Finans Emeklilik Annual Report 2012
Contents
Presentation 1 2 3 4 5 6 8 10 16 18 28 30
Corporate Profile Mission, Vision, Corporate Goal and Strategies, Primary Competitive Advantages Highlights from Finans Emeklilik’s History Key Financial Highlights Shareholder Structure of the Company The Historical Development of the Company and Changes in the Articles of Association and their Reasons during the Reporting Chairman’s Message General Manager’s Message The Economy and the Sector in Turkey and in the World in 2012 Assessment of Finans Emeklilik’s Activities in 2012 and the Company’s Position in the Sector Explanations on the Private and Public Inspections made within the Accounting Period Independent Auditors’ Compliance Opinion on Annual Report
Information on the Management and the Corporate Governance Practices 32 32 34 37
Board of Directors Senior Management Organization Chart Summary of Annual Report of the Board of Directors Presented to the General Assembly of Shareholders 38 Information About the Human Resources Practices 40 Transactions Conducted with the Risk Group in which the Company is Included 41 Mission, Vision, Corporate Goal and Strategies Financial Information and Assessment on Risk Management 43 The Report Prepared by the Auditors Who Were Assigned in Compliance with the Article 347 of the Turkish Commercial Code Dated 29.06.1956 and Numbered 6762 44 Profit Distribution 45 Information on Internal Control System and Internal Audit Activities of the Company and Management Opinion on This Issue 46 Independent Auditors' Report 47 The Unconsolidated Financial Report For The Year Ended 31 December 2012 48 Detailed Balance Sheet 53 Detailed Income Statement 56 Detailed Statement of Changes in Equity 57 Cash Flow Statement 58 Profit Distribution 59 Notes To The Financial Statements As Of 31 December 2012 121 Assessment of the Financial Situation, Profitability and Claims Payment Efficiency 123 Information on Risk Management Policies Applied per Risk Types 128 Management of Risks related to Reinsurance Companies 131 5-Year Summary Financial Information Including the Reporting Period 135 Contact
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Corporate Profile
Finans Emeklilik: Young, dynamic and reliable... Finans Emeklilik ve Hayat A.Ş. (Finans Emeklilik) is a dynamic, innovative, competitive and strong company that provides services at international standards in the private pension, life and accident insurance branches. Commencing operations in November 2007, Finans Emeklilik made a rapid entry into the sector. By further enhancing the synergy it has created with Finansbank, its main shareholder and distribution channel, Finans Emeklilik strengthened its position in private pension, life and accident branches in the sector in 2012. Finans Emeklilik provides the highest quality and reliable service to its customers, and will continue to do so, backed by the wealth of knowledge and 26-years of experience of its main shareholder, Finansbank, with its widespread branch network, competent and experienced human resources and sound financial structure. Finans Emeklilik’s aim is to continue providing the best service to its customers as a customerfocused, innovative and dynamic pension and life insurance company, demonstrating rapid and sustainable growth in branches where it is operational, making a difference in its sector.
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Finans Emeklilik - 2012 Annual Report
Mission, Vision, Corporate Goal and Strategies, Primary Competitive Advantages Vision To be a pension and life insurance company which is admired and which stands as an example. Mission To be a trusted, profitable pension and life insurance company, aware of its social responsibilities and which provides a level of service which exceeds the expectations of its customers, and whose shareholders and employees are proud and happy to be a partner and a member of it.
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Corporate Goal and Strategies Our corporate goal is; To increase market share by developing innovative and competitive products which meet the needs of Finansbank’s customers - our primary distribution channel, To continue strengthening the confidence and satisfaction gained in the eyes of our customers, To be a distinguished pension and life insurance company in the sector with a management approach befitting Finansbank’s reputation and reliability in the financial market, and which is mindful of corporate image and profitability.
Primary Competitive Advantages A strong and competitive brand name associated with its primary distribution channel, Finansbank Customer database Advanced technological infrastructure Strong capital structure A widespread distribution channel and effective sales and marketing activities, conducted together with Finansbank.
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Highlights from Finans Emeklilik’s History
2007 Having received the certificate of incorporation from the Undersecretariat of Treasury, Prime Ministry, Republic of Turkey, Finans Emeklilik was incorporated on July 10th, 2007 to operate in the life and accident insurance, and private pension branches. Finans Emeklilik began conducting business in the life and accident insurance branches in November, 2007. Finans Emeklilik applied to the Undersecretariat of the Treasury for an operating license in private pension branch in December 2007.
2008 After the company’s application was duly reviewed and inspections were completed by the Undersecretariat of Treasury, the Capital Markets Board and the Pension Monitoring Center, Finans Emeklilik received its operating license for private pension branch on April 11th, 2008. Finans Emeklilik issued its first private pension contract on November 30th, 2008.
2009 Finans Emeklilik began selling individual life insurance products as of January 2009. In line with the decision to raise the Company’s capital to TRY 30,000,000 the subscribed capital amount of TRY 10,000,000 was paid in cash by the shareholders on June 5th, 2009. The Company received licenses to operate in the capital redemption, marriage/birth and unitlinked life insurance branches.
2010 Finans Emeklilik’s capital was increased from TRY 30,000,000 to TRY 40,000,000 in 2010.
2011 Finans Emeklilik’s capital was increased by TRY 5,000,000 from TRY 40,000,000 to TRY 45,000,000 in 2011. The increased amount of TRY 5,000,000 was completely guaranteed by Finansbank A.Ş. free of collusion. It was paid in cash on October 31st, 2011.
2012 Company’s Articles of Association was amended on November 9, 2012. The supplemental agreement approved under number 6935 by R.OT. Ministry of Customs and Trade on 02/11/2012 and the resolutions adopted at the Extraordinary General Assembly Meeting dated 09/11/2012 were registered with Istanbul Trade Registry Office on 14/11/2012 in accordance with the Turkish Commercial Code, and announced in the Turkish Trade Registry Gazette numbered 8197 and dated 20/11/2012. Following the obtainment of all necessary permits, Finansbank A.Ş., one of the shareholders, have transferred its 51% shares in the Company to Cigna Nederland Gamma B.V.; and with the Board decision numbered 172 and dated 09/11/2012, the sale and transfer of Finansbank's 22,950,000 registered shares having the value of TRY 22,950,000 - to Cigna Nederland Gamma B.V. has been approved by the Board of Directors, upon which the transferred shares have been recorded in the share ledger.
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Finans Emeklilik - 2012 Annual Report
Key Financial Highlights
Finans Emeklilik ve Hayat A.Ş. (the "Company") booked a total premium production of TRY 161.1 million in 2012, while it paid out TRY 25.4 million in insurance claims. In 2012, Finans Emeklilik ve Hayat A.Ş. booked TRY 36.5 million as general expenses and TRY 18.9 million as investment income. Financial Indicators (TRY)
2012
2011
Change (TRY)
Change (%)
PPS Contributions*
186,321,726
107,366,116
78,955,610
73.54
PPS Total Fund Size
201,138,824
105,073,590
96,065,233
91.43
Written Premiums
161,118,628
124,684,896
36,433,732
29.22
25,377,465
19,376,314
6,001,151
30.97
General Expenses**
36,538,219
29,086,862
7,451,358
25.62
Technical Profit/Loss
23,760,518
9,501,189
14,259,329
150.08
Claims Paid
Investment Income
18,996,834
7,222,786
11,774,048
163.01
Investment Expenses
(4,968,713)
(1,847,818)
(3,120,895)
168.90
Net Profit / Loss
28,767,741
9,800,920
18,966,821
193.52
(*) PPS Contributions also include the amounts in credit card blocking. (**) “General expenses” consist of all operating expenses, except for production commission expenses and reinsurance commission income, net of prepaid commission expenses and unearned commission revenue and check-up costs.
Consequently, the Company closed its sixth reporting year with a net profit of TRY 28.7 million indicating a 193.5% YoY increase.
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Shareholder Structure of the Company
Shareholders Name / Title
Share Group
Number of Shares
Cigna Nederland Gamma B.V.
A
22,949,999
Cigna Nederland Gamma B.V.
Share Amount (TRY) Share Ratio (%) 22,949,999,0000
50.9999978
A1
1
1,0000
0.0000022
Finansbank A.Ş
B
22,049,994
22,049,994,2333
48.9999872
Finansbank A.Ş
B1
1
1,0000
0.0000022
B
1
1,1917
0.0000026
Finans Yatırım Menkul Kıymetler A.Ş. Finans Finansal Kiralama A.Ş.
B
1
1,1917
0.0000026
Finans Portföy Yönetimi A.Ş.
B
1
1,1917
0.0000026
IBTECH Uluslararası Bilişim ve İletişim Teknolojileri Araştırma, Geliştirme, Danışmanlık, Destek San. ve Tic. A.Ş.
B
1
1,1917
0.0000026
45,000,000
45,000,000,00
100.0000000
TOTAL (*)
(*) The fraction certificate has been issued for the shares that were less than TRY 1 during the capital increase resolved at the year 2009 meeting of the General Assembly of the Company and met from the internal resources. Therefore, one share has been broken into fractions, and fraction certificate has been issued to the shareholders in proportion to their shares.
Information concerning Changes in the Company’s Capital and/or Ownership Structure during the Reporting Period; Identities and Shareholding Interests of Real Persons or Legal Entities that Hold Shares with Special Rights The Company has amended its Articles of Association at the Extraordinary General Assembly meeting on November 9th, 2012. Finansbank A.Ş., one of the shareholders, has transferred its shares corresponding to 51% of the capital of the company to Cigna Nederland Gamma B.V. The transfer of shares has been approved with the Company decision numbered 172 and dated November 9th, 2012, and the transferred shares have been recorded in the share ledger in the name of the new holder of the said shares. The capital of the company is composed of the A, A1, B and B1 groups of shares, which are detailed in the table above.
Information concerning the Company's Direct or Indirect Affiliates and the Share Percentages of the Affiliates Except the Pension Monitoring Center in which it is a shareholder due to legislation, the Company does not have any direct or indirect affiliates.
Information concerning the Company's own Shares bought back The Company does not have any own shares bought back.
Shares Held by the Chairman or Members of the Board of Directors, by the General Manager, or by the Assistant General Managers Neither the chairman nor any member of the Board of Directors, nor the general manager, nor any assistant general manager is a shareholder in the Company. 5
Finans Emeklilik - 2012 Annual Report
The Historical Development of the Company and Changes in the Articles of Association and their Reasons during the Reporting Activities leading to the formation of Finans Emeklilik ve Hayat A.Ş. were launched in the beginning of 2007. Having conducted necessary preparations and feasibility studies, an application was submitted to the Undersecretariat of the Treasury of the Prime Ministry of the Republic of Turkey on April 20th, 2007 for a license to obtain approval for the establishment of the company. After conducting its review of the application in light of the requirements of the Private Pension Savings and Investment System Law No: 4632 and relevant laws and regulations, the Undersecretariat of Treasury issued the establishment license to the Company on May 9th, 2007. Following the completion of procedures, Finans Emeklilik was incorporated on July 4th, 2007 to operate in the life and accident insurance, and private pension branches. Finans Emeklilik applied for life and accident operation licenses on August 20th, 2007. These applications were reviewed by the Undersecretariat of Treasury, which issued operation licenses to the Company for both branches on November 21st, 2007. Finans Emeklilik began conducting business in the life and accident insurance branches on November 27th, 2007. After fulfilling the prerequisites, Finans Emeklilik applied to the Undersecretariat of Treasury for an operating license in the private pension branch on December 17th, 2007. After the company’s application was duly reviewed and inspections were made by the Capital Markets Board and the Pension Monitoring Center, Finans Emeklilik received its operating license for the private pension branch on April 11th, 2008. Finans Emeklilik issued its first private pension contract on November 30th, 2008. The Company received an operating license in the capital redemption, marriage/birth and unit-linked life insurance branches upon the decision no. B.02.1.HZN.0.10.04.01 of the Undersecretariat of the Treasury of the Prime Ministry of the Republic of Turkey on October 26th, 2009. The decision was published in the Turkish Trade Registry Gazette no. 7438 on November 13th, 2009.
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The Company’s Articles of Association was amended in the operating year of 2012. The former articles 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25 of the Company's articles of association have been amended, while the new articles 8, 9, 10, 15, 24, and 31 have been added to the articles of association. The supplemental agreement approved under number 6935 by R.OT. Ministry of Customs and Trade on 02/11/2012 and the resolutions adopted at the Extraordinary General Assembly meeting dated 09/11/2012 were registered with Istanbul Trade Registry Office on 14/11/2012 in accordance with the Turkish Commercial Code, and announced in the Turkish Trade Registry Gazette numbered 8197 and dated 20/11/2012.
Information concerning the Extraordinary General Assembly Meeting held within the Year, if any, including the Meeting Date, Resolutions Adopted at the Meeting, and the Relevant Procedures Performed The agenda of the Extraordinary General Assembly meeting held on 09/11/2012 is as follows; the Company's articles of association have been amended at the meeting. The resolutions adopted at the extraordinary general assembly meeting dated 09/11/2012 concerning the amendment to the articles of association were registered with Istanbul Trade Registry Office on 14/11/2012 in accordance with the Turkish Commercial Code, and announced in the Turkish Trade Registry Gazette numbered 8197 and dated 20/11/2012. Agenda of Extraordinary General Assembly Meeting dated 09th November 2012 1. Opening and Election of the Presidential Council. 2. Authorizing the Presidential Council to sign the meeting minutes of the Extraordinary General Assembly of Shareholders. 3. Amending various articles of the Company's Articles of Association as specified in the attached document. 4. Putting the auditor elected under article 351 of the Turkish Commercial Code number 6762 to the vote of the General Assembly of Shareholders. 5. Acquitting the members of the Board of Directors and the Auditors, who have retired from the office.
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Management Analysis and Evaluation on the Financial Condition and Operating Results, Degree of Achievement of the Planned Operations, the Company’s Position against the Set Strategic Targets The insurance sector is growing every year in our country thanks to its dynamic and strong financial structure. Turkey is an attractive market for its young population and the low insurance rate despite such population. Due to the increasing interest in the sector and the new players, the competition in the market is becoming tougher every year. The recorded premiums-to-GDP ratio is 6.6% globally and 2.7% in the developing countries, while this figure is only 1.3% in Turkey. The premium production of the insurance sector in Turkey is TRY 14.3 billion in the first 9 months of 2012 compared with TRY 17.2 billion at the end of 2011. Thanks to its strong capital structure, Finans Emeklilik ve Hayat A.Ş. increased its market share in the life insurance sector to 5.94% in the year 2012 indicating a 28% YoY increase. Key Financial Results
2012
2011
Change (%)
Non-Life Technical Income
1,299
81,970
(98.42)
Non-Life Technical Expenses (-) Life Technical Income Life Technical Expenses (-) Private Pension Technical Income Private Pension Technical Expenses (-)
(177,029)
(75,714)
133.81
143,458,114
103,789,972
38.22
(116,587,411)
(92,703,634)
25.76
10,362,297
8,997,860
15.16
(13,296,752)
(10,589,265)
25.57
Investment Income
18,996,834
7,222,786
163.01
Investment Expenses (-)
(4,968,713)
(1,847,818)
168.90
"Other Income and Expenses (+ -)"
(1,291,295)
(1,933,521)
(33.22)
NET PROFIT / (LOSS)
28,767,741
9,800,920
193.52
(175,730)
6,256
(2.909,12)
LIFE TECHNICAL PROFIT/(LOSS)
NON-LIFE TECHNICAL PROFIT/(LOSS)
26,870,703
11,086,338
142.38
PRIVATE PENSION TECHNICAL PROFIT/(LOSS)
(2,934,455)
(1,591,405)
84.39
TOTAL TECHNICAL PROFIT/(LOSS)
23,760,518
9,501,189
150.08
An evaluation made according to provisions of the Turkish Commercial Law number 6102 indicates that the Company neither has any capital loss nor is deep in debt.
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Finans Emeklilik - 2012 Annual Report
Chairman’s Message An Important Year for Our Affiliate: We Keep Going with Global Partner In addition to the current economic developments, the year 2012 was particularly important for Finans Emeklilik. One of the biggest health and life insurance companies of the US, Cigna has signed partnership agreement with Finansbank to expand its activities in Turkey, and bought 51% of the shares of Finans Emeklilik. Following the official approval given by the Undersecretariat of Treasury on November 9th, 2012, the share transfer has been completed and two shareholders have begun to operate under the same roof for the same purpose.
Esteemed Shareholders, The year 2012 started as a year full of pessimistic expectations about the global economy; and the instability in Europe, together with the winds of worries in the US, have caused slowdown and turmoils in the economy. In the developed economies, the growth continued to lose speed in 2012 as well. Despite still faster growth performance, the developing economies could not stand completely clear of the negative effects of the deceleration in the developed economies, and their average growth rates dropped from 6.2% to 5.3%. The weak recovery of the developed economies has led the central banks to pursue looser monetary policies. While the US and Japanese central banks maintain their quantitative easing operations, the European Central Bank has decreased the policy interest rate in addition to long-term liquidity injections. Thus, the loose liquidity conditions that have become the most characteristic feature of the post-financial-crisis global economy. In such an environment, the controlled deceleration needed by our national economy has been achieved through sound and consistent policies. The Turkish economy that has better dynamics in the banking system and public finance compared with the developed economies has outperformed globally.
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In addition to the global experience of Cigna, the coincidence of the perspective of Cigna prioritizing the needs of its customers and generating solutions with alternative product and service options for these needs and the service understanding of Finans Emeklilik makes this partnership much more valuable. I believe and feel greatly pleased that the year 2013 will be a new year in which we will offer our customers the insurance products they need within the scope of a high-quality and full service understanding thanks to the synergy among Finansbank, Cigna and Finans Emeklilik. We are already excited with the value this partnership will gain with the experience of a global insurance giant Cigna has in countries like Turkey where the penetration of insurance products is limited. Therefore, I sincerely believe that the joint venture between Cigna, acting with the mission of “developing the feeling of health, quality life and trust" for the customers it serves to in its operating countries, and Finansbank under the roof of Finans Emeklilik will play a crucial role in development of the Turkish Insurance Sector.
Development of the Private Pension System is Promising for the Future Having completed its 10th operating year in Turkey, the private pension system reached a total of 3,119,033 participants as of December 28th, 2011, with the total funds under management climbing to TRY 20,326,425,746 with the total amount of collected contributions reaching TRY 16,109,796,944 with a total amount of TRY 15,674,013,121 directed to investments. Although Turkey is one of the countries that has established the private pension most recently, its demographic structure, in particular, has always offered significant potential in terms of the rapid development of the system; the point that the sector has today is an important indicator of this. I believe that the positive economic developments in Turkey as well as the new rules and regulations that conduced to implementation of State Contribution in the year 2012 and
Presentation
encourage the participation in the system will be important in continuation of the rapid and exponential growth of the sector.
Awareness of Life Insurance is Rapidly Increasing The necessity of life insurance is becoming more prominent with ever increasing life risks in parallel with the developments in the social, economic, technological and environmental fields. Banks, which have made significant contributions to the development of life insurance, have played a key role in introducing life insurance to the public and raising awareness on these risks. In Turkey, nearly 77% of life insurance policies are sold through banks, while 23% of such policies are sold through non-bank channels. Statistical data acquired from the examples from around the world indicate that the utilization rate of life insurance products is high in countries where there is a high level of public awareness of these products. It is satisfactory to see that the level of perception related to the life insurance products that have reached an important point with contribution of the banks is increasing day by day.
Another Successful Operating Year for Finans Emeklilik Finans Emeklilik, with the impact of productive synergy that it has built with Finansbank, received in 2012 a 5.94% market share in the life insurance branch, which is its primary field of activity, and ranked 7th in terms of life insurance premium production. In the year 2012, Finans Emeklilik has expanded its product portfolio with new individual products and produced a total premium of TRY 161,040,971 in life insurance branch, achieving a noticeable premium production growth trend in the sector. At the end of its sixth operating year in the life insurance branch, the total number of life insurance policies / certificates issued by Finans Emeklilik reached 1,671,515. Reaching a total fund size of TRY 208,021,394 in the private pension branch in 2012, Finans Emeklilik captured a 2.3% market share in terms of number of contracts in this branch, thus enabling 2.4% of the new participants in the sector to be included in the system. Under the light of all these data, I am glad to say that 2012 was a year in which Finans Emeklilik reaped the positive results of its investments in its technical infrastructure and operational processes associated with its sales-marketing and human resources organization as is the case every year. Having carried out all of its general assembly resolutions and achieved all of its
predetermined targets in 2012, Finans Emeklilik completed an extremely successful year in this context.
Customer Satisfaction is Always Our Top Priority‌ The priority of Finans Emeklilik is to make the customer satisfaction permanent. In this context, Finans Emeklilik acts in line with the mission of offering the highest quality service to its customers and becoming a pension and life insurance company which shareholders and employees feel happy and proud to be partners and members of, and which is reliable and aware of its social responsibilities. The Company offers products and services that meet their needs within the framework of a high-quality and reliable service approach. Acting upon this point, Finans Emeklilik has, in order to increase its total service quality and operational efficiency, carried out projects and investments to enhance its technological infrastructure and develop its integration with Finansbank, its primary distribution channel, while producing effective business models; and the reflections of our sales performance in 2012 to our technical profitability and balance sheet figures were also highly satisfactory. Backed by the participation of our new partner Cigna in the strength of the joint cooperation between Finansbank and Finans Emeklilik, we will maintain the confidence and the satisfaction of our customers in 2013 by developing innovative and competitive products and services in line with their needs. I would like to take this opportunity to extend my gratitude to our beloved Finans Emeklilik and Finansbank families, who have played a key role in our achievements, Cigna, who has joined our family newly and with whom I sincerely believe to achieve more successful works in the future, as well as our precious customers, who have preferred and trusted us.
Dr. Mehmet Ă–mer Arif Aras Chairman
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Finans Emeklilik - 2012 Annual Report
General Manager’s Message
Esteemed Customers and Colleagues, 2012 has been a productive year with a remarkable progress both for the sector and Finans Emeklilik, significant innovations for the participants and insured customers and developments giving hope for the future. Despite the influence of the global crisis fluctuations throughout 2012 following the 3-year positive recovery process for the Turkish economy compared to the global country economies, we have completed an effective fiscal year where we have observed an increasing acceleration for private pension and life insurances. The partnership agreement signed by Finansbank and Cigna, one of the insurance giants of the USA, was one of the most important progresses for Finans Emeklilik, making its mark for the year 2012. I sincerely believe that the joint venture between Cigna, acting with the mission of “developing the feeling of health, quality life and trust for the customers it serves to” in the entire world, and Finans Emeklilik, providing service to its customers with an overlapping mission and approach, will add an important value in increasing the perception and awareness on the need for insurance activities and insurance products in Turkey.
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Within the scope of its activities during such a short period of five years and with the influence of Finansbank as its main and sole distribution channel, Finans Emeklilik has become one of the fastest growing pension and life insurance companies of the sector with a significant market share in the fields of operation. In the following period, Finans Emeklilik will continue with its activities under a global frame together with its new business partner Cigna, having a sales capability in 30 countries, will first strengthen its distribution channel more and will allow its customers to communicate with them through any channel the customers prefer. Finans Emeklilik will simultaneously continue to perform development works for diversifying its existing product range through product innovations and to expand its service capacity with its prioritized principle on increasing the awareness and perception of its customers related to the insurance products. Considering the penetration of the insurance products, which is still weak compared to the examples in world today, the growth opportunities and its importance can be seen clearly. At this point, “ability to be competent in reaching to bigger masses” particularly becomes prominent. Having such a competency and improving this day by day will be possible under this new partnership. In addition to the effective global experience of Cigna in developed and developing markets, the perspective of Cigna prioritizing the needs of its customers and generating solutions with alternative product and service options for these needs coincides with the service understanding of Finans Emeklilik to date and constitutes one of the strongest aspects of this partnership.
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The partnership agreement signed by Finansbank and Cigna, one of the insurance giants of the USA, was one of the most important progresses for Finans Emeklilik, making its mark for the year 2012
Sectoral Developments: The Tangible Impact of State Contribution
Another Distinguishable Success in Life Insurance Branch
In its 10th year of operation in Turkey, the Private Pension System displays a very satisfactory performance with 17.8% growth in the total number of participants and 42% growth in the total size of funds. These figures are satisfactory indicators related to private pension, which now have a sound foundation in Turkey, continue to progress further and that the trust of the public for these systems increas day by day.
As in every year since its foundation, 2012 has also been an important year where Finans Emeklilik has displayed a fast and remarkable progress in the sector with the activities in life insurance branch. An effective generation was achieved throughout the year and the premium amount at the end of 2012 has reached to TRY 161,040,971. Finans Emeklilik, achieving such a success as one of the youngest actors in the sector, has increased its market share in life insurance branch to 5.94% at the end of its 6th operating year and ranked 7th in generating premium in the sector.
161,040,971
The most important progress of the year has been the implementation of State Contribution. As Total Premium Amount Finans Emeklilik concentrated on a transparent and reliable product development in 2011 in saving and investment system order to develop new private life complementing the existing Public Social insurance products for customer risk, continued with this initiative in 2012 and provided a Security Systems and designed for individuals significant added value in terms of increasing to start saving from today for their retirement the awareness of public in private life insurance period, PPS has now become stronger than products which are less common compared to before with the State Contribution launched the life insurance products sold in connection within the scope of the legal regulations entering with private banking products in Turkey. into force in 2012. While only taxpayers were able to benefit from the tax advantage as a basic Upon insurance products with unemployment incentive within the scope of the past practices, coverage became favorable products with the State Contribution had a significant leverage the impact of the periodical fluctuations in impact in the progress of the system by allowing the economy and the developments in the all participants, regardless from being a taxpayer, markets, our Company acted quickly and created a rich product range in life insurance with to benefit from this contribution. The support unemployment coverage and had the opportunity provided by the State Contribution, one of the to offer a rich product range by means of the practices launched by the legal authorities for new private life insurance products covering life bringing the world standards to the insurance risks with different insurance products, where sector in Turkey, for the development of the the customers are able to select any product they need. sector and the system is satisfactory.
TRY
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Finans Emeklilik - 2012 Annual Report
At the end of our 6th operating year in life insurance branch, the total number of our life insurance policies/certificates has reached to 1.671.515. As a result of this production data, Finans Emeklilik maintained its technical profitability in 2012 and achieved a technical profit of TRY 26.870.703 in life insurance branch, while the technical profitability rate was realized as %16,69.
Stable Progress in Private Pension Branch Finans Emeklilik has realized 2.4% of the increase in net participant number throughout the sector in pension branch. According to the official EGM data published on 28.12.2012, Finans Emeklilik ranked 10th in private pension branch at the end of its 5th operating year with 73,473 participants, 80,315 contracts, contribution share collection of TRY 180,559,623 TRY and fund size of TRY 208,021,394. Today, Finans Emeklilik became one of the important actors of the sector in Turkey with a quick and healthy growth thanks to the cooperation and synergy created by Finansbank, its shareholder and distribution channel, among the subsidiaries, completed the year 2012 with satisfactory production figures in pension branch and continued to take firm steps by maintaining its stable progress.
Strong Cooperation with Finansbank The synergy-based and productive cooperation with Finansbank, the shareholder and main distribution channel of Finans Emeklilik, has been one of the most fundamental driving forces for the success of Finans Emeklilik since its foundation with the market experience of 26 years, broad knowledge, bank insurance service structure built on its wide branch network and operating in the banking sector with its competent and experience human resources and sound financial structure of Finansbank.
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Performing one of the successful examples of bank insurance practices with the effective business models designed with Finansbank, Finans Emeklilik efficiently maintained its strong and effective distribution channel management - performance relation in 2012, as in the past operating years. In addition to the added value provided by the qualified and experienced Finans Emeklilik sales teams and general directorate employees to this cooperation, the private pension broker licensed branch employees working at Finansbank branches also have a significant contribution with their development, performance and sales competencies. The perspective of Finans Emeklilik and Finansbank managements has ensured that the employees working at Finansbank branches have also adapted the business method for a common aim and led to a continuous increase in customer oriented service quality. One of the prioritized targets of Finans Emeklilik in 2012, as in every year, was offering the private pension and life insurance products with high quality standards, as well as with reasonable and competitive costs developed by taking the customer segmentation, target mass and customer needs of Finansbank into account and providing a complete service by ensuring a continuous after-sales customer satisfaction. The trust of Turkish people to Finansbank, the strong management structure and model of Finansbank, observing the customer needs as a priority under any condition, carefully following up the pre-sales and post-sales processes with a plan and taking the remedial actions when required, accurate setup of operational processes and technical infrastructure and accurate and effective information flow between Finansbank branch employees and Finans Emeklilik employees are among the other important matters leading to the satisfactory performance in 2012 where the partnership process of Finans Emeklilik and Cigna continued intensively.
Presentation
In our business based on longterm relationship, it is our constant rule to understand our customers. In addition to this, “raising the awareness of our customers”, which we believe to be one of our most important duties, is another indispensable value we have taken as a mission in this journey Marketing and Communication Activities Based on Raising the Customer Awareness Always acting close to and understanding its customers, modern and sincere Finans Emeklilik continued to prioritize the expectations and demands of its customers in 2012 and has become one of the leading companies in the sector by implementing marketing and communication strategies aiming to reinforce the channels which the customers communicate with them. Finans Emeklilik continues its new product development works and marketing communication based on customer orientation principle and maintains its identity as “preferred company” by its customers through establishing long-term relationships based on trust.
an important competition threshold and we build all of our projects by keeping this in our minds. We had the opportunity to offer an alternative pension plan addressing the customers receiving their compensation through Finansbank: FinansMaaş Private Pension Plan in private pension branch which we added in 2012 to our private pension and life insurance product range we are planning to sell strategically. In life insurance branch, we have increased the number of our private life insurance product to 5, which 3 of them are with unemployment coverage, together with Cancer Protection Life Insurance products we included to our product range in life insurance branch in 2012 and continued to provide service to our customers with the wide product range we have.
208,021,394
TRY
Total Fund Size
In our business based on longterm relationship, it is our constant rule to understand our customers. In addition to this, “raising the awareness of our customers”, which we believe to be one of our most important duties, is another indispensable value we have taken as a mission in this journey. We believe that understanding our customers is the most important milestone in continuously increasing the quality of the service we are providing to them. And we also know that it is an undeniable requirement to allow our customers understanding their own needs and to increase their awareness related to the necessity of insurance products and we proceed with a perspective contributing to increase this awareness. We believe adding value to every stage of their lives and increasing our competencies in developing innovative products and services are
Within the scope of our marketing and communication projects for 2012 which we have implemented for increasing the consciousness and awareness on private pension and life insurances and correctly explaining the necessity and benefits of the products to the Turkish people, we have carried out customer communication works telling that PPS is a long-term investment system designed for individuals to save for their retirement period and that the important thing is making saving for the retirement period. On the life insurances side, we have concentrated on communication works explaining the benefits provided by life insurance products to the insured people and their relatives in case of any undesired situation by emphasizing the importance that they have to get a financial assurance for themselves and their beloved ones against any possible life risks.
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Finans Emeklilik - 2012 Annual Report
“Customer Satisfaction” is A Must... Finans Emeklilik ensured a more effective management of the sales processes as well as after-sales services and operational processes by producing quality, fast and permanent solutions against the customer demands and needs in order to make the customer satisfaction sustainable, and intensively and regularly continued with continuous development works within this scope in 2002. It was ensured that the customers are once again acknowledged completely about the requirements of the system and the details of the products in post-sales period through the quality control calls carried out routinely and the practice on offering the right product to the right customer has been strengthened. With the screens designed especially for our call center, we have instantly responded to the needs of our customers in 2012 and provided fast and quality service with the applications meeting their needs electronically. We have recorded the demands and complaints of our customers with the work flows continuously improved for enhancing the operation and after-sales service processes and the questions of our customers have been responded within the relevant time and possible problems have been solved without omitting any detail related to their expectations, demands or suggestions. We believe that improving the contact points with the customers and using the communication channels with them more effectively have a critical importance in establishing stronger bonds based on trust between the Company and the customer and thus increasing the customer loyalty. In private pension system, where product differentiation is limited, it is vital to keep the existing customers as much as including new customers to the system. At this point, the value of customer satisfaction achieved with service offering and quality becomes prominent once again. We are glad and proud to offer services to our customers with the quality we desire through
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our call center operating as an operation center where the customer demands in all product groups can be instantly met within the scope of the legislation with the system and infrastructure revisions allowing our operators to be more effective in their daily activities. “Customer Satisfaction” is a must for our Company...
Our People are Also Our Customers and Their Satisfaction Matters to Us Finans Emeklilik believes that the employees, loving their job, loyal to their company, working hard and satisfied, are an important factor in gaining and keeping satisfied customers. Finans Emeklilik considers each of its employees as a customer and carries out devoted works for ensuring employees satisfaction. Finans Emeklilik closely monitors the performance and development of its employees, whom it has employed in positions suitable to their skills and characteristics, and carries out their periodical career planning. In this regard, 2012 has been a year where the processes such as employing a qualified human resource, regularly measuring their performances and ensuring employees satisfaction have been carried out effectively as in all previous operating years. With the activity groups in different branches established within our Company for increasing the socialization and sharing of our employees by acting together out of the working hours based on voluntary participation and where the top management attends from time to time, the positive communication and synergy has been reinforced and added value has been provided for the employees satisfaction.
Presentation
Finans Emeklilik completed its 6th operating year in the sector as of 2012 and will continue with its new partner Cigna under a global scope in 2013
Forecasts and Targets for 2013
Thank You...
We are pleased with the position of Finans Emeklilik achieving a satisfactory place in the sector and putting its signature under important successes by leaving a mark in such a short period of 6 years with the valuable support of Finansbank’s management, the main and sole distribution channel to date.
I would like to express my gratitude to all my colleagues working in the general directorate and sales organization of Finans Emeklilik, who has taken it as a principle to apply its customer oriented service quality completely, for making our Company one of the most effective actors in the sector in such a short period and for increasingly improving our success.
Finans Emeklilik completed its 6th operating year in the sector as of 2012 and will continue with its new partner Cigna under a global scope in 2013. Within the scope of the activities we will continue together, Finans Emeklilik will be an important part of Cigna’s global structure. This partnership, which also led a cooperation between Cigna and Finansbank with more than 580 branches today, is an important milestone in Technical accessing to the Turkish market where particularly the middleincome group market has displayed a significant growth. In addition to the broad global experience and competency in direct marketing of Cigna, strong and continuously growing distribution channel of Finansbank and the position achieved in the sector and strong customer relations based on trust of Finans Emeklilik in a short period of time, we believe we will increasingly strengthen our position in the Turkish market with our innovative products and services. We are aiming to increase the use of individual life insurance products for customer risks in addition to the life insurance products connected with loans, which is relatively more prevalent in Turkey, by increasing the product and distribution channel diversity with our new restructuring. We will continue to improve our service model in Turkey with the partnership of Finans Emeklilik and Cigna based on giving them the habit to use products meeting their needs by “increasing the awareness of the customers related to the scope and necessity of the products”, which both companies adapt as a principle.
I would like to express my gratitude to our Board of Directors for their instructive and supportive approach to our works.
16 % .69
I would like to express my gratitude to Finansbank Management and employees as an integral part of our business for the added value they provide.
Profit Ratio
I would like to express my gratitude to Cigna, which we will together continue with our journey, for their belief in Finans Emeklilik Management and team and also for the added value they will provide on penetrating “global approach and perspective” to the Turkish market. I also would like to express my gratitude for the continuous trust and loyalty of our insured customers and participants, whom we continue our activities for making the quality of service we provide to them permanent. Sincerely yours,
David Jerry Fike * General Manager (*) David Jerry Fike, is assigned as General Manager as of 02 January 2013.
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Finans Emeklilik - 2012 Annual Report
The Economy and the Sector in Turkey and in the World in 2012
The Global Economy General That the fragilities observed in the global economy at the closure of the year 2011 have gone from bad to worse due to deepening crisis in the Eurozone and the slowdown exceeding the anticipations in most of the market economies have caused that the global growth to lose more speed in the year 2012 compared with the previous year. Despite the positive activation in the markets in the summer of 2012, the vulnerability of the financial segment to risks has risen relative to the spring, and the feeling of trust in the global financial system has became exceptionally fragile at the end of 2012. The weak growth and high unemployment in the developed economies in the year 2012, the stagnation and the continuing debt spiral in the Eurozone, the US employment and housing results announced to be weaker that expected, the tough slowdown of growth in the developing countries, and the commodity prices continuing to increase despite the slowdown in the global economy have caused the global expectations at the beginning of the year 2012 to have a downtrend. Expectations regarding the Coming Period The macroeconomic indicators show uncertainty about a normalization in the volume of the global activities in the near future. In its revised report, “World Economic Outlook�, published in January 2012, the International Monetary Fund (IMF) estimated the global growth for the world economy as 3.5% and 4.1% for the years 2013 and 2014 respectively, compared with 3.2% global growth in the year 2012. According to the same report, the emerging markets and the developing economies are expected to grow by 5.5% in the year 2013 and 5.9% in the year 2014. It is also estimated that the Central and Eastern European countries, which grew by 1.8% on average in 2012, will grow by 2.4% in the year 2013, and 16
3.1% in the year 2014. According to the report, it is estimated that the developed countries will grow by an average of 1.4% in the year 2013, while this figure is 2% for the USA, 7.1% for the developing Asian countries, 8.2% for China, and 3.4% for the Middle East and North Africa. It is foreseen that the Eurozone economies that shrank by 4 per thousand in 2012 will recover relatively to shrink by 2 per thousand, while the oil prices will decrease by 5.1% in 2013.
The Turkish Economy General Having survived the impacts of the global crisis rapidly, the Turkish economy have enjoyed a strong and domestic-demand-based growth led by the private sector in the years 2010 and 2011 with the impact of the domestic demand deferred in the crisis period. Having grown by an average of 8.8% in the years 2010 and 2011, the Turkish economy has become one of fastest growing economies in the world after the crisis thanks to this performance. Following the 8.6% growth in 2011, this figure decreased to 2.9% in the year 2012. As indicated by the GDP growth rates in the 2012 Q1 and the structure of this growth, these steps have resulted in an evident slowdown in the economy due to negative global conditions and the declining expectations depending on the global economy. While the slowdown in domestic demand was the leading actor in this "harder-than-expected soft landing", this slowdown itself was the result of the shrinking private sector consumption and investment spending. In the year 2012, the consumer price index was 1 point above the targeted 6.16%, compared with 2.45% producer price index. Foreign Trade Figures and Current Account Deficit According to the data released by Turkish Statistical Institute, Turkey's exports totaled 152.5 billion dollars in the year 2012, indicating a 13% YoY increase.
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The imports in the year 2012, on the other hand, dropped by 2%, leading to 21% decrease in the foreign trade deficit. In the year 2012, the share of the Middle East countries in Turkey's exports increased considerably while the share of the EU countries decreased. On the other hand, according to the data released by the Turkish Central Bank (TCMB), the current account deficit fell to 48 billion 867 million dollars in 2012, indicating 28 billion 352 million dollars YoY decrease. It has been observed that this fall in the current account deficit is the result of the tight monetary policy pursued by the Central Bank, the measures taken by the Banking Regulation and Supervision Agency (BDDK), and the cautionary policies pursued by the Ministry of Finance. Upgrading the Credit Rating to Investable Level In November, the international credit rating agency Fitch Ratings upgraded Turkey's long term foreign currency credit rating from BB+ to BBB- that is the investable level, and its rating outlook as “stable�. The positive developments in Turkey's financial situation, the strong banking system, the decreasing public debt burden, and the positive medium term growth expectations have been specified as the reasons of this upgrade. With the decision of Fitch, Turkey has been upgraded above the investable level for the first time after 18 years. Expectations regarding the Coming Period In its report "Global Economic Outlook 2013", the World Bank has estimated that the Turkish economy will grow by 4% in 2013, while mentioning that Turkey has made a considerable progress in decreasing the acceleration of inflation. It is estimated in the report that the Turkish economy will grow by 4% in 2013, 4.5% in 2014, and 5% in 2015. The report also estimates Turkey's current account deficit to GDP ratio as 7% in 2013, 6.8% in 2014, and 6.5% in 2015.
Insurance Sector in the Year 2012 According to the data released by the Association of Insurance and Reinsurance Companies of Turkey (TSRSB), the recorded premiums-to-GDP ratio is 6.6% globally and 2.7% in the developing countries, while this figure is only 1.3% in Turkey. The premium production per capita, on the other hand, is 661 dollars in the US, 2,757 dollars on average in the EU, while it is just 136 dollars in Turkey. The premium production of the Turkish insurance sector is TRY 19.8 billion at the end of 2012 compared with TRY 17.2 billion at the end of 2011. At the end of 2012, the non-life premium production rose TRY 17.1 billion, indicating a 18.21% YoY increased, while the life premium increase became TRY 2.7 billion, indicating a 0.94% YoY increase. At the end of 2012, the vehicle insurance accountable for 23.7% of the sector was the branch that produced the most of the premiums. The liability insurance branch has ranked the second with a market share of 22.38% to be followed by the life branch at the third rank with 13.67% and the fire and natural disasters branch at the fourth rank with 13.34%. Private Pension System According to the update published by the Pension Monitoring Center (PMC) on December 28th, 2012, the total fund size of the private pension system is TRY 20 billion 326 million 425 thousand 746, while the total number of participants has reached 3 million 119 thousand 033. The pension funds to GDP ratio is about 65% in the OECD countries compared with 2.5% in Turkey, a ratio indicating a clear growth potential for the sector. The upgrade of Turkey's credit rating to 'investable level' by the international credit rating agency Fitch Ratings indicates the stability and confidence in the markets, and spreads the opinion that the returns in the market will be better and affect the private pension sector positively. 17
Finans Emeklilik - 2012 Annual Report
Assessment of Finans Emeklilik’s Activities in 2012 and the Company’s Position in the Sector Commencing operations in November 2007, Finans Emeklilik ve Hayat A.Ş. (Finans Emeklilik) is a dynamic, innovative, competitive and effective company that provides services at international standards in the private pension, life and accident insurance branches. Making a rapid entry into the sector in 2007, Finans Emeklilik strengthened its position in private pension, life and accident branches in the sector in 2012 by further enhancing the synergy it has created with Finansbank, its main shareholder and distribution channel. Finans Emeklilik provides the highest quality and reliable service to its customers, and will continue to do so, backed by the wealth of knowledge and 26-years of experience of its main shareholder, Finansbank, with its widespread branch network, competent and experienced human resources and sound financial structure. Having entered the private pension sector at the end of 2008, Finans Emeklilik has a 2.37% market share in the private pension branch in terms of the number of new participants and ranked 10th in the sector with a total 73,473 participants in total, according to the data published by the Pension Monitoring Center (PMC) on December 28th, 2012. According to the same data, Finans Emeklilik, with a total of 80,315 pension contracts, held a 2.3% market share in the sector in terms of the number of pension contracts. According to figures pertaining to the end of December 2012, released by the Association of Insurance and Reinsurance & Pension Companies of Turkey (TSREŞB), Finans Emeklilik raised its market share in life insurance by 0.73% points to 5.94% to rank 7th in the sector in terms of life insurance premium production, having produced a total amount of TRY 161,040,971 in premiums. As of the same date, Finans Emeklilik had a total of 1,628,542 insureds in life and accident business lines. Having issued its first private pension contract on November 30th, 2008, Finans Emeklilik aims to provide the best service to its customers as a pension and life insurance company, which is customer-oriented, innovative and dynamic, which demonstrates rapid and sustainable growth and which makes a difference in the sector. 18
Alternative Sales Channels and Corporate Sales Coordination Activities Alternative Sales Channels »» Sales of the CardFinans Payment Protection product, that began to be sold in May 2010 in cooperation with Finansbank through an outsourced call center services provider contracted with Finansbank, continued in 2012. • The 'Pomegranate Arils' campaign has been held for the outsourced call center services provider’s sales teams since the last quarter of 2012 in order to increase and positively affect sales, and raise the motivation. • Finans Emeklilik began to conduct pilot studies for the sale of different life insurance products, in addition to the CardFinans Payment Protection product. • As of the 2012 Q4, a new productbased data modeling has been made with Finansbank to increase the productivity. Depending on the data modeling, the sales consultants awarding methods have been revised. »» As of the year 2012, the sales of CardFinans Payment Protection product has been accelerated on the tablets used prevalently in Finansbank's Direct Sales Channel. Within this scope, sales activities were coordinated; sale quality was regularly monitored by keeping view of the performance of sales teams; and training sessions were organized for the sales teams. »» Finans Emeklilik held regular sales campaigns that encourage the gathering of requests for the life insurance product, “CardFinans Payment Protection”, through various alternative sales channels, such as the Finansbank’s call center, Internet branch, ATMs, etc. For turning the requests into actual sales, the outsourced call center services provider contacted those customers who had submitted their requests. »» In cooperation with Finansbank, our primary distribution channel, we made
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product improvements and planned new products, while monitoring and improving the performance of the existing life insurance products sold through the alternative sales/distribution channels. Moreover, we regularly measured the quality of sold products and the aftersales services (quality control calls and call listening), improved the collection process, performed site visits where we held meetings with product managers and sales teams, developed and provided regular product training to sales teams, designed and implemented activities and campaigns aimed at increasing sales, as well as implementing projects that would ensure the continuity of customer satisfaction. Corporate Sales Coordination Activities Finans Emeklilik’s product sales focused on all of Finansbank’s profit centers in 2012 - its primary distribution channel - that were deemed to have legal entity customer potential. In this context, Finans Emeklilik conducted sales activities and efforts aimed at improving its legal and technological infrastructure in order to raise the participation of corporate customers and to carve itself a sound position in terms of group private pension contracts and employercontributed group pension plans. As a result of these efforts, the Company reached a total of around 750 groups. Finans Emeklilik raised the awareness of commercial and corporate profit centers of Finansbank for the legal entity customer portfolio, which also offers significant potential in terms of life insurance, and directed their focus on the sales of life insurance products. Within this scope, the Company organized activities aimed at increasing the sale of life insurance products, and gaining significant momentum in life insurance premium production.
»» Finans Emeklilik maintained its promotion activities and sales in Finansbank and each of its subsidiaries, with full coordination, to sell group pension contracts within the framework of the Group Private Pension Plan (GPPP) for the Finansbank employees and its subsidiaries’ employees, which was prepared aiming to cover nearly 12,000 people employed by Finansbank and its subsidiaries, and the relatives of those employees as the participants to the private pension system. The Company continued to painstakingly provide seamless after-sales services to all employees of Finansbank and its subsidiaries, and their relatives, who hold GPPP in order to make the quality of service permanent and to raise and maintain customer satisfaction. The Company organized various activities in coordination with group founders and different units of the Company in a bid to increase the contributions of those existing participants holding group private pension contracts. In that way we aimed to maximize the benefits for the participants provided by the product. »» Finans Emeklilik defined a number of legal entities as “Group Founders” within the system in line with the sales strategies and business flow processes which it had set out, and included employees employed by Finansbank’s pay roll customers and their relatives in the system through group private pension contracts by cooperating with the profit centers of Finansbank to which the Company sells GPPP. These profit centers represent the pay roll customers’ employees of Finansbank as well as the bank’s associates holding portfolios that comprise of all other legal entities related to them by any means other than salary payment. For existing GPPP participants, Finans Emeklilik organized and managed various sales campaigns and other activities aimed at increasing sales, contributions and the rate of participation in group pension plans through calls from the call center, short messages, electronic mails, visual promotion and similar marketing methods. For the existing participants of the group 19
Finans Emeklilik - 2012 Annual Report
private pension contracts, the number of which had reached nearly 750 by the end of 2012, the Company painstakingly continued to provide seamless aftersales services in a bid to ensure a longlasting quality of service while raising and maintaining customer satisfaction.
»» In the second half of the year 2012, Finans Emeklilik designed a special pension plan called FinansMaaş for the pay roll customers of the Bank, thus focusing on these firms and enabling their employees to benefit from this special plan. Upon development of the FinansMaaş plan, the volume of the actual corporate sales promotion and communications works has also increased. »» Finans Emeklilik maintained the necessary sales activities throughout the year aimed at increasing the sales performance of the Noncontributory Group Pension Contracts (NCGPC). Within the framework of these pension plans, we have entered into joint activities with Finansbank to serve private banking customers who use the bank to receive their salaries, as well as with Finansbank’s profit centers that serve all corporate customers of the bank. As a result of the collaboration with the Mass and SME profit centers as well as the bank’s commercial and corporate profit centers, we signed employer- contributed group pension contracts with 155 sponsors in 2012. »» Plans were set out and various activities conducted to ensure that group life insurance policies could be offered to the legal entity customer portfolios of Finansbank profit centers in question regarding group pension plans, thanks especially to the synergy established with Finansbank’s commercial profit centers. With the sales campaign conducted at the last quarter of the year especially, Finans Emeklilik ensured continuous premium production in the life insurance branch for Finansbank’s commercial profit center as well. »» Thanks to the cooperation built with Finansbank’s commercial and corporate 20
profit centers, Finans Emeklilik carried out joint activities with Finansbank based on the consensus reached with respect to improving existing products in the respective segment and the banking products that are used, as well as the planning of new products, determination of sales targets, performance monitoring, reporting and execution of new activities aimed at increasing sales and maximizing the penetration into the legal entity customers.
Sales and Knowledge Development Activities Licensing Efforts In 2012, the Sales and Knowledge Development Unit continued to provide individual mediation licenses to the employees employed in the Finansbank branches, the only and primary distribution channel of Finans Emeklilik. Four examinations were made in the year 2012, and the Finansbank employees who would take these exams had received trainings on licensing since October. The first one of these examinations was made October 4-5-6-7, 2012 and the second one on November 23-24-25-26, 2012 with a great success. In consequence of the examinations made, the number of the employees holding individual mediation licenses and the number of the Finansbank branches where these employees are employed have continued to increase. The joint target of Finans Emeklilik and Finansbank is to ensure there is at least one employee holding an individual mediation license in each Finansbank branch by the end of 2013. Training of Sales Teams In 2012, the Sales and Knowledge Development Unit, in coordination with the Human Resources group, organized training programs that were deemed to contribute to the increase in performance of the sales teams responsible for Finansbank branches and raise their professional knowledge and talents.
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Training of the Employees Employed in Finansbank Branches Finans Emeklilik planned training programs on insurance and private pension products in coordination with Finansbank’s Training Unit for the employees employed in Finansbank branches. Performance of Sales Teams In 2012, the Sales and Knowledge Development Unit carried out activities aimed at improving the regional organization of sales teams responsible for Finansbank branches and promoting loyalty within the branches and monitoring their sales performance and development. The Unit also organized various campaigns, contests and awarding systems aimed at increasing sales teams’ performance and motivation. The Sales and Knowledge Development Unit also employed regular monitoring and supporting mechanisms as required for the sales team to gain faster and high-quality service from the respective units in the head office.
Information on Research & Development Practices concerning New Services and Activities Marketing Activities Product Development Activities The year 2012 was the year of intense efforts to implement the Core Integration project, which aims at allowing the Finansbank branch employees to issue the Finans Emeklilik insurance policies more easily, understandably and by entering less data through the policy issuing screen prepared on the Core Finans instead of using the applications other than Core Finans. At the first stage of the project, all branches have been enabled to issue life insurance policies connected with loans on Core Finans screens, and print out the policies and/or applications from the system. The 2nd stage works are continuing, and the target at the 2nd stage is to be able to issue policies connected or not connected with the loans on the screens independent of the loan processes.
We have started the e-mail marketing to deliver the company's marketing messages to potential or current customers economically. With these activities, it is targeted to have loyal customers by increasing the satisfaction of the current customers, ensuring that the current customers buy again, and create customer demands to be turned into sale. The customers are also sent greetings messages on religious festival days, special days, and birthdays. Consistently attaching special importance and priority to new product development efforts aimed at meeting ever-changing and more demanding customer needs, Finans Emeklilik pressed ahead unstintingly with its new product development efforts in the life insurance and private pension business lines in 2012. Through the strategic cooperation established and executed with Finansbank, the Company’s primary distribution channel, Finans Emeklilik, in its 5th year of operation in the sector, created a diversified range of private pension and life insurance products which are able to meet Finansbank customers’ expectations and needs in different segments. Also, with respect to the management of pension mutual funds and operational transactions, Finans Emeklilik works in close cooperation with Finans Portföy and Finans Yatırım, which are both Finansbank Group Companies. In Life Insurance... By adding new products to its current range of products available to its individual customers, in addition to credit-linked life insurance products, Finans Emeklilik further enhanced its product diversification in this area in 2012. Considering the high amount required to treat the cancer disease which has been spreading especially in recent years, the Cancer Protection One-Year Term Life Insurance, which is the new individual product of Finans Emeklilik, has been developed to meet this demand. In 2012, Finans Emeklilik added the following products to its range of life insurance products: 21
Finans Emeklilik - 2012 Annual Report
»» “Cancer Protection One-Year Term Life Insurance”, which offers individual policyholders the benefit for cancer, the most scary illness of the present day, within the scope of the Critical Illness Benefit. Services under the Private Pension System (PPS)... In 2012, Finans Emeklilik continued to sell pension contracts under various private pension plans which the Company began to sell intensively from February 2009. Finans Emeklilik’s private pension plans are structured in three categories identified as "B”, “C”, the Easy Retirement Plan, the Capital Pension Plan which requires payment of an initial minimum amount of contribution, the Elite Pension Plan designed for participants in the middle and upper income levels and who would like to utilize their savings in the private pension system, and the Private Banking Customer Pension Plan designed for participants in the upper income level and are seeking to utilize their savings in the private pension system. Each of the plans has been tailored to different customer groups with different risk profiles under separate strategy groups. In 2012, Finans Emeklilik increased the number of private pension plans in its product range from 6 to 7 by adding the FinansMaaş Pension Plan designed for Finansbank's pay roll customers. In 2012 Finans Emeklilik added the following product to its private pension product range: »» FinansMaaş Pension Plan designed for Finansbank's pay roll customers. Analytical Marketing Activities Having carried out its operations under the Marketing Group in 2012, the Analytical Marketing Unit is responsible for the planning, coordination and directing the strategic marketing activities of Finans Emeklilik by making use of different analysis tools and methods. 22
The Analytical Marketing Unit: »» Designs projects deemed to generate added value for Finans Emeklilik by supporting the Company’s sales channels in order to ensure that the right product is offered to the right customer through the right sales channel by using the information pertaining to internal and external customers as well as the information management system; »» Provides project management support to the respective units, as part of its efforts to ensure quality and continuity of data exchange between units, by making use of the existing information management system in order to rapidly cover the needs during the development of new projects, being aware of the technical and reporting capabilities of the software used by Finans Emeklilik; »» Provides service support to the Company’s senior management during the decisionmaking process by analyzing domestic and foreign sector data in the life insurance and pension categories and by examining the status of the market, sector’s growth and sector-specific behavior in order to evaluate the market according to its dynamics; »» Ensures the necessary activities are performed in order to understand the most effective (sales) channel of target customers by analyzing Finans Emeklilik’s customer profile and the tendency of customers; aims to determine other products required by Finans Emeklilik customers in addition to the existing products, as well as to ensure these products are offered to the customers through cross-selling, thus increasing the added value generated for the Company; »» Carries out segmentation efforts -its primary field of activity- and makes effective use of the information management system to acquire new data within the scope of such segmentation efforts by confirming and updating the accuracy of the information of existing customers, in order to support sales and distribution channels;
Presentation
»» Prepares data in accordance with the pre-determined criteria for specific product groups, and submits the data to the related system or unit such that it can be processed by sales units in creating new customer potential; Carries out checking, monitoring, analysis and reporting on a regular basis to maintain existing customers and to increase the added value generated by them; »» Manages, controls and monitors the processes related to the preparation of ad hoc and routine reports at the designated time and frequency for the management of Finans Emeklilik and Finansbank, establishment of coordination between units, determining, updating and testing the infrastructure needs. Also designs and automatizes the required infrastructure of Finansbank Campaigns carried out periodically. »» Ensures management, development, system integration and control of the Finansbank branch and alternative sales channels employees commission systems as well as delivery of the progress payment bills to Finansbank Human Resources group correctly and in due time. Receives and solves all the relevant questions and problems. »» Designs the infrastructure allowing monitoring on branch basis and carries out works aiming to increase the branch productivity. Also monitors productivity of the sales channels and analyzes the interchannel profitability. »» Ensures that the campaign-based data are prepared and loaded to the Reference monitoring module available to Finans Emeklilik sales teams through the system, and monitors the sales results.
Finans Emeklilik’s Brand and Corporate Communication Strategy As an innovative, modern and sincere company with its standing, integrity, style and proximity to its customers, Finans Emeklilik planned its brand and communication strategies in 2012 in parallel with the Company’s general strategy of “Customer Orientation” and carried out its operations, accordingly, as is the case with every year. Finans Emeklilik acts in line with its permanent growth target, aiming to fully meet its customers’ changing standards of judgment, as well as their new needs and requests, a natural result of the significant changes currently occurring socially, culturally, economically and technologically. The Company has taken important steps to raise public awareness of life insurance and private pension products and systems in the year 2012 as well. Within this scope, the Company has intensified its efforts to raise public awareness and recognition on the importance of insurance, continuing the customer communication in parallel with its brand strategies with a point of view of providing useful and reliable information on insurance. Finans Emeklilik has worked intensively in the area of PPS, in line with its brand and communication strategies created for 2012, and has prepared written and visual materials that promote an awareness that the PPS was set up so that individuals can save as of today for their retirement; it is a long-term investment system; and what is important is to save starting from today for retirement. In the life insurance branch, on the other hand, the Company has concentrated on communication activities which inform individuals of the importance of substantially securing themselves and their loved ones, and explaining the benefits of life insurance products to policyholders and those closest to them in the event of lifethreatening risks 23
Finans Emeklilik - 2012 Annual Report
In the private pension system, in which product diversification is limited, Finans Emeklilik, with the model it has created, draws attention to the fact that creating brand preference, brand loyalty and customer loyalty over time -by ensuring brand recognition- is as important as offering a reliable and high-quality service. Within the framework of brand and communication activities actively carried out in 2012, the Company: »» Laid down the foundations of its communication activities carried out under the motto, “Plan Your Retirement Right from Today”, which stressed the importance of the Private Pension System while at the same time producing added value in terms of raising the recognition of both the product and the system; provided an important support for increasing the brand awareness by using visual promotion materials that fit the new motto. »» Sent regular communication bulletins to Finans Emeklilik and Finansbank employees throughout the year so that the Company's periodic situation, business models, sales strategies and processes are understood better internal customer and to provide support to that end. »» Prepared general and tailored written and visual communication activities at various platforms regarding the features of pension and life insurance products developed newly; »» Performed marketing projects that raise customer loyalty by ensuring the establishment of personal communication with customers. Finans Emeklilik’s marketing and corporate communication strategy in 2013 is again to be a company, which is competitive, innovative and creative, which listens to its customers, which attaches importance to communication with customers and improvement of contact points, and which remains “preferred and trustworthy” among its customers. 24
Placing the effective promotion of its brand and products to its internal and external customers and thus establishing sound relations based on trust with its customers as a key priority in its marketing-brand and communication activities, Finans Emeklilik will maintain its activities in 2013 with the same approach.
Operational Activities in Insurance and Private Pension Businesses Issued all contracts addenda related to life insurance and private pension contracts, and prepared and delivered all certificates, contracts and collection vouchers to their respective policyholders and participants in the scope of activities of the Operations and After-Sales Services Unit in 2012. Issued a total of 32,858 participation certificates, including creditor group life insurances, employer group life insurance policies and discretionary bancassurance products and customers’ group life insurance and group personal accident insurance products as part of entering data from the life insurance application forms, participation certificates and policy information into the IT system; and 42,234 addenda within the scope of the life insurance operations. Sent 477,789 policies/ certificates and 32,882 receipts within the scope of the life insurance policies production in the year 2012. Performed general checks of private pension proposal forms and entered a total of 30,917 new pension contracts (both contributory pension contracts and private pension contracts) into the IT system, issued 61,971 addenda within the scope of the private pension operations.
Presentation
Assumed responsibility for establishing coordination with the insurance-related units of Finansbank our main distribution channel and our own sales teams, in order to ensure that work flows are executed and developed in a sound manner. Maintained the project works in the year 2012 so that the work flows can be monitored on a measurable platform and the work quality can be increased.
»» Informing users and handling the procedures involved in obtaining passwords for use on the Finans Emeklilik online branch website,
Call Center Activities
»» Regularly monitoring of the communication information of policyholders or participants registered in the Company’s IT infrastructure; and updating such information, if necessary,
Having entered operation in September 2008, the Finans Emeklilik Call Center continues to provide service to its customers by telephone at 444 0 984.
»» Conducting quality control calls for participants who have filled in the private pension proposal form,
Thanks to the technological infrastructure investments made in 2012, the call center assumed more active responsibility not only in call center activities, but also in operational transactions. The competence of operators was enhanced through regular training sessions on products and legislation. The training sessions were held for the Call Center employees. In the year 2012, we started to use modern and up-to-date measuring methods to observe and evaluated the call center employees activities systematically. With the scorecard application, the operators are allowed to evaluate their own performances by listening their own phone interviews. Thus, attainment of the total quality target has been ensured by enabling the whole call center employees to act in integration as a team. Finans Emeklilik Call Center’s activities in 2012 can be summarized as follows:
»» Contacting and informing participants by phone about their overdue contribution installation amounts they had not paid by the due date, receiving information concerning their new payment instruments, if necessary, and thus ensuring the continuity of payments within the framework of collection enhancing activities in the private pension branch; also calling participants to increase their contributions in order to expand the size of the accumulation amount in the private pension funds. »» In July 2012, we started to call the participants who want to leave early the private pension system to inform and convince them to stay in the system.
»» Receiving and settling policyholder or participant requests and complaints in a timely manner, and directing them to the appropriate units for resolution, if necessary,
»» Conducting calls to update and confirm the private pension participants' addresses for documents which have been sent, but which have not been submitted.
»» Providing information on a regular basis about the Company’s life insurance and private pension products to policyholders and participants,
»» Recording the operational activities of the Call Center through electronic means and by regularly checking and reporting all work done by the operators. 25
Finans Emeklilik - 2012 Annual Report
Customer Services Activities In 2009, Finans Emeklilik began to send SMS messages to policyholders who own group life insurance participation certificates and to participants who hold private pension contracts, informing them about the premiums and contributions collections of the product(s) they own. We continued this activity regularly in 2012 as well. Working in a well-coordinated business model, both the Operations and After-Sales Services Unit and Call Center play a key role in ensuring that the requirements of policyholders and participants are met by Finans Emeklilik within predetermined periods of time. The After-Sales Services Unit receives requests for information on our products and services received from our policyholders and participants through e-mail, and it is the contact unit for the people who want to be informed on the products and services of Finans Emeklilik. The After-Sales Services Unit was commissioned as the department responsible for the evaluation of customer complaints. Within this framework, the unit receives and evaluates customer complaints, directs them to the related units and forwards responses that include information pertaining to the results of the evaluation related to the complaint to the complainant/relevant institution. Information concerning the complaints in question is fully obtained and reported to Finans Emeklilik Senior Management and the Prime Ministry Undersecretariat of the Treasury within the time limits specified in the legislation. IT (Information Technologies) Activities Always attaching importance and priority to ever changing and developing customer needs, Finans Emeklilik set up a roadmap setting out improvements in its system infrastructure in 2012, and conducted new projects in line with this roadmap. Within the framework of these activities, the Company: »» Added new, unique and flexible products to ever its range of private pension and life insurance products with different properties; »» Special screens designed for the branch managers to enable them to make observations. 26
»» In the new generation internet banking application developed by Finansbank, the viewing and revising screens for the company products have been made available. »» In the Private Pension System, the works for the State Contribution practice have been completed on time and the practice has been made available, and new withholding tax arrangement has been put into practice. »» The works for producing policies on the online FEHAS by selling the policies on Finansbank's “Core” application have been completed. »» The works to print out the application forms for the credit-link, discretionary, individual term life insurance over the system have been completed. »» The systemic works related to the new Commercial Code have been completed. All of the projects, data structure, security policy and system infrastructure of the IT Unit were audited by COBIT, and no adverse findings were identified. All projects were designed by taking criteria such as high speed and low cost into account. Here, the main approach is to minimize at all times the user’s risk of making a mistake during production. Thanks to the special screens designed for the call center, customers’ requests and complaints are recorded and solutions are rapidly produced for problems, thus shortening waiting times. Applications are checked and monitored via regular reporting activities. In 2012, a total of 4,563 requests were submitted to the System Analysis resolution team of the IT Unit, 1,100 requests to the IT Support Team that covered all requests and instantly informed the respective users. User speed was increased by raising the data line speed of regional offices to 2 MB/s. All users' machines were shifted to Microsoft Windows 7 successfully.
Presentation
Assessment of our Technical and Actuarial Activities As of 31.12.2012, the total number of life insurance policies and participation certificates in effect was 1,671,515, while the total life insurance premium production amounted to TRY 161,040,971. As of 31.12.2012, in the accident insurance business line, the total number of personal accident insurance participation certificates was 463, while total premium production amounted to TRY 77,657.
As of 31.12.2012, of the 1,671,515 life insurance policies and participation certificates, the average amount of Death Benefit was equal to TRY 9,139. A breakdown of policyholders in the life insurance business line is shown in the following table. As seen in the table, guarantees are predominantly given to policyholders aged between 28 and 47.
Breakdown of Death Benefit Amounts in Life Insurances in Force by Age Group as of 31.12.2012 Age 18-27
Individual
Group
Total Death Benefit (TRY)
Ratio (%)
317,568,748
1,387,472,109
1,705,040,857
11
28-37
573,380,000
5,077,982,476
5,651,362,476
37
38-47
285,989,873
4,260,744,549
4,546,734,422
30
48-57
85,273,074
2,553,008,573
2,638,281,647
17
58-67
11,617,047
713,659,890
725,276,937
5
68-77
296,500
9,468,243
9,764,743
0
78-87
0
21,000
21,000
0
1,274,125,242
14,002,356,841
15,276,482,083
100
Total
As of 31.12.2012, the sum of death benefits belonging to the life insurances in force amounts to TRY 15,276,482,083.
Breakdown of Number of Group Life Insurance Participation Certificates and Total Amounts of Death Benefits by Insurance Duration as of 31.12.2012: Duration of Insurance
Number of Policies/Certificates
Total Death Benefit (TRY)
1 Year
663,418
5,541,571,309
2-5 Years
961,416
7,263,345,469
46,218
2,443,917,579
5-10 Years More than 10 Years Total
463
27,647,726
1,671,515
15,276,482,083
As of 31.12.2012, the total number of individual life insurance policies in force was 49,912, while the total individual life insurance premium production amounted to TRY 7,669,467. As of the same date, the total number of Long-Term Individual Life Insurance policies in force was 900, while the total Long-Term Individual Life Insurance premium production amounted to TRY 232,720. Two pension plans were defined in the e-plan system through the PMC (Pension Monitoring Center) system. After the approval by the system, Finans Emeklilik began to sell these products. 27
Finans Emeklilik - 2012 Annual Report
Explanations on the Private and Public Inspections made within the Accounting Period The information on the public and private inspections of Finans Emeklilik ve Hayat A.Ş. in the accounting period 2012 is as follows. Public Inspections 1. R.O.T. Prime Ministry Undersecretariat of Treasury Insurance Inspection Board Insurance Inspector Serkan Şenol Şentürk issued on 8.6.2012 his report titled “Inspection of the Subsidiary Finans Emeklilik ve Hayat A.Ş. within the scope of the Consolidated Inspection of Finansbank A.Ş”.
3. R.O.T. Prime Ministry Undersecretariat of Treasury Insurance Inspection Board Insurance Inspection Actuary Meltem Kılıç has been continuing its inspections of Finansbank A.Ş. and Finans Emeklilik ve Hayat A.Ş. started in 2012, and no report on this inspection has been delivered to us yet.
2. Insurance Inspection Board Chief Inspector Esin Odabaşıoğlu, on the other hand, has inspected the accounts, transactions and activities of Finans Emeklilik ve Hayat A.Ş. pension mutual funds in the year 2011. The records related to this inspection was delivered to our company on 09.11.2012.
4. The Competition Agency Presidency conducted an onsite inspection on 13.06.2012, and in the Competition Board decision dated 18.07.2012, it has been decided to decline the allegations in the inspection file.
28
Presentation
Private Inspections 1. Within the accounting period, DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. conducted the following audits. a) Independent external audits, in accordance with the "Regulation on Independent Audit in the Insurance and Reinsurance and Pension Companies" published in the Official Gazette dated July 12, 2008 and numbered 26934, of the financial statements prepared by the Company in compliance with the accounting principles and standards set by the regulations effective under the Insurance Law number 5684 and the Private Pension Savings and Investment System Law number 4632 and with the explanations and principles delivered by R.O.T. Prime Ministry Undersecretariat of Treasury. b) Independent audits of the financial statements prepared for consolidation of Finansbank A.Ş. that is the shareholder of the company in compliance with the International Financial Reporting Standards. c) Independent audits of the financial package of the Company to be included in the consolidation works of Finansbank A.Ş., a shareholder of the company, to be carried out by the Banking Regulation and Supervision Agency (BDDK), prepared in accordance with Turkish Accounting
Standards and Turkish Financial Reporting Standards and Turkish Financial Reporting Standards specified in the regulation on the principles and procedures relating to Accounting Practices of Banks and Preservation of Documents" published by BDDK and on the force under article 37 and 38 of the Banking Law number 5411. 2. Başaran Nas Yeminli Mali Müşavirlik A.Ş. has verified the inspection and attestation of the annual income and corporate tax returns and the financial statements and declarations attached thereto and/or of the other works under the Law number 3568 and the relevant legislation. 3. DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. has evaluated the efficiency, competency and compatibility of our company's information systems as well as the control mechanism designed and implemented on the financial data production processes and systems on the basis of the "Regulation on Inspection of the Bank Information Systems and Banking Process by Independent Inspection Firms" published by the Banking Regulation and Supervision Board in the Official Gazette dated January 13, 2010 and numbered 27461.
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Finans Emeklilik - 2012 Annual Report
Independent Auditors’ Compliance Opinion on Annual Report
To the General Assembly of Finans Emeklilik ve Hayat A.Ş.;
We have audited the accuracy and compliance of financial information provided in the accompanying annual activity report of Finans Emeklilik ve Hayat A.Ş.(“the Company”) with the audit report issued as of 31 December 2012. The Company management is responsible for the annual activity report. As independent auditors, our responsibility is to express an opinion on the compliance of the financial information provided in the annual activity report with the audited financial statements and explanatory notes. We conducted our audit in accordance with the principles and procedures of preparing and issuing annual activity reports and standards on auditing as set out by the Insurance Law No: 5684. Those standards require that we plan and perform our audit to obtain reasonable assurance whether the annual activity report is free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the financial information provided in the accompanying annual activity report is in compliance with the audited financial statements and explanatory notes and presents fairly, in all material respects, the financial position of Finans Emeklilik ve Hayat A.Ş. as of 31 December 2012 in accordance with the applicable accounting principles and standards issued based on insurance laws and regulations and includes the summary Management report and our audit opinion on these financial statements. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED
Müjde Şehsuvaroğlu Partner İstanbul, 12 March 2013
30
INFORMATION ON THE MANAGEMENT AND THE CORPORATE GOVERNANCE PRACTICES
Finans Emeklilik - 2012 Annual Report
Board of Directors
Dr. Mehmet Ömer Arif ARAS
Chairman
Jason Dominic SADLER
Deputy Chairman
Brian Case EVANKO
Member
Erkin AYDIN
Member
David Jerry FIKE
Member and General Manager
Information about the Attendance of Members of the Board of Directors to the Board Meetings during the Accounting Period Members of the Board of Directors of the Company attended regularly held Board Meetings.
Senior Management
David Jerry Fike General Manager
Merve Ayşen Özalp Senior Vice President
Çapkın Ersoy
Senior Vice President
32
Ajlan Sözütek
Executive Vice President
Serkan Ersoy
Senior Vice President
Aslı Öztürk
Senior Vice President
Aşkın Düşündere
Executive Vice President
İsmail Aydemir
Senior Vice President
Beyhan Tuncay
Senior Vice President
Ayfer Saltan Oladi
Executive Vice President
Zuhal Karan
Senior Vice President
Hakan Kahraman
Senior Vice President
Information on the Management and the Corporate Governance Practices
Names, Surnames, Terms of Duty, Responsibilities, Educational Backgrounds and Professional Experiences of Chairman and Members of the Board of Directors, General Manager, Executive Vice Presidents and Managers of Internal Audit Systems Units Name and Surname
Professional Experience Communication Coordinates (Year)
Duty / Position
Education
Chairman
PhD
34
Address: Büyükdere Cad. No: 129 Mecidiyeköy / Istanbul Tel: 0 212 318 50 20 Fax: 0 212 318 50 16 E-mail: omer.aras@finansbank.com.tr
Vice Chairman
Bachelor's Degree
22
Address: 17/F, Sunning Plaza, 10 Hysan Avenue, Causeway Bay, Hong Kong Tel: +(852) 22975128 Fax: +(852) 3412 1929 E-mail: jasond.sadler@cigna.com
Brian Case EVANKO
Member
Bachelor's Degree
14
Address: 25/F, Sunning Plaza, 10 Hysan Avenue, Causeway Bay, Hong Kong Tel: +1 522.297.5148 Fax: +(852) 3412 1929 E-mail: brian.evanko@cigna.com
Erkin AYDIN
Member
Master’s Degree
14
Address: Büyükdere Cad. No: 129 Mecidiyeköy / Istanbul Tel: 0 212 318 56 04 Fax: 0 212 318 56 90 E-mail: erkin.aydin@finansbank.com.tr
David Jerry FIKE
General Manager Member Senior Management
Bachelor's Degree
24
Address: Sahrayıcedit Mah. Halk Sk. No:48 34734 Kadıköy/Istanbul Tel: 0 216 468 04 85 Fax: 0 216 368 74 16 E-mail: david.fike@finansemeklilik.com.tr
Ajlan SÖZÜTEK
Deputy General Manager Senior Management
Bachelor's Degree
24
Address: Sahrayıcedit Mah. Halk Sk. No:48 34734 Kadıköy/Istanbul Tel: 0 216 468 03 83 Fax: 0 216 368 74 16 E-mail: ajlan.sozutek@finansemeklilik.com.tr
24
Address: Sahrayıcedit Mah. Halk Sk. No:48 34734 Kadıköy/Istanbul Tel: 0 216 468 03 14 Fax: 0 216 368 74 16 E-mail: askin.dusundere@finansemeklilik.com.tr
21
Address: Sahrayıcedit Mah. Halk Sk. No:48 34734 Kadıköy/Istanbul Tel: 0 216 468 03 15 Fax: 0 216 368 74 16 E-mail: ayfer.saltan@finansemeklilik.com.tr
Dr. Mehmet Ömer Arif ARAS
Jason Dominic SADLER
Aşkın DÜŞÜNDERE
Finans Emeklilik ve Hayat A.Ş. Executive Vice President Bachelor's Technical, Financial, Legal Degree and HR
Ayfer SALTAN
Finans Emeklilik ve Hayat A.Ş. Executive Vice President Bachelor's IT & Process Development, Degree Operations and ASS
Beyhan TUNCAY
Finans Emeklilik ve Hayat A.Ş. Senior Vice President Internal Audit
Master’s Degree
13
Address: Sahrayıcedit Mah. Halk Sk. No:48 34734 Kadıköy/Istanbul Tel: 0 216 468 04 52 Fax: 0 216 368 74 16 E-mail: beyhan.tuncay@finansemeklilik.com.tr
Term of Duty and Professional Experience of the Auditors Duty / Position
Education
Professional Experience (Year)
Ümit SÖNMEZ
Statutory Auditor
Bachelor's Degree
11
Address: Büyükdere Cad. No: 129 Mecidiyeköy / Istanbul Tel : 0 212 318 59 83 Fax: 0 212 318 55 78 E-mail: umit.sonmez@finansbank.com.tr
Berran GÜNDOĞU
Statutory Auditor
Bachelor's Degree
10
Address: Büyükdere Cad. No: 129 Mecidiyeköy / Istanbul Tel: 0 212 318 55 57 Fax: 0 212 318 55 78 E-mail:berran.gundogu@finansbank.com.tr
Name and Surname
Communication Coordinates
33
Finans Emeklilik - 2012 Annual Report
Organization Chart
Board Member responsible for Prevention of Laundering Proceeds of Crime and Financing of Terrorism Brian Case Evanko
Board of Directors
Responsible/ Consultant Actuary Ertan Tan
Compliance Officer Atty. Zeynep Reva
General Manager TBA
Internal Control Manager Atilla Konar Risk Management Assistant Supervisor İsa Coşkun Göde
Technical and Actuarial, Financial Control and Reporting, Legal and Compliance and HR EVP Aşkın Düşündere
HR, Adm. Affairs and Purchasing SVP Zuhal Karan
Financial Control and Reporting Senior Vice President Serkan Ersoy
Accounting Vice President Aytuğ Karaahmet
Regional Representative Office of Bosphorus Regional Manager Ebru Güven
34
Sales, Marketing, ADC and Business Development Executive Vice President TBA
Technical and Actuarial Senior Vice President Ismail Aydemir
Legal and Compliance Vice President Atty. Zeynep Reva
Executive Vice President Ajlan Sözütek
Fund Management Vice President Elif Bilmez
Alternative Sales Channels and Corporate Sales Coordination Senior Vice President Merve Ayşen Özalp
Alternative Sales Channels Vice President Dilşad Özbaşoğlu
Sales and Knowledge Development Vice President Orhan Kaçar
Regional Representative Office of Istanbul Anatolia and Marmara Regional Manager Erkan Kanca
Marketing Senior Vice President Çapkın Ersoy
Product Management VP Başak Evrim Şengül Analytical Marketing Vice President Volkan Bora
Regional Representative Office of Istanbul Europe Regional Manager Fırat Çuvalcı
Representative Office of Anatolia 1 Regional Sales Manager Sibel Mutlu
Representative Office of Anatolia 2 Regional Sales Manager Görkem Uygur
Representative Office of Europe 2 Regional Sales Manager Aslıhan Sert
Representative Office of Europe 1 Regional Sales Manager Erhan Aksu
Representative Office of Marmara Regional Sales Manager TBA
Representative Office of Europe 3 Regional Sales Manager TBA
Regional Corporate Sales Supervisor
Regional Corporate Sales Supervisor
Regional Corporate Sales Supervisor
Information on the Management and the Corporate Governance Practices
Dated 31.12.2012 Finans Emeklilik ve Hayat A.Ş. Organization Chart
Board Member responsible for Prevention of Laundering Proceeds of Crime and Financing of Terrorism Erkin Aydın
Internal Audit SVP Beyhan Tuncay
IT, Process Development, Operations and ASS Executive Vice President Ayfer Saltan Oladi
Operations and After-Sales Services SVP Hakan Kahraman
Information Technologies Senior Vice President Aslı Öztürk
Process Development Vice President Azime Petek Celep
Regional Representative Office of Istanbul Europe Regional Manager Mustafa Aydın
Regional Representative Office of Ankara Regional Manager Dolunay Filiz Ercan
Regional Representative Office of Istanbul Europe Regional Manager Ömür Hüsnü Teymur
Representative Office of Aegean Regional Sales Manager Yasemin Çetin
Representative Office of Ankara 1 Regional Sales Manager Kadir Yılmaz
Representative Office of Southeastern Anatolia Regional Sales Manager Aziz Burak Balta
Representative Office of Mediterranean Regional Sales Manager Fatih Kaya
Representative Office of Ankara 2 Regional Sales Manager Sinem Ercan
Representative Office of Çukurova Regional Sales Manager Hilmi Can Yeşil
Regional Corporate Sales Supervisor
Regional Corporate Sales Supervisor
Regional Corporate Sales Supervisor
35
Finans Emeklilik - 2012 Annual Report
Information on the Total Amount of Allowances, Travel, Accommodation and Representation Expenses, Real and Financial Opportunities, Insurances, and Similar Benefits
Remuneration and fringe benefits provided to management
January 1 - Monday, December 31, 2012
January 1 - December 31, 2011
(2,245,394)
(1,616,867)
The benefits provided to our senior managers (General Manager and Executive Vice Presidents) for the years ending at December 31, 2012 and 2011 include remuneration, bonus, SSA and unemployment insurance employer contribution.
Information on the Board Members' Transactions with the Company on his own behalf or on behalf of others pursuant to the Permission Given by the Company's General Assembly and on the Activities entering into the Scope of Prohibition of Competition The Company's General Assembly has given the Board members the permissions specified in articles 334 and 335 of the Turkish Commercial Code number 6762 (articles 395 and 396 of the new Turkish Commercial Code) at the Ordinary General Assembly Meeting for 2011 held on 30/03/2012.
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Information on the Management and the Corporate Governance Practices
Summary of Annual Report of the Board of Directors Presented to the General Assembly of Shareholders Dear Shareholders,
The Board of Directors’ Annual Report, the Balance Sheet and the Income Statement of Finans Emeklilik ve Hayat A.Ş., whose sixth operational period has been completed successfully, are submitted for your evaluations and approval for the period 01.01.2012-31.12.2012. The Articles of Association of our company founded in 2007 was amended on November 9, 2012. The supplemental agreement approved under number 6935 by R.OT. Ministry of Customs and Trade on 02/11/2012 and the resolutions adopted at the Extraordinary General Assembly meeting dated 09/11/2012 were registered with Istanbul Trade Registry Office on 14/11/2012 in accordance with the Turkish Commercial Code, and announced in the Turkish Trade Registry Gazette numbered 8197 and dated 20/11/2012. Following the obtainment of all necessary permits, Finansbank A.Ş., one of the shareholders, have transferred its 51% shares in the Company to Cigna Nederland Gamma B.V.; and with the Board decision numbered 172 and dated 09/11/2012, the sale and transfer of Finansbank's 22,950,000 registered shares having the value of TRY 22,950,000 - to Cigna Nederland Gamma B.V. has been approved by the Board of Directors, upon which the transferred shares have been recorded in the share ledger. Our company that produced a total premium of TRY 161,118,628 in its life and accident branches in the year 2012 captured a 5.94% market share in these branches. Having collected private pension contributions of TRY 78,955,610 in the private pension branch, the Company captured a 2.3% market share in terms of number of contracts in this branch, thus enabling 2.4% of the new participants in the sector to be included in the system. The Company closed the year 2012 with a net profit of TRY 28,767,741. We wish to express our appreciation to the General Assembly for honoring the meeting with their presence. Yours faithfully,
Dr. Mehmet Ömer Arif Aras Chairman
David Jerry Fike General Manager
37
Finans Emeklilik - 2012 Annual Report
Information About the Human Resources Practices
Recruitment Having completed 2011 with 265 employees on its payroll, Finans Emeklilik created an additional 108 jobs in 2012, closing the year with 286 people on its payroll. In 2012, 87 employees resigned from their positions, while 33 employees were promoted. The following table indicates the number of employees by title since Finans Emeklilik’s foundation as of the end of each operating period: 31.12.2007
31.12.2008
31.12.2009
31.12.2010
31.12.2011 31.12.2012
General Manager
1
1
1
1
1
1
Executive Vice President
2
2
2
3
3
2
Senior Vice President
4
4
4
5
5
8
Vice President
4
6
7
8
9
8
Manager
8
14
14
20
23
27
Supervisor
5
17
23
26
30
34
Assistant Supervisor
4
9
15
24
25
28
1
1
1
Workplace Physician Administrative Employees (Officer, Technician, Driver, Platform Assistant, Executive Assistant)
3
7
8
13
18
20
31
60
74
101
115
129
4
4
6
6
Corporate Sales Supervisor
4
8
9
Regional Supervisor
4
Total Head Office Headcount Regional Manager
Regional Sales Manager
11
12
13
15
12
10
Pension and Insurance Advisor
45
91
91
105
116
125
7
11
13
15
8
7
Regional Customer Services Assistant Total Regional Offices Headcount
63
114
121
147
150
157
Total Headcount
94
174
199
248
265
286
The Employee Profile Data pertaining to company employees at Monday, December 31, 2012 is as below; Average age of our employees: 32
Breakdown by Gender (%) 106
180
38
37 63
Male Female
Breakdown by Education (%)
63 20 10 7
Bachelor's Degree Two-year degree High School Degree and Below Master’s Degree
Information on the Management and the Corporate Governance Practices
The activities of the Human Resources, Administrative Affairs and Purchase Departments in 2012 were as follows; In addition to the headquarters employees whose performances are assessed in the electronic environment, the project aimed at evaluating the performance of sales teams in an electronic environment was completed and the pilot project was launched.
Duties and functions of all units and departments within the Company were defined; also, duty definitions were regularly updated on a position basis and shared with the employees on the Company’s intranet portal. The actions to be taken in our Company under the occupational health and safety law have been planned, and the necessary works have been started.
Training Activities As a result of all trainings performed by the Company in 2012, each employee received 55.3 hours (7.9 days) of training on average. Training Data
2010
2011
2012
Number of training participants
1,547
1,925
1,966
Training days/employee Duration (man hour)
8.6
6.18
7.9
14,818
12,113
16,239
The training programs that were carried out for the professional and personal development of the employees cost TRY 1,850 per employee.
Training Expenses per Employee (TRY)
2,091
1,191 1,850
1,515 1,243
The Retirement and Insurance Consultants have been given 2-day training on the “Basic Selling Skills” and the trainings on “Cooperation and Sales Efficiency”.
873
2007
In the year 2012, within the scope of the Executive Development Project (Rainbow) covering the senior vice presidents, vice presidents, regional managers, and regional sales managers, the competencies of the said managers were measured, they were provided with the related feedbacks, and the development of their managerial competencies was supported by organizing five different trainings by development areas.
2008
2009
2010
2011
2012
Although the year 2012 trainings were mostly classroom trainings, e-learning was accountable for 8% of the actual learning period. 39
Finans Emeklilik - 2012 Annual Report
Transactions Conducted with the Risk Group in which the Company is Included Our primary distribution channel, Finansbank’s branch and alternative distribution channel structure is effectively used when we present our products and services to our customers. In parallel with the growth strategy of National Bank of Greece (NBG), major shareholder of Finansbank, it is expected that Finansbank will increase its number of branches and effectiveness in alternative distribution channels. Experience in Turkey’s pension market to date shows that bank distribution channels are very important in terms of reaching potential customers easily and providing after sales services. Finansbank increased the total number of branches to 581 at the end of 2012, which was 520 at the end of 2011. Fast growing Finansbank will continue to open new branches in 2012. This growth will create absolute advantage to our Company and will provide easier contact with the potential customers. Thereby, it will be possible to bring in new, potential customers who are ready to enter the system.
If it is a company included in a group of companies; legal transactions it has made with the flagship company, a subsidiary of the flagship company, or for the benefit of the flagship company or the subsidiary of the flagship company under the direction of the flagship company, and all other actions taken or avoided in the previous operating year for the benefit of the flagship or the subsidiary of the flagship company In the year 2012, our company did not make any transactions or take any decisions with the flagship company, a subsidiary of the flagship company, or for the benefit of the flagship company or the subsidiary of the flagship company under the direction of the flagship company, nor did it take any actions for the benefit of the flagship company or the subsidiary of the flagship company but to its own disadvantage.
40
Information on the Management and the Corporate Governance Practices
Mission, Vision, Corporate Goal and Strategies
Vision To be a pension and life insurance company which is admired and which stands as an example.
Mission To be a trusted, profitable pension and life insurance company, aware of its social responsibilities and which provides a level of service which exceeds the expectations of its customers, and whose shareholders and employees are proud and happy to be a partner and a member of it.
Corporate Goal and Strategies To increase market share by developing innovative and competitive products which meet the needs of Finansbank’s customers-our primary distribution channel, To continue strengthening the confidence and satisfaction gained in the eyes of our customers, To be a distinguished pension and life insurance company in the sector with a management approach befitting Finansbank’s reputation and reliability in the financial market, and which is mindful of corporate image and profitability.
41
FINANCIAL INFORMATION AND ASSESSMENT ON RISK MANAGEMENT
Financial Information and Assessment Risk Management
The Report Prepared by the Auditors Who Were Assigned in Compliance with the Article 347 of the Turkish Commercial Code Dated 29.06.1956 and Numbered 6762 TO THE ATTENTION OF FİNANS EMEKLİLİK VE HAYAT A.Ş. GENERAL ASSEMBLY OF SHAREHOLDERS Name of the Company: Head office: Capital: Main business:
Finans Emeklilik ve Hayat A.Ş. İstanbul 45.000.000.-TRY Private Pension and Insurance
Auditor’s or Auditors’ Term of Duty, Whether They are Partners or Staff of the Firm:
Ümit SÖNMEZ Term of duties 1 year. Auditors are not either partners or staff of the company Berran GÜNDOĞU (She has been assigned under the Board decision dated 16/07/2012 to replace Gökhan Yücel who has resigned from his office, and her assignment has been approved with the General Assembly decision dated 09/11/2012. Berran Gündoğu has been assigned to serve the remaining office term of her predecessor whose office term was one year. Auditor, is not either partner or staff of the company)
Number of Attendance to the meetings of the Board of Directors and Auditing Committee:
All meetings
Company Accounts, Scope of Audit on Company’s Accounts and Books, Audit Date and Conclusion:
According to our audits on the Company’s books at various times during the year and before the closing of the 2012 year-end, it was determined that the Company’s accounts have been booked in accordance with the legislation and the Generally Accepted Accounting Principles. According to our quarterly audits, no criticized matter has been seen.
The company’s cash and cash equivalent countings and their results that were performed in compliance with 3rd subparagraph, of the article 353 of the Turkish Commercial Code: Results and dates of the audits that were performed in accordance with 4th subparagraph, of the 1st paragraph of the article 353 of the Turkish Commercial Code:
According to audit results, all types of commercial paper have been found registered and existed.
Received Complaints, Irregularities and the activities subsequently taken:
There hasn’t been any received complaint or irregularity.
We have audited financial statements and operations of Finans Emeklilik ve Hayat A.Ş. as at December 31, 2012, in accordance with the Turkish Commercial Code, Articles of Association, other related legislations and Generally Accepted Accounting Principles. In our opinion, the accompanying balance sheet dated 31.12.2012 and the income statement for the period 01.01.2012 - 31.12.2012 give a true and fair view of the financial position and financial performance of the Company. We submit the balance sheet, the income statement, and the Board of Directors’ release for your approval.
Auditor Ümit SÖNMEZ
Auditor Berran GÜNDOĞU
43
Finans Emeklilik - 2012 Annual Report
Profit Distribution
I. DISTRIBUTION OF PERIOD PROFIT
Current Period (31/12/2012)
1.1. PERIOD PROFIT
36,497,343
1.2. TAXES AND SURCHARGES PAYABLE (-)
(7,729,602)
1.2.2 Corporate tax (Income tax)
(7,729,602)
1.2.2. Income witholding tax 1.2.3. Other taxes and surcharges A. NET PERIOD PROFIT (1.1-1.2) 1.3. PRIOR PERIODS’ LOSSES (-) 1.4. FIRST LEGAL RESERVE (-) 1.5. COMPULSORY LEGAL FUNDS TO BE RETAINED IN THE COMPANY (-)
28,767,741 (1,438,387) -
B. NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)]
27,329,354
1.6. FIRST DIVIDEND TO SHAREHOLDERS (-)
(2,250,000)
1.6.1. To Holders of Ordinary Shares
(2,250,000)
1.6.2. To Holders of Preferred Shares
-
1.6.3. To Holders of Participating Redeemed Shares
-
1.6.4. To Holders of Bonds Participating to Profit
-
1.6.5. To Holders of Profit and Loss Sharing Certificates
-
1.7. DIVIDENDS TO Employees (-)
-
1.8. DIVIDENDS TO FOUNDER SHAREHOLDERS (-)
-
1.9. DIVIDENDS TO BOARD OF DIRECTORS (-)
-
1.10. SECOND DIVIDEND TO SHAREHOLDERS (-)
(16,550,000)
1.10.1 To Holders of Ordinary Shares
(16,550,000)
1.10.2 To Holders of Preferred Shares
-
1.10.3 To Holders of Participating Redeemed Shares
-
1.10.4 To Holders of Bonds Participating to Profit
-
1.10.5 To Holders of Profit and Loss Sharing Certificates 1.11 SECOND LEGAL RESERVE (-)
(1,655,000)
1.12. STATUTORY RESERVES (-)
-
1.13. EXTRAORDINARY RESERVES
-
1.14. OTHER RESERVES
-
1.15 SPECIAL FUNDS
-
II. DISTRIBUTION OF RESERVES
-
2.1. DISTRIBUTED RESERVES
-
2.2. SECOND LEGAL RESERVES (-)
-
2.3. DIVIDENDS TO SHAREHOLDERS (-)
-
2.3.1. To Holders of Ordinary Shares
-
2.3.2. To Holders of Preferred Shares
-
2.3.3. To Holders of Participating Redeemed Shares
-
2.3.4. To Holders of Bonds Participating to Profit
-
2.3.5. To Holders of Profit and Loss Sharing Certificates
-
2.4. DIVIDENDS TO Employees (-)
-
2.5. DIVIDENDS TO BOARD OF DIRECTORS (-)
-
III. EARNINGS PER SHARE 3.1. TO OWNERS OF ORDINARY SHARES 3.2. TO OWNERS OF ORDINARY SHARES ( % )
0.639 63.93%
3.3. TO OWNERS OF PREFERRED SHARES
-
3.4. TO OWNERS OF PREFERRED SHARES ( % )
-
IV. DIVIDEND PER SHARE 4.1. TO OWNERS OF ORDINARY SHARES 4.2. TO OWNERS OF ORDINARY SHARES ( % )
0.418 41.78%
4.3. TO OWNERS OF PREFERRED SHARES
-
4.4. TO OWNERS OF PREFERRED SHARES ( % )
-
4.4. TO OWNERS OF PREFERRED SHARES ( % )
-
44
Financial Information and Assessment Risk Management
Information on Internal Control System and Internal Audit Activities of the Company and Management Opinion on This Issue Brief Information on Internal Systems Internal Audit Activities The purpose of the activities carried out by the Internal Audit Unit is to give the senior management assurance that the activities of the Company are conducted in accordance with the law and other applicable legislation and with the predetermined strategies, policies, principles and targets, and that the internal control and risk management systems are effective and adequate. The Internal Audit Unit operates directly under the Board of Directors pursuant to "Regulation on Internal Systems of Insurance, Reinsurance and Pension Companies" published on 21/06/2008. The internal audit activities are carried out within the scope of the annual audit plans prepared so as to cover all activities of the Company under the periodic and risk-based assessments, compliant with the international internal audit standards, including also the Company senior management's opinions, and approved by the Board of Directors. On the other hand, special inquiries and investigations are also performed if necessary. As of the end of 2012, the Internal Audit Unit is composed of one senior vice-president and two internal auditors. The reports issued in consequence of the audit engagements are put on the agenda of the Board through the board member responsible for internal systems, and the actions to be taken according to these reports are decided with the approval of the Board of Directors.
Internal Control Activities The internal control unit operates directly under the General Manager pursuant to "Regulation on Internal Systems of Insurance, Reinsurance and Pension Companies" published on 21/06/2008. The internal control activities are carried out through control self-assessment questionaries intended for conducting periodic controls on the risk points determined on unit basis. Besides, the on-site controls are also conducted on the risk points periodically. The results are shared with the managers of the relevant business units and the Company senior
management to ensure that the necessary improvements are made. As of the end of 2012, the internal control activities are carried out by assistant vice president.
Risk Management Activities The risk management unit operates directly under the General Manager pursuant to "Regulation on Internal Systems of Insurance, Reinsurance and Pension Companies" published on 21/06/2008. The risk management is carried out through the Risk Control Self-Assessment and Process Risk Assessment works carried out to measure, monitor, control and report the risks of the Company’s operations. In order to define the management framework for the circumstances that may interrupt the Company's normal operations, and to ensure that the Company activities can be continued with minimum interruption and manageable damage in case of all emergencies from small incidents to big disasters, a Business Continuity Management Plan has been prepared and put into force following the Board approval. The personnel to be assigned to emergencies under the plan have been identified together with their substitutes, and ensured to have been trained as necessary. Additionally, Vacating Instruction have been prepared and implemented within the year 2012. As of the end of 2012, the risk management activities are carried out by an assistant supervisor.
Board of Directors' Opinion The activities related to the internal systems of the company are carried out in compliance with the Insurance Law number 5684 dated 03/06/2007 and the Private Pension Savings and Investment System Law number 4632 dated 28/03/2001 and "Regulation on Internal Systems of Insurance, Reinsurance and Pension Companies" dated 21/06/2008 published based on these laws. 45
Finans Emeklilik - 2012 Annual Report
Independent Auditors' Report Finans Emeklilik ve Hayat Anonim Şirketi Independent Auditors' Report To Board of Directors of Finans Emeklilik ve Hayat Anonim Şirketi We have audited the accompanying financial statements of Finans Emeklilik ve Hayat Anonim Şirketi (“the Company”) which comprise the balance sheet as at 31 December 2012, and the statement of income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles and standards issued based on insurance laws and regulations. This responsibility includes; designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards on auditing issued based on insurance laws and regulations. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 46
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of Finans Emeklilik ve Hayat Anonim Şirketi as of 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with the applicable accounting principles and standards issued (Note 2) based on insurance laws and regulations. Additional paragraph for the English translation: The effect of the differences between the accounting principles summarized in Note 2 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Company’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. İstanbul, 8 March 2013 DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED
Müjde Şehsuvaroğlu Partner
Financial Information and Assessment Risk Management
The Unconsolidated Financial Report For The Year Ended 31 December 2012 We assure you that our year end unconsolidated financial report and the related disclosures and notes prepared in accordance with the requirements set out by the Turkish Republic Prime Ministry Undersecretariat of Treasury are in compliance with the provisions of the Decree on “Financial Reporting of Insurance and Reinsurance Companies and Pension Funds” and our Company’s accounting records. İstanbul, 8 March 2013
David Jerry Fike General Manager
Aşkın Düşündere Executive Vice President
Ümit Sönmez
Berran Gündoğu
Statutory Auditor
Statutory Auditor
Serkan Ersoy Senior Vice President
Ertan Tan Actuary Registration No:21
47
Finans Emeklilik - 2012 Annual Report
Detailed Balance Sheet
I- CURRENT ASSETS Note
Current Period (31/12/2012)
Previous Period (31/12/2011)
14
133,722,404
86,360,135
1- Cash
-
-
2- Cheques Received
-
-
14
125,778,170
81,142,222
-
-
14
7,944,234
5,217,913
A- Cash and Cash Equivalents
3- Banks 4- Cheques Given and Payment Orders (-) 5- Other Cash and Cash Equivalents 6- Other Cash and Cash Equivalents B- Financial Assets and Investments with Risks on Policyholders 1- Financial Assets Available for Sale
11
2- Financial Assets Held to Maturity
-
-
21,370,879
28,293,398
362,019
362,021
-
-
21,008,860
27,931,377
4- Loans
-
-
5- Provision for Loans (-)
-
-
6- Investments with Risks on Policyholders
-
-
7- Equity Shares
-
-
8- Impairment on Financial Assets (-)
-
-
3- Financial Assets Held for Trading
11
C- Receivables From Main Operations
12
241,204,526
128,493,815
1- Receivables From Insurance Operations
12
25,215,391
14,286,891
2- Provision for Receivables From Insurance Operations (-)
-
-
3- Receivables From Reinsurance Operations
-
-
4- Provision for Receivables From Reinsurance Operations (-)
-
-
5- Cash Deposited With Insurance & Reinsurance Companies
-
-
6- Loans to Policyholders
-
-
7- Provision for Loans to Policyholders (-)
-
-
215,989,135
114,206,924
8- Receivables from Pension Operation
12
9- Doubtful Receivables From Main Operations
12
55,157
76,623
10- Provisions for Doubtful Receivables From Main Operations (-)
12
(55,157)
(76,623)
D- Due From Related Parties
-
-
1- Due from Shareholders
-
-
2- Due from Affiliates
-
-
3- Due from Subsidiaries
-
-
4- Due from Entities Under Common Control
-
-
5- Due from Employees
-
-
6- Due from Other Related Parties
-
-
7- Discount on Receivables Due from Related Parties (-)
-
-
8- Doubtful Receivables Due from Related Parties
-
-
9- Provisions for Doubtful Receivables Due from Related Parties (-)
-
-
-
41,587
1- Leasing Receivables
-
-
2- Unearned Leasing Interest Income (-)
-
-
3- Deposits and Guarantees Given
-
-
-
41,587
5- Discount on Other Receivables (-)
-
-
6- Other Doubtful Receivables
-
-
7- Provisions for Other Doubtful Receivables (-)
-
-
17,561,365
14,038,814
E- Other Receivables
4- Other Receivables
47.1
47.1
F- Prepaid Expenses and Income Accruals 1- Deferred Expenses
17,299,647
13,780,005
2- Accrued Interest and Rent Income
2.1.2
-
-
3- Income Accruals
-
-
261,718
258,809
G- Other Current Assets
-
-
1- Inventories
-
-
-
-
3- Deferred Tax Assets
-
-
4- Business Advances
-
-
5- Advances Given to Employees
-
-
6- Stock Count Differences
-
-
7- Other Current Assets
-
-
8- Provision for Other Current Assets (-)
-
-
413,859,174
257,227,749
4-Other Prepaid Expenses
2- Prepaid Taxes and Funds
I- Total Current Assets
48
35
Financial Information and Assessment Risk Management
II- NON CURRENT ASSETS Note A- Receivables From Main Operations 1- Receivables From Insurance Operations 2- Provision for Receivables From Insurance Operations (-) 3- Receivables From Reinsurance Operations 4- Provision for Receivables From Reinsurance Operations (-) 5- Cash Deposited with Insurance & Reinsurance Companies 6- Loans to Policyholders 7- Provision for Loans to Policyholders (-) 8- Receivables From Pension Operations 9- Doubtful Receivables from Main Operations 10-Provision for Doubtful Receivables from Main Operations B- Due From Related Parties 1- Due from Shareholders 2- Due from Affiliates 3- Due from Subsidiaries 4- Due from Entities Under Common Control 5- Due from Employees 6- Due from Other Related Parties 7- Discount on Receivables Due from Related Parties (-) 8- Doubtful Receivables Due from Related Parties 9- Provisions for Doubtful Receivables Due from Related Parties (-) C- Other Receivables 1- Leasing Receivables 2- Unearned Leasing Interest Income (-) 3- Deposits and Guarantees Given 4- Other Receivables 5- Discount on Other Receivables (-) 6- Other Doubtful Receivables 7- Provisions for Other Doubtful Receivables (-) D- Financial Assets 1- Long-term Investments 2- Affiliates 3- Capital Commitments to Affiliates (-) 4- Subsidiaries 5- Capital Commitments to Subsidiaries (-) 6- Entities Under Common Control 7- Capital Commitments to Entities Under Common Control (-) 8- Financial Assets and Investments with Risks on Policyholders 9- Other Financial Assets 10- Impairment on Financial Assets (-) E- Tangible Assets 1- Investment Properties 2- Impairment on Investment Properties (-) 3- Owner Occupied Property 4- Machinery and Equipments 5- Furnitures and Fixtures 6- Vehicles 7- Other Tangible Assets (Including Leasehold Improvements) 8- Leased Tangible Fixed Assets 9- Accumulated Depreciation (-) 10- Advances Paid for Tangible Fixed Assets (Including Construction In Progresses) F- Intangible Assets 1- Rights 2- Goodwill 3- Establishment Costs 4- Research and Development Expenses 5- Other Intangible Assets 6- Accumulated Amortizations (-) 7- Advances Regarding Intangible Assets G- Prepaid Expenses and Income Accruals 1- Deferred Expenses 2- Income Accruals 3- Other Prepaid Expenses and Income Accruals H- Other Non-current Assets 1- Cash Foreign Currency Accounts 2- Foreign Currency Accounts 3- Inventories 4- Prepaid Taxes and Funds 5- Deferred Tax Assets 6- Other Non-current Assets 7- Other Non-current Assets Amortization (-) 8- Provision for Other Non-current Assets (-) II- Total Non-current Assets Total Assets (I+II)
6
6 6 6 6 8 8
8
21
21
Current Period (31/12/2012)
Previous Period (31/12/2011)
27,465 27,465 1,153,925 2,282,467 882,753 (2,011,295) 1,381,891 5,074,999 (3,693,108) 2,029 2,029 1,444,691 1,444,691 4,010,001 417,869,175
27,890 27,890 1,200,494 1,511,202 804,112 409,312 (1,524,132) 856,241 3,945,043 (3,088,802) 6,086 6,086 907,221 907,221 2,997,932 260,225,681
49
Finans Emeklilik - 2012 Annual Report
III- SHORT TERM LIABILITIES Current Period (31/12/2012)
Previous Period (31/12/2011)
A- Borrowings
Note
-
-
1- Borrowings from Financial Institutions
-
-
2- Finance Lease Payables
-
162
3- Deferred Finance Lease Costs (-)
-
(162)
4- Current Portion of Long Term Borrowings
-
-
5- Principal, Installments and Interests on Issued Bills (Bonds)
-
-
6- Other Financial Instruments Issued
-
-
7- In Excess of Par of Financial Instruments (-)
-
-
8- Other Financial Borrowings (Liabilities)
-
-
228,383,038
119,747,000
B- Payables From Main Operations 1- Payables From Insurance Operations
9,141,222
6,027,180
2- Payables From Reinsurance Operations
-
-
3- Cash Deposited by Insurance & Reinsurance Companies
-
-
219,241,816
113,719,820
5- Payables From Other Operations
-
-
6- Discount on Other Payables From Main Operations, Notes Payable (-)
-
-
236,219
73,496
4- Payables From Pension Operations
19
19
C- Due to Related Parties
186,335
38,341
2- Due to Affiliates
1- Due to Shareholders
-
-
3- Due to Subsidiaries
-
-
4- Due to Entities Under Common Control
-
-
19
49,884
35,155
-
-
47.1
790,936
790,275
1- Guarantees and Deposits Received
-
-
2- Payables to Social Security Institution
-
-
793,442
794,756
5- Due to Employees
19
6- Due to Other Related Parties D- Other Payables
2- Other Payables 3- Discount on Other Payables (-)
(2,506)
(4,481)
E- Insurance Technical Reserves
56,877,246
42,669,293
1- Unearned Premiums Reserve - Net
45,084,954
33,914,950
2- Unexpired Risk Reserves - Net
66,289
-
3- Life Mathematical Reserves - Net
17.15
1,508,810
978,539
4- Outstanding Claims Reserve - Net
4.1.2.2
10,217,193
7,775,804
5- Provision for Bonus and Discounts - Net
-
-
6- Other Technical Reserves - Net
-
-
3,401,052
2,169,817
1- Taxes and Dues Payable
470,308
580,030
2- Social Security Premiums Payable
320,453
305,271
3- Overdue, Deferred or By Installment Taxes and Other Liabilities
-
-
4- Other Taxes and Liabilities
-
-
F- Taxes and Other Liabilities and Provisions
5- Corporate Tax Provision on Period Profit
35
7,729,602
3,141,716
6- Advance Taxes and Other Liabilities on Period Profit (-)
35
(5,119,311)
(1,857,200)
7- Provisions for Other Taxes and Liabilities
-
-
G- Provisions for Other Risks
-
-
1- Provision for Employment Termination Benefits
-
-
2- Pension Fund Deficit Provision
-
-
3- Provisions for Costs
-
-
190,925
428,065
H- Deferred Income and Expense Accruals 1- Deferred Income
19
69,102
52,022
2- Expense Accruals
19
121,823
376,043
3- Other Deferred Income and Expense Accruals
-
-
2,727,268
2,092,478
1- Deferred Tax Liability
-
-
2- Inventory Count Differences
-
-
2,727,268
2,092,478
292,606,684
167,970,424
I- Other Short Term Liabilities
3- Other Short Term Liabilities III - Total Short Term Liabilities
50
47.1
Financial Information and Assessment Risk Management
IV- LONG TERM LIABILITIES Note
Current Period (31/12/2012)
Previous Period (31/12/2011)
A- Borrowings
-
-
1- Borrowings From Financial Institutions
-
-
2- Finance Lease Payables
-
-
3- Deferred Finance Lease Costs (-)
-
-
4- Bonds Issued
-
-
5- Other Financial Instruments Issued
-
-
6- In Excess of Par of Financial Instruments (-)
-
-
7- Other Borrowings (Financial Liabilities)
-
-
B- Payables From Main Operations
-
-
1- Payables From Insurance Operations
-
-
2- Payables From Reinsurance Operations
-
-
3- Cash Deposited by Insurance & Reinsurance Companies
-
-
4- Payables From Pension Operations
-
-
5- Payables From Other Operations
-
-
6- Discount on Other Payables From Main Operations (-)
-
-
C- Due to Related Parties
-
-
1- Due to Shareholders
-
-
2- Due to Affiliates
-
-
3- Due to Subsidiaries
-
-
4- Due to Entities Under Common Control
-
-
5- Due to Employees
-
-
6- Due to Other Related Parties
-
-
D- Other Payables
-
-
1- Guarantees and Deposits Received
-
-
2- Payables to Social Security Institution
-
-
3- Other Payables
-
-
4- Discount on Other Payables (-) E- Insurance Technical Reserves
-
-
48,504,829
35,790,536
1- Unearned Premiums Reserve - Net
-
-
2- Unexpired Risk Reserves - Net
-
-
44,312,840
33,311,952
3- Life Mathematical Reserves - Net
17.15
4- Outstanding Claims Reserve - Net
-
-
5- Provision for Bonus and Discounts - Net
-
-
4,191,989
2,478,584
6- Other Technical Reserves - Net
2.1.2
F- Other Liabilities and Provisions
-
-
1- Other Liabilities
-
-
2- Overdue, Deferred or By Installment Other Liabilities
-
-
3- Other Liabilities and Expense Accruals
-
-
G- Provisions for Other Risks 1- Provision for Employment Termination Benefits
22
270,655
145,455
270,655
145,455
2- Provisions for Employee Pension Fund Deficits
-
-
H- Deferred Income and Expense Accruals
-
-
1- Deferred Income
-
-
2- Expense Accruals
-
-
3- Other Deferred Income and Expense Accruals
-
-
I- Other Long Term Liabilities
-
-
1- Deferred Tax Liability
-
-
3- Other Long Term Liabilities
-
-
IV- Total Long Term Liabilities
48,775,484
35,935,991
51
Finans Emeklilik - 2012 Annual Report
V- SHAREHOLDERS' EQUITY Note A- Paid in Capital 1- (Nominal) Capital
15
Current Period (31/12/2012)
Previous Period (31/12/2011)
45,000,000
45,000,000
45,000,000
45,000,000
2- Unpaid Capital (-)
-
-
3- Positive Inflation Adjustment on Capital
-
-
4- Negative Inflation Adjustment on Capital (-)
-
-
5-Capital to be registered
-
-
B- Capital Reserves
-
-
1- Equity Share Premiums
-
-
2- Cancellation Profits of Equity Shares
-
-
3- Gain on Sale of Assets to be Transferred to Capital
-
-
4- Translation Reserves
-
-
5- Other Capital Reserves
-
-
C- Profit Reserves
2,719,266
1,518,346
1- Legal Reserves
2,608,747
1,483,701
2- Statutory Reserves 3- Extraordinary Reserves
-
-
110,519
34,645
4- Special Funds (Reserves)
-
-
5- Valuation of Financial Assets
-
-
6- Other Profit Reserves
-
-
D- Retained Earnings
-
-
1- Retained Earnings
-
-
E- Previous Years' Losses (-)
-
-
1- Previous Years' Losses
-
-
F- Net Profit of the Period
28,767,741
9,800,920
1- Net Profit of the Period
28,767,741
9,800,920
2- Net Loss of the Period
-
-
3- Nondistributed Net Profit of the Period
-
-
Total Shareholders' Equity Total Liabilities and Shareholders' Equity (III+IV+V)
52
76,487,007
56,319,266
417,869,175
260,225,681
Financial Information and Assessment Risk Management
Detailed Income Statement
I- TECHNICAL DIVISION Note A- Non-Life Technical Income 1- Earned Premiums (Net of Reinsurer Share) 1.1 - Premiums (Net of Reinsurer Share)
81,970 57,185
53,357
38,452
77,657
51,625
10.2
(24,300)
(13,173)
1.1.3- Premiums Tranfered to SSI(-)
1.2.1 - Unearned Premiums Reserve (-) 10.2
1.2.3- SSI Share of Gross Unearned Premiums Reserve (Net of Reserves Carried Forward) 1.3- Changes in Unexpired Risks Reserve (Net of Reinsurer Share and Reserves Carried Forward)(+/-) 1.3.1 - Unexpired Risks Reserve (-) 1.3.2 - Reinsurance Share of Unexpired Risks Reserve (+)
1,299
24
1.2- Change in Unearned Premiums Reserve (Net of Reinsurers Shares and Reserves Carried Forward) (+/-)
1.2.2 - Reinsurance Share of Unearned Premiums Reserve (+)
Previous Period 01/01/2012-31/12/2011
(28,939)
1.1.1 - Gross Premiums (+) 1.1.2 - Ceded Premiums to Reinsurers (-)
Current Period 01/01/2012-31/12/2012
-
-
(16,007)
18,733
(26,464)
19,391
10,457
(658)
-
-
(66,289)
-
(101,544)
-
10.2
35,255
-
26
30,238
24,785
3- Other Technical Income (Net of Reinsurer Share)
-
-
3.1 - Gross Other Technical Income (+)
-
-
3.2 - Reinsurance Share of Other Technical Income (-)
-
-
4. Accrued Subrogation and Sovtage Income (+)
-
-
(177,029)
(75,714)
2- Investment Income Transferred from Non-Technical Division
B- Non-Life Technical Expenses (-) 1- Total Claims (Net of Reinsurer Share)
(121,149)
5,231
1.1- Claims Paid (Net of Reinsurer Share)
(120,000)
-
1.1.1 - Gross Claims Paid (-)
(400,000)
-
1.1.2 - Reinsurance Share of Claims Paid (+)
10.2
280,000
-
(1,149)
5,231
(1,927)
5,039
778
192
2- Changes in Bonus and Discount Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-)
-
-
2.1 - Bonus and Discount Reserve (-)
-
-
2.2- Reinsurance Share of Bonus and Discount Reserve (+)
-
-
3- Changes in Other Technical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-)
-
-
(55,880)
(80,945)
1.2- Changes in Outstanding Claims Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 1.2.1 - Outstanding Claims Reserve (-) 1.2.2 - Reinsurance Share of Outstanding Claims Reserve (+)
4- Operating Expenses (-)
10.2
32
5- Changes in Mathematical Reserves (Net of Reinsurer Share and Reserves Carried Forward)(+/-)
-
-
5.1- Mathematical Reserves (-)
-
-
5.2- Reinsurer Share of Mathematical Reserves (+)
-
-
6- Other Technical Expenses (-)
-
-
6.1- Other Gross Technical Expenses (-)
-
-
6.2- Reinsurer Share of Other Gross Technical Expenses (+)
-
-
(175,730)
6,256
C- Non Life Technical Profit/(Loss) (A-B) D- Life Technical Income
143,458,114
103,789,972
1- Earned Premiums (Net of Reinsurer Share)
143,458,114
103,789,972
1.1- Premiums (Net of Reinsurer Share)
17.12. 24
1.1.1 - Gross Premiums (+) 1.1.2 - Ceded Premiums to Reinsurers (-)
10.2
1.2- Change in Unearned Premiums Reserve (Net of Reinsurers Shares and Reserves Carried Forward) (+/-) 1.2.1 - Unearned Premiums Reserve (-) 1.2.2 - Reinsurance Share of Unearned Premiums Reserve (+)
10.2
154,612,111
116,929,263
161,040,971
124,633,271
(6,428,860)
(7,704,008)
(11,153,997)
(13,139,291)
(10,545,387)
(14,641,583)
(608,610)
1,502,292
53
Finans Emeklilik - 2012 Annual Report
I- TECHNICAL DIVISION (CONT’D)
1.3- Changes in Unexpired Risks Reserve (Net of Reinsurer Share and Reserves Carried Forward)(+/-)
Note
Current Period 01/01/2012-31/12/2012
Previous Period 01/01/2012-31/12/2011
2.1.2
-
-
1.3.1 - Unexpired Risks Reserve (-)
-
-
1.3.2 - Reinsurance Share of Unexpired Risks Reserve (+)
-
-
2- Life Branch Investment Income
-
-
3- Accrued (Unrealized) Income from Investments
-
-
4- Other Technical Income (Net of Reinsurer Share)
-
-
4.1- Other Gross Technical Income (+)
-
-
4.2- Reinsurers Share of Other Gross Technical Income (+/-)
-
-
4. Accrued Subrogation Income (+)
-
-
(116,587,411)
(92,703,634)
1- Total Claims (Net of Reinsurer Share)
(24,297,671)
(20,734,228)
1.1- Claims Paid (Net of Reinsurer Share)
(21,857,431)
(17,831,285)
4.1.2.3
(24,977,465)
(19,376,314)
10.2
3,120,034
1,545,029
(2,440,240)
(2,902,943)
(2,743,682)
(3,019,178)
303,442
116,235
2- Changes in Bonus and Discount Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-)
-
-
2.1- Bonus and Discount Reserve (-)
-
-
2.2- Reinsurance Share of Bonus and Discount Reserve (+)
-
-
3- Changes in Life Mathematical Reserves (Net of Reinsurer Share and Reserves Carried Forward) (+/-)
(11,531,158)
(12,745,020)
3.1- Life Mathematical Reserves
(11,531,158)
(12,745,020)
3.1.1 - Actuerial Mathematical Reserves (+/-)
(11,531,158)
(12,745,020)
3.1.2 - Profit Share Reserve (Technical Reserves for Investments with Riskis on Policyholders)
-
-
3.2- Reinsurance Share of Life Mathematical Reserves
-
-
3.2.1 - Reinsurers Share of Actuerial Mathematical Reserves (+)
-
-
3.2.2 - Profit Share Reserve (Technical Reserves for Investments with Riskis on Policyholders)
-
-
(1,713,405)
(1,087,371)
E- Life Technical Expense
1.1.1 - Gross Claims Paid (-) 1.1.2 - Reinsurance Share of Claims Paid (+) 1.2- Changes in Outstanding Claims Reserve (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 1.2.1 - Outstanding Claims Reserve (-) 1.2.2 - Reinsurance Share of Outstanding Claims Reserve (+)
10.2
4- Changes in Technical Reserves for Investments with Risks on Policyholders (Net of Reinsurer Share and Reserves Carried Forward) (+/-) 5- Operating Expenses (-)
(79,045,177)
(58,137,015)
6- Investment Expenses (-)
32
-
-
7- Unrealized Losses from Investments (-)
-
-
8- Investment Income Transferred to Non Technical Divisions (-)
-
-
26,870,703
11,086,338
F- Life Technical Profit/(Loss) (D-E) G- Private Pension Technical Income
10,362,297
8,997,860
1- Fund Management Fee
25
3,220,059
1,708,066
2- Management Fee Deduction
25
3,048,904
2,546,029
3- Entrance Fee Income
25
4,093,334
4,716,965
4- Management Fee In Case Of Temporary Suspension
-
-
5- Witholding tax
-
-
-
26,800
6- Increase in Market Value of Capital Commitment Advances
28
7- Other Technical Income H- Private Pension Technical Expenses 1- Fund Management Expenses (-) 2- Decrease in Market Value of Capital Commitment Advances (-) 3- Operating Expenses (-) 4- Other Technical Expenses (-) I- Private Pension Technical Profit/(Loss) (G-H)
54
32
-
-
(13,296,752)
(10,589,265)
(644,012)
(341,613)
-
-
(12,558,862)
(10,184,254)
(93,878)
(63,398)
(2,934,455)
(1,591,405)
Financial Information and Assessment Risk Management
II- NON TECHNICAL DIVISION Note C- Non Life Technical Profit/(Loss) (A-B)
Current Period 01/01/2012-31/12/2012
Previous Period 01/01/2012-31/12/2011
(175,730)
6,256
F- Life Technical Profit /(Loss) (D-E)
26,870,703
11,086,338
I- Private Pension Technical Profit/(Loss) (G-H)
(2,934,455)
(1,591,405)
J- Total Technical Profit/(Loss) (C+F+I)
23,760,518
9,501,189
K- Investment Income
18,996,834
7,222,786
1- Income From Financial Investment
26
10,343,718
6,514,215
2- Income from Sales of Financial Investments
26
317,065
333,597
26. 27
8,295,859
347,317
36
40,192
27,657
5- Dividend Income from Affiliates
-
-
6- Income form Subsidiaries and Entities Under Common Control
-
-
7- Income Received from Land and Building
-
-
8- Income from Derivatives
-
-
9- Other Investments
-
-
10- Investment Income transferred from Life Technical Division
-
-
(4,968,713)
(1,847,818)
3- Revaluation of Financial Investments 4- Foreign Exchange Gains
L- Investment Expenses (-) 1- Investment Management Expenses (Including Interest) (-)
(249,002)
(173,724)
26.27
(3,399,077)
(198,962)
26
(159,920)
(179,820)
4- Investment Income Transferred to Life Technical Division (-)
-
-
5- Losses from Derivatives (-)
-
-
36
(39,995)
(70,078)
6.8
(1,120,720)
(1,225,234)
2- Valuation Allowance of Investments (-) 3- Losses On Sales of Investments (-)
6- Foreign Exchange Losses (-) 7- Depreciation Charges (-) 8- Other Investment Expenses (-)
-
-
(1,291,295)
(1,933,521)
(2,459,388)
(1,940,291)
387,680
(564,879)
3- Specialty Insurances (+/-)
-
-
4- Inflation Adjustment (+/-)
-
-
537,470
368,178
M- Other Income and Expenses (+/-) 1- Provisions (+/-)
22.23.1
2- Discounts (+/-)
5- Deferred Tax Asset (+/-)
21.35
6- Deferred Tax Liability Accounts (+/-) 7- Other Income and Revenues 8- Other Expenses and Losses (-)
-
-
242,945
203,471
(2)
-
9- Prior Period Income
-
-
10- Prior Period Losses (-)
-
-
28,767,741
9,800,920
N- Net Profit / (Loss) 1- Profit /(Loss) Before Tax 2- Corporate Tax Charge (-) 3- Net Profit (Loss) 4- Inflation Adjustment Account (+/-)
35
36,497,343
12,942,636
(7,729,602)
(3,141,716)
28,767,741
9,800,920
-
-
55
Finans Emeklilik - 2012 Annual Report
Detailed Statement of Changes in Equity
PREVIOUS PERIOD
I - Balance at (31/12/2010) II - Changes in Accounting Policies III - Restated Balance ( I + II) (01/01/2011)
Capital
Treasury Investment Inflation Shares Revaluation Adjustment to Reserves Shareholders' Equity
Exchange Differences Arising on Translation of Foreign Operations
Legal Reserves
Statutory Reserves
Other Net Profit / Reserves (Loss) For and Retained the Period Earnings
Previous Periods' Profits / (Losses) (-)
Total
46.530.846
36.812.500
-
-
-
-
381.626
-
13.980
9.322.740
-
-
-
-
-
-
-
-
-
-
-
-
36.812.500
-
-
-
-
381.626
-
13.980
9.322.740
-
46.530.846
A- Capital increase (A1 + A2)
8.187.500
-
-
-
-
-
-
-
-
-
8.187.500
1- Cash
8.187.500
-
-
-
-
-
-
-
-
-
8.187.500
2- Internal Resources
-
-
-
-
-
-
-
-
-
-
-
B- Change in treasury shares
-
-
-
-
-
-
-
-
-
-
-
C- Income / (expenses) recognized directly in equity
-
-
-
-
-
-
-
-
-
-
-
D- Valuation gains on assets
-
-
-
-
-
-
-
-
-
-
-
E- Exchange difference arising on translation of foreign operations
-
-
-
-
-
-
-
-
-
-
-
F- Other income / (expenses)
-
-
-
-
-
-
-
-
-
-
-
G- Inflation adjustments
-
-
-
-
-
-
-
-
-
-
-
H- Net profit for the period
-
-
-
-
-
-
-
-
9.800.920
-
9.800.920
I- Payment of dividends
-
-
-
-
-
-
-
-
(8.200.000)
-
(8.200.000)
J- Transfers to reserves
-
-
-
-
-
1.102.075
-
20.665
(1.122.740)
-
-
45.000.000
-
-
-
-
1.483.701
-
34.645
9.800.920
-
56.319.266
45,000,000
-
-
-
-
1,483,701
-
34,645
9,800,920
-
-
-
-
-
-
-
-
-
-
-
-
III - Restated Balance ( I + II) (01/01/2012)
45,000,000
-
-
-
-
1,483,701
-
34,645
9,800,920
-
56,319,266
A- Capital increase (A1 + A2)
-
-
-
-
-
-
-
-
-
-
-
1- Cash
-
-
-
-
-
-
-
-
-
-
-
2- Internal Resources
-
-
-
-
-
-
-
-
-
-
-
B- Change in treasury shares
-
-
-
-
-
-
-
-
-
-
-
C- Income / (expenses) recognized directly in equity
-
-
-
-
-
-
-
-
-
-
-
D- Valuation gains on assets
-
-
-
-
-
-
-
-
-
-
-
E- Exchange difference arising on translation of foreign operations
-
-
-
-
-
-
-
-
-
-
-
F- Other income / (expenses)
-
-
-
-
-
-
-
-
-
-
-
G- Inflation adjustments
-
-
-
-
-
-
-
-
-
-
-
H- Net profit for the period
-
-
-
-
-
-
-
-
28,767,741
-
28,767,741
I- Payment of dividends
-
-
-
-
-
-
-
-
(8,600,000)
-
(8,600,000)
J- Transfers to reserves
-
-
-
-
-
1,125,046
-
75,874
(1,200,920)
-
-
45,000,000
-
-
-
-
2,608,747
-
110,519
28,767,741
-
76,487,007
"IV- Balance at (31/12/2011) (III+ A+B+C+D+E+F+G+H+I+J)"
CURRENT PERIOD I - Balance at (31/12/2011) II - Changes in Accounting Policies
"II- Balance at (31/12/2012) (III+ A+B+C+D+E+F+G+H+I+J)"
56
56,319,266
Financial Information and Assessment Risk Management
Cash Flow Statement
Note
Current Period 01/01/2012-31/12/2012
Previous Period 01/01/2011-31/12/2011
143,407,106
106,524,431
A. CASH FLOWS FROM THE OPERATING ACTIVITIES CASH FLOWS 1. Cash inflows from the insurance operations 2. Cash inflows from the reinsurance operations 3. Cash inflows from the pension operations 4. Cash outflows due to the insurance operations (-) 5. Cash outflows due to the reinsurance operations (-) 6. Cash outflows due to the pension operations (-) 7. Cash generated from the operating activities (A1+A2+A3-A4-A5-A6) 8. Interest payments (-) 9. Income tax payments (-) 10. Other cash inflows
-
-
13,070,666
11,688,175
(100,753,617)
(74,654,404)
-
-
(12,250,440)
(15,524,746)
43,473,715
28,033,456
-
-
(6,403,827)
(2,582,472)
3,013,940
1,765,204
11. Other cash outflows (-)
(4,593,120)
(2,685,767)
12. Net cash generated from the operating activities
35,490,708
24,530,421
B. CASH FLOWS FROM THE INVESTING ACTIVITIES 1. Sale of tangible assets 2. Purchase of tangible assets (-)
6
3. Acquisition of financial assets (-) 4. Sale of financial assets 5. Interest received
-
-
(480,684)
(412,591)
-
-
8,847,957
16,064,225
16,724,007
8,428,413
6. Dividends received
-
-
7. Other cash inflows
40,192
27,659
8. Other cash outflows (-)
(4,967,111)
(1,400,788)
9. Net cash generated from the investing activities
20,164,361
22,706,918
1. Issue of equity shares
-
8,187,500
2. Cash inflows from borrowings
-
-
3. Payments of financial leases (-)
-
-
(8,600,000)
(8,200,000)
5. Other cash inflows
-
-
6. Other cash outflows (-)
-
-
(8,600,000)
(12,500)
C. CASH FLOWS FROM THE FINANCING ACTIVITIES
4. Dividends paid (-)
7. Cash generated from/(used in) the financing activities D. EFFECTS OF EXCHANGE RATE DIFFERENCES ON CASH AND CASH EQUIVALENTS E. Net increase/(decrease) in cash and cash equivalents (A12+B9+C7+D)
47,055,069
47,224,839
F. Cash and cash equivalents at the beginning of the period
14
85,958,755
38,733,916
G. Cash and cash equivalents at the end of period (E+F)
14
133,013,824
85,958,755
57
Finans Emeklilik - 2012 Annual Report
Statement of Profit Distribution
Note
Current Period 01/01/2012-31/12/2012
Current Period 01/01/2012-31/12/2011
I. DISTRIBUTION OF PERIOD PROFIT 1.1
PERIOD PROFIT
36,497,343
12,942,636
1.2
TAXES AND SURCHARGES PAYABLE (-)
(7,729,602)
(3,141,716)
1.2.1 Corporate tax (Income tax)
(7,729,602)
(3,141,716)
1.2.2. Income witholding tax
-
-
1.2.3 Other taxes and surcharges
-
-
28,767,741
9,800,920
A.
NET PERIOD PROFIT (1.1-1.2)
1.3
PRIOR PERIODS’ LOSSES (-)
-
-
1.4
FIRST LEGAL RESERVE (-)
-
(490,046)
1.5. COMPULSORY LEGAL FUNDS TO BE RETAINED IN THE COMPANY (-) B.
NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)]
1.6
FIRST DIVIDEND TO SHAREHOLDERS (-)
-
-
28,767,741
9,310,874
-
(2,250,000)
1.6.1 To Holders of Ordinary Shares
-
(2,250,000)
1.6.2 To Holders of Preferred Shares
-
-
1.6.3 To Holders of Participating Redeemed Shares
-
-
1.6.4 To Holders of Bonds Participating to Profit
-
-
1.6.5 To Holders of Profit and Loss Sharing Certificates
-
-
1.7 DIVIDENDS TO Employees (-)
-
-
1.8 DIVIDENDS TO FOUNDER SHAREHOLDERS (-)
-
-
1.9 DIVIDENDS TO BOARD OF DIRECTORS (-)
-
-
1.10 SECOND DIVIDEND TO SHAREHOLDERS (-)
-
(6,350,000)
1.10.1 To Holders of Ordinary Shares
-
(6,350,000)
1.10.2 To Holders of Preferred Shares
-
-
1.10.3 To Holders of Participating Redeemed Shares
-
-
1.10.4 To Holders of Bonds Participating to Profit
-
-
1.10.5 To Holders of Profit and Loss Sharing Certificates
-
-
1.11 SECOND LEGAL RESERVE (-)
-
(635,000)
1.12. STATUTORY RESERVES (-)
-
-
1.13. EXTRAORDINARY RESERVES
-
(75,874)
1.14 OTHER RESERVES
-
-
1.15 SPECIAL FUNDS
-
-
-
-
2.1 DISTRIBUTED RESERVES
-
-
2.2. SECOND LEGAL RESERVES (-)
-
-
2.3 DIVIDENDS TO SHAREHOLDERS (-)
-
-
2.3.1 To Holders of Ordinary Shares
-
-
2.3.2 To Holders of Preferred Shares
-
-
2.3.3 To Holders of Participating Redeemed Shares
-
-
2.3.4 To Holders of Bonds Participating to Profit
-
-
2.3.5 To Holders of Profit and Loss Sharing Certificates
-
-
2.4 DIVIDENDS TO Employees (-)
-
-
2.5 DIVIDENDS TO BOARD OF DIRECTORS (-)
-
-
III. EARNINGS PER SHARE
-
-
3.1 TO OWNERS OF ORDINARY SHARES
-
0,218
3.2 TO OWNERS OF ORDINARY SHARES ( % )
-
21.78%
3.3 TO OWNERS OF PREFERRED SHARES
-
-
3.4 TO OWNERS OF PREFERRED SHARES ( % )
-
-
IV. DIVIDEND PER SHARE
-
-
4.1 TO OWNERS OF ORDINARY SHARES
-
0.191
4.2 TO OWNERS OF ORDINARY SHARES ( % )
-
19.11%
4.3 TO OWNERS OF PREFERRED SHARES
-
-
4.4 TO OWNERS OF PREFERRED SHARES ( % )
-
-
II. DISTRIBUTION OF RESERVES
(*) As the statement of profit distribution to be authorized by the General Assembly is not determined by the Board of Directors, only the net profit available for distribution is presented in the statement of profit distribution for the year 2012.
58
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
1. General Information 1.1. The title of the parent company and the ultimate shareholder of the Group Finans Emeklilik ve Hayat A.Ş. was incorporated on 04.07.2007 as fully owned subsidiary of Finansbank A.Ş.. Finansbank A.Ş. is a subsidiary of National Bank of Greece S.A. (“NBG”). On 12 July 2012, a share purchase agreement between Finansbank A.Ş. and Cigna Nederland Gamma B.V. was signed. Within the scope of the contract, 22,950,000 of the 44,999,995 company shares that Finansbank A.Ş. held, corresponding to 51% out of 100% of the company shares, were transferred to Cigna Nederland Gamma B.V. and the participation rate of Finansbank A.Ş. decreased to 49%. Depending on the change in the structure of partnership, the company has received approval from Ministry of Customs and Trade on 2 November 2012, approved amendment agreement was discussed in the Extraordinary General Meeting held on 9 November 2012 and transfer of share has been registered in Trade Registry Gazette on 14 November 2012. 1.2. Company’s address and legal structure, country where the company was founded and the address of the registered office (if the company’s address is different from the address of the registered office, the main location where the operations are maintained) Finans Emeklilik ve Hayat A.Ş. is a corporation, which is established in compliance with the requirements of Turkish Commercial Code and maintains its operations at Sahrayıcedit Mah., Halk Sokak, No:48 34734 Kozyatağı İstanbul. Principles of operations are determined based on the Insurance Law No: 5684 and Pension, Saving and Investment System Law No. 4632 which is amended by Law No:6327 with effect from 1 January 2013 and the related pronouncements in support of these laws. 1.3. The Company’s main operations The operations of the Company involve providing individual and group insurance and reinsurance services relating to pension, individual life, marriage/birth, capital redemption and accident insurance branches, establishing pension funds, developing internal rules and regulations related to these funds, carrying out retirement, annual income insurance, portfolio management and custody contracts for the assets of the funds held in custody. There are 5 Pension Investment Funds which are established by the Company with the decision of the Capital Markets Board dated 3 July 2008 and numbered B.02.1.SPK.0.15-598, which are in turn registered and announced in the Trade Registry Gazette numbered 7103 on 11 July 2008, and there are 2 Group Pension Funds registered and announced in the Trade Registry Gazzette dated 3 August 2011 and numbered 7872 with the decision of the Capital Markets Board dated 18 July 2011 and numbered B.02.1.SPK.0.15-310-01-01.697. 2 Group Pension Funds have been offered to the public as of 26 March 2012. These funds are managed by Finans Portföy Yönetimi A.Ş in accordance with the Fund Management Agreement signed between the Entity and Finans Portföy Yönetimi A.Ş. (31 December 2011: 7). 1.4. Details of the Company’s operations and nature of field of activities Principles of personal and group private pension operations are determined based on the Pension, Saving and Investment System Law No. 4632 which is amended by Law No:6327 with effect from 1 January 2013 and the principles of life insurance operations are determined based on the Insurance Law No. 5684 and standards and policies set out in prevailing regulations. 59
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
1.5. Average number of the Company’s employees based on their categories 31 December 2012
31 December 2011
3
4
Top management
22
20
Officers
Managers
101
91
Marketing and sales employees
144
136
Other
16
14
Total
286
265
1.6. Remuneration and fringe benefits provided to top management The gross remuneration and fringe benefits provided to top management such as; general manager, assistant general managers and general coordinators in the current period amount to TRY 2,245,394 (31 December 2011:TRY 1,616,867). 1.7. Distribution tables used in the distribution of investment income and operating expenses (employees, administration, research and development, marketing, selling, and other operating expenses) in the financial statements In accordance with the “Communiqué Related to the Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” dated 4 January 2008, issued by the Turkish Undersecretariat of the Treasury, known and exactly distinguishable operating expenses are distributed to related branches directly. Undersecretariat of the Treasury issued 9 August 2010 dated and 2010/9 numbered “Communiqué Related to the Changes in Procedures and Principles for the Keys Used in the Financial Statements Being Prepared In Accordance With Insurance Accounting Plan” effective from 1 January 2011 for the expenses recorded not directly under the related segment. The expenses are distributed to pension and insurance segments according to the arithmetical average of the ratio of the number of insurance policies to the pension contracts which are effective at the year ends for last three years and the ratio of the contribution income from pension contracts to the premium earned produced in last 3 years. The expenses that are distributed to the insurance segment is distributed to life and non-life branches in accordance with the average of 3 ratios calculated by dividing “number of the policies produced within the last three years”, “gross premium written within the last three years”, and “number of the claims reported within the last three years” to the “total number of the policies”, “total gross written premiums” and the “total number of the claims reported”, respectively. The Company, in accordance with the above mentioned circular, transfers some of its investment income from non-technical division to technical accounts by transfering its investment income from financial investments covering non-life technical provisions. 1.8. Stand-alone or consolidated financial statements Financial statements include financial information of Finans Emeklilik ve Hayat A.Ş., only. 60
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
1.9. Name and other information of the reporting company and changes occurred since the prior balance sheet date Name / Trade name Headquarter address
Finans Emeklilik ve Hayat A.Ş. Sahrayıcedit Mah. Halk Sok. No:48, 34734 Kozyatağı, Kadıköy, İstanbul
Phone Fax
+90 216 468 03 00 +90 216 411 28 48
Web page address
www.finansemeklilik.com.tr
E-mail address
info@finansemeklilik.com.tr
There has been no change in the above information since the prior balance sheet date. 1.10. Subsequent Events Subsequent events after the balance sheet date are disclosed in Note 46.
2. Summary of the Accounting Policies 2.1. Basis of Preparation 2.1.1. Basis of preparation of financial statements and specific accounting policies used in preparation of the financial statements Accounting Standards The Company prepares its financial statements in accordance with the “Communiqué Related to the Financial Reporting of Insurance, Reinsurance, and Pension Companies” as promulgated by the Undersecretariat of the Treasury based on Article 18 of the Insurance Law and Article 11 of Pension Savings and Investment System Law (‘‘Individual Retirement Law’’) in accordance with the Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), and other accounting and financial reporting principles, statements and guidance issued by the Undersecretariat of the Treasury (collectively “the Reporting Standards”). In Article 4 of the related communiqué; it is stated that procedures and principles related to accounting of insurance contracts, subsidiaries, associates and joint ventures and presentation of unconsolidated and consolidated financial statements together with their explanatory notes which will be announced to the public will be determined by the further communiqués of the Undersecretariat of the Treasury. Within this respect, the 4th standard of the Turkish Accounting Standards Board (“TASB”) for the ‘Insurance contracts’ became effective on 25 March 2006 for the accounting periods beginning on or after 31 December 2005. The Standard is effective as of 25 March 2006; however, it is not applicable for the current period since International Accounting Standards Board has not yet completed the second phase of its project. Within this scope, the Decree “Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions” is issued in the Official Gazette No: 26606 on 7 August 2007 and was effective as of 1 January 61
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
2008 and related regulations, circulars and sector announcements are issued by Undersecretariat of the Treasury. The accounting policies applied in accordance with these regulations, circulars and sector announcements are summarized under its own title in the following sections. Statutory Decree No: 660, which has been become effective and published in the Official Gazette on 2 November 2011, and the Additional Clause 1 of the Law No: 2499 were nullified and accordingly, Public Oversight, Accounting and Audit Standards Institution (the “Institution”) was established. As per Additional Article 1 of the Statutory Decree, applicable laws and standards will apply until new standards and regulations be issued by the Institution and will become effective. In this respect, the respective matter has no effect over the ‘Basis of The Preparation of Financial Statements” Note disclosed in the accompanying financial statements as of the reporting date. “Circular Related to the Presentation of Financial Statements”, issued by the Turkish Treasury in the 18 April 2008 dated and 26851 numbered Official Gazette, regulates the content of the financial statements to make them comparable with the financial statements of previous periods and the other companies. Law No: 6327 which was published in the Official Gazette on 29 June 2012 has brought a legislative amendment to the requirement on the payment of insurance companies to insurance policy holders of whose savings are made by means of premiums or contributions to pensions and/ or insurance policies as effective from 29 August 2012. Under the amendment, only revenues on the payments made to the policyholders that make savings through the premium and contributions they pay, by the pension funds, support funds and insurance and pension companies having legal entities, are considered as earnings on movables and are subject to income withholding tax under certain rates. Withholding rates are determined by the Council of Ministers. Revenues only obtained through the payments made by insurance policy holders that leave pension funds or that complete their insurance policy terms are considered as earnings on movables and are subject to income withholding tax under certain rates. Withholding rates are determined by the Council of Ministers. Payments of the annual revenue insurance policies with single premium are exempt from income taxes and income withholding tax. 2.1.2. Other related accounting policies relevant for the financial statements Preparation of Financial Statements in Hyperinflationary Periods In accordance with the Undersecretariat of the Treasury’s statement no: 19387 issued on 4 April 2005, the Company’s financial statements as of 31 December 2004 are adjusted and its 2005 openings are prepared based on the requirements set out in “the preparation of financial statements in hyperinflationary periods” specified in the CMB’s Decree Volume: XI, No: 25 “Accounting Standards in Capital Markets” which was published in the Official Gazette No: 25290 on 15 November 2003. In 2005, the preparation of financial statements in hyperinflationary periods has not been applied in accordance with the same statement of the Undersecretariat of the Treasury. Comparative Information and Restatement of Prior Period Financial Statements Financial statements of the Company have been prepared comparatively with the prior period. If the presentation or classification of the financial statements is changed, in order to maintain consistency, financial statements of the prior periods are also reclassified in line with the related changes. 62
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Balance Sheet 31 December 2011 -Other Cash and Cash Equivalents (1) -Bank Guaranteed and Credit Card Collections (Less than 3 months) (1)
Reported
Classification
Reporting
5,578,637
(5,578,637)
-
-
5,217,913
5,217,913
-Receivables from Insurance Operations(1)
13,926,167
360,724
14,286,891
-Prepaid Expenses (Short term) (2)
14,038,814
(14,038,814)
-
-Deferred Expenses (2)
-
13,780,005
13,780,005
-Other Prepaid Expenses (2)
-
258,809
258,809
6,086
(6,086)
-
-
6,086
6,086
-Prepaid Expenses (Long term) (2) -Other Prepaid Expenses (2) -Prepaid Incomes (2) -Deferred Commission Income (2)
(52,022)
52,022
-
-
(52,022)
(52,022)
33,497,682
-
33,497,682
(1) Reclassifications were made in the Company’s financial statements as of 31 December 2011 in accordance with the sector announcement numbered 2011/14 regarding the new account codes opened in Insurance Chart of Accounts. (2) Reclassifications were made in the Company’s financial statements as of 31 December 2011 in accordance with the sector announcement numbered 2012/7 regarding the New Account Codes and the Presentation of the Financial Statements. a. Technical Reserves Unearned premium reserve, outstanding claim reserves and their reinsurance shares in the financial statements are recognized based on the below principles in accordance with Article (16) of the Insurance Law No: 5684 effective at 14 June 2007, Article (8) of the Pension, Saving and Investment System Law No. 4632 dated 28 March 2001 which is amended by Law No:6327 with effect from 1 January 2013 and the requirements set out in the Decree “Technical Provisions of Insurance and Reinsurance Companies and Pension Funds and Assets Held For Such Provisions” issued in the Official Gazette No: 26606 dated 7 August 2007. Unearned premium provision: The Company is required to provide unearned premium reserves for all insurance contracts except for the contracts for which mathematical reserves are provided. Unearned premium reserves is provided for the premiums corresponding to the annual insurance guarantees provided in policies with maturities for more than one year that are annually renewed. Policies providing guarantees given for the possibilities of life and death or both and for personal accident, disability by illness, treatment cost by accident, unemployment, insurance of daily benefits during hospitalization by accident or illness, temporary incapacity, death by accident, death by accident in public transport and serious illness are considered as life insurance policies and their premiums are classified as life insurance premiums. Such annual supplementary coverages are given together with life insurance policies as package policy deals, such coverage are assessed separately from the life insurance policies. 63
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Unearned premiums reserve is the carried forward portion of unearned gross premiums written in the current period, without commissions or any other deductions, and is calculated on a daily prorata basis. It is the carried forward portion of the written gross premiums less the portion allocated for accumulation for effective annual life policies and for long term life policies with accumulation premiums. Future portion(s) of commissions paid to agencies, commissions received in relation with premiums ceded to reinsurers, production expense shares and amounts paid for non-proportional reinsurance treaty agreements since 1 January 2008 are recognized under the deferred income/ loss and other related accounts. Regardless of any classification; incentives, profitability and similar commissions which are not related to insurance policies are not considered in deferred income/ loss calculations. In this context, the Company calculated TRY 17,299,647 deferred commission expense and TRY 69,102 deferred commission income at the end of 2012 (31 December 2011:TRY 13,780,005 deferred commission expense and TRY 52,022 deferred commission income). Terms of reinsurance treaty agreements are considered in the calculation of reinsurers’ share of unearned premium reserves. In the related period, as the financial statements are prepared, the “Carried Forward Unearned Premium Reserves” account should reflect the “Unearned Premium Reserves” account of the prior period’s financial statement and “Unearned Premium Reserves” for the period should be recognized as the sum of unearned portion of premiums of policies effective as of the balance sheet date, which are calculated on a daily basis. Start date and end date of insurance coverage is considered as half business days in the calculation in accordance with the provisions of the Sector Circular no: 2009/9 “Adaptation of Technical Reserves Regulation” issued on 27 March 2009 and the requirements of the Communiqué of “Changes in Technical Reserves for Insurance, Reinsurance and Pension Companies and the Related Assets That Should Be Invested Against Those Technical Reserves” issued by the Undersecretariat of Treasury on the Official Gazette dated 28 July 2010 and numbered 27655. Also, for the deferral of commissions paid to agencies and for the commissions received from reinsurers, the effective periods stated above should be considered, consistent with the unearned premium provision. Unexpired risk reserves: In accordance with the Communiqué on Technical Reserves, the companies should provide unexpired risk reserves against the risk that the claims that may occur for the effective policies may exceed the unearned risk reserves provided for these policies, regarding the estimated claim/ premium ratio. Estimated claim premium ratio is calculated by dividing the incurred claims by earned premiums. If the estimated claim premium ratio exceeds 95%, the ratio exceeding 95% is multiplied by net unearned premiums reserve and this amount is recorded as net provision for unexpired risk reserve. The ratio exceeding 95% is multiplied by gross unearned premiums reserve and this amount is recorded as gross provision for unexpired risk reserve. The difference between net and gross provision for unexpired risk reserve is considered as reinsurer share. 64
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
As of 31 December 2012, unexpired risk reserve amounting to TRY 101,544 is calculated and recorded for the personal accident branch (31 December 2012: None). As of the balance sheet date, there are no unexpired risk reserves for the life branch. Outstanding claim reserves: Outstanding claims reserve is provided for outstanding claims incurred and calculated but not actually paid in prior or current period, or outstanding claims for which the related amount couldn’t be calculated, but carried by their estimated values. Amendments made by the Undersecretariat of Treasury in Communiqué of “Amendments to the Technical Reserves Communiqué” published in the Official Gazette no: 27655 dated 28 July 2010 are effective as of 30 September 2010. Following the amendments in the related Communiqué by the Undersecretariat of Treasury, the Circulars no: 2010/12, 2010/13 and 2010/14 and the sector announcement no: 2010/29 have been issued. These included clarifications for the accounting of salvage and subrogation income, measurement of incurred but not reported claim reserves and disclosures of some specific issues, and thus eliminated the unresolved and vague matters that were not explicitly described in previous circulars and sector announcements; then the Circular no: 2010/16 have been issued to clarify some uncertain issues in the sector. It has been stated that such new regulations are effective as of 30 September 2010. Claims incurred but not notified by the balance sheet date are considered as incurred but not reported (“IBNR”) claims. There is a change in the method of calculating incurred but not reported claims According to the circular numbered 2010/14 about the “Incurred but not reported outstanding claims reserve for life insurance branch” by the Undersecretariat of Treasury. In accordance with this change, a weighted average ratio is used which is calculated by dividing the gross claims that are incurred prior to but reported after the balance sheet date during the previous 5 or more years by the yearly average coverage amounts in these years. In addition, it will be added an additional triangle for subrogation, salvage and other similar incomes for each branch for necessary calculations by automatically in accordance with the 2011/23 numbered "Basis of Incurred but Not Reported Provision Calculation" issued by the Undersecretariat of Treasury as of 26 December 2011. The Company has provided a total reserve of TRY 3,767,068 for incurred but not reported claims for life branch as of 31 December 2012 (31 December 2011: TRY 3,228,002), In accordance with the ninth paragraph of article 7 in the regulation for “Reinsurance and Pension Companies’ Technical Reserves and the Funding Related to Such Reserves”, for the calculations for newly operating branches, the actuary of the insurance company calculates adequacy difference between the incurred but not reported outstanding claims reserve and the outstanding claims reserve. 65
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
The methods per the circular numbered 2010/12 actuarial chain ladder method issued by the Undersecretariat of Treasury are used for accident branch of the Company. Actuarial chain ladder method used in order to estimate current period reserve based on past claims data. If reserve amount by this method exceeds the outstanding claims reserve then additional reserve is provided for the difference. There has been an amendment in methods used to calculate incurred but not reported claims reserve with the issuance of Communiqué numbered 2010/14 for “The Methods to Calculate Incurred but Not Reported Outstanding Claims Reserve”, published by the Undersecretariat of Treasury. Accordingly, a weighted average ratio is used which is calculated by dividing the gross claims incurred prior to but not reported as of the balance sheet date by the average annual coverage amounts for the past 5 years or more. For the newly operating branches, incurred but not reported claim reserve amount is calculated by the Company actuary for the five years after the start of the operations. The Undersecretariat of Treasury has issued the Circular No: 2011/23 "Basis of Incurred But Not Reported Provision Calculation” as of 26 December 2011. The following sections of the Circular have been come into effect as of 1 January 2012 and 31 December 2011, respectively: Legal decision titles of "Explanation on circular note of Calculation of incurred but not reported claims" and "Reflecting the negatively incurred but not reported test results fully" and "Reflecting the accrued subrogation, salvage and other claims to incurred but not reported test results"; and "Income from on trial litigations” come into effect as of 1 January 2012 and legal decision titles of revenues acquired from the files on lawsuit process as of 31 December 2011. In this context, Incurred but Not Reported Outstanding Claims amount was calculated by the Company for the current year and it is stated that there is no need to provide additional provision (31 December 2011: None). As the Company started its operations on accident branch in January 2008, no data is available for the past 5 years for the Accident branch. Based on the calculations using actuarial chain ladder method, no additional provision was needed (31 December 2011: None). As of 31 December 2012, based on the calculations using actuarial chain ladder method the result was zero but for being cautious, within the method approved by company’s actuaries, total amount of incurred but not reported outstanding claim reserve for non-life branch is calculated as TRY 4,962 (31 December 2011: TRY 3,036), In accordance with the related regulation, a weighted average ratio based on past 5 years is used which is calculated by dividing the claims incurred but not reported as of balance sheet date (net of subrogation, salvage and other related income), by the premium income. Adequacy calculations are performed by the companies’ actuaries for outstanding claim reserves related to newly operating branches for the following five years after the start of operations. Also, for branches where it has been concluded that the total number of claims are not sufficient, large scale claims are separated from the claims population, an adequacy calculation is done for such large claims. For newly operating branches and for branches where there are not sufficient number of claims, companies have to prepare outstanding claim provision adequacy table based on gross amounts and provide it to Undersecretariat of Treasury within 10 weeks after the balance 66
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
sheet date. As of every balance sheet date, this table demonstrates the outstanding claim reserve adequacy ratio calculated by dividing the outstanding claim reserve of the companies to actual paid compensation amounts of the related provisions. In cases where the outstanding claim adequacy ratio is under 100%, adequacy difference share amount is calculated by multiplying the 100% difference with current year outstanding claims reserve. Adequacy difference share amount is added to outstanding claims reserve for each branch to calculate final adjusted outstanding claim reserve as of balance sheet date. Outstanding claims incurred and calculated but not actually paid or incurred but not reported outstanding claims and all related expenditure shares are taken into consideration in calculating adequacy table and outstanding claim reserve. Under the Technical Reserves Regulation, companies are required to prepare outstanding claim reserves adequacy table for each branch at each year-end at gross amounts based on the formats specified by the Undersecretariat for the purpose of determining the adequacy of outstanding claim reserves measured by actuaries in relation to newly operated branches and inadequate number of claims. As of 31 December 2012, no additional provision is provided in relation to the outstanding claims adequacy test performed at each year-end (31 December 2011: 223,631). The Undersecretariat of Treasury issued the Circular No: 2011/23 "Basis of Incurred But Not Reported Provision Calculation� on 26 December 2011, with this circular, provision for outstanding claims can be discounted for the files that are in the process of litigation in order to present the financial statements fairly. The elements of this circular are as follows; a. It is possible that a winning ratio over the cases filed against the Company is calculated for each sub-branch for the previous five years. This winning ratio can be used to reduce the outstanding claims reserve for the files that are under legal process. The calculations are performed quarterly. b. The winning ratio is calculated based on the proportion of the litigation amount concluded in favor of the Company (increased litigation amount) compared to the lawsuits concluded in favor of the Company through the completion of all proceedings phases (including the revision of decision) or the conciliation or dismissal and the lawsuits concluded in favor of the Company through the system of arbitration to the total of all of the lawsuits concluded as explained above (irrespective of finalized against or in favor of the Company). c. The calculations are performed over the claim amount of the files; therefore some portion of this amount which corresponds to the unpaid amount due to partially accepted files should be considered as won case. d. During the winning ratio calculation, only the principal amount of claim should be included in the calculation; additional costs like; interest, attorneys' fee, expert fee, litigation costs should not be taken into account. However, the total reserve amount including all costs that are related to the file is considered during the calculation of reduction in the reserve amount. 67
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
e. The case files are considered as non-deductible while calculating IBNR. f. The reduction amount in outstanding claim provision should not be more than 25% of the total outstanding claims provision provided for the case files. As indicated in the first article, the companies which do not have five-year data for the sub-branch, the winning ratio can be calculated based on the years they have operated not exceeding 15%. The same principle is applied for the new branches. g. Ratio can be calculated separately for each file or can be calculated for the files in aggregate. However, total reduction amount cannot exceed the upper limits mentioned in Article 6. h. Regarding with the winning ratio, periodic reports and detailed explanations in the footnotes must be prepared for the Undersecretariat of the Treasury. In addition, all information and documentation should be ready for auditing related to calculation of winning ratio. Because the Company started its activities in November 2007, it has not occurred five-year data for the files in litigation process. The calculation of these files has not been made. Mathematical reserves: Companies engaged in life and non-life branches provide appropriate actuarial mathematical reserves in order to meet their liabilities to policyholders and beneficiaries having life, health and personal accident policies having more than one year of maturity. In addition, for disability from illness, serious illnesses, health and personal accident policies having more than one year of maturity, life insurance mathematical reserves are calculated in a manner that it would include mathematical reserve amount for additional guarantees calculated on an actuarial basis. Mathematical reserves consist of actuarial mathematical reserves and profit share reserves that are calculated separately for each effective policy, in accordance with the technical principles in the tariffs and which are explained in clauses (a) and (b) below. a) Actuarial mathematical reserve is the difference between the premiums received for the risks assumed and cash value of liabilities to policyholders and beneficiaries. Actuarial mathematical reserves are funded based on the formulas and elements of the approved technical principles of directions determined for life insurances having more than one year of maturity. Actuarial mathematical reserves are calculated on a prospective method by However, the sum of actuarial mathematical reserves calculated either based on the retrospective method (calculation of difference between the final value of premiums paid and the final value of the risks assumed) or based on the generally accepted methods by the Undersecretariat of Treasury cannot be less than this amount. When the actuarial mathematical reserve is calculated as negative, this value is deemed to be nil. In life insurance policies where accumulated premiums are collected, actuarial mathematical reserve includes the sum of accumulated portion of premiums. Actuarial mathematical reserves can be measured on an accrual or collection basis depending on the technical characteristics of the tariffs. 68
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
b) Profit share reserves consist of the income obtained from assets in relation to reserves provided for the obligations for the policyholders and beneficiaries in contracts for which the Company has committed to distribute profit shares; the guaranteed portion (not to exceed the technical interest income calculated based on the profit share distribution system prescribed in the approved technical principles of profit share) and prior years’ accumulated profit share reserves. Equalization reserves: It is the reserve provided for earthquake and credit guarantees in order to equalize the possible fluctuations in the claims compensation rates and to cover the catastrophic risks in subsequent periods. 12% of the net earthquake and credit insurance premiums are taken for the calculation of this reserve. Amounts paid for non-proportional reinsurance contracts are considered as premiums ceded in the calculation of net premium. The reserve is provided to the extent that reserves reach at 150% of the maximum net premium written in the last five financial periods. In a case of an incurrence of a claim, the amounts corresponding to the reinsurer and the amounts below the exemption limit determined in the contract cannot be deducted from the equalization reserves. The claims paid in relation to guarantees given are to be deducted from the equalization reserves starting from the amounts recognized in the first year, by the “first in first out” method. According to Circular No:2012/1, “The Circular on the Use of Equalization Reserve and Additional Information about some other Circulars”, it is possible to use the equalization reserve provided for catastrophic claims on the reimbursement of catastrophic claims. Additionally, it is possible to net off the outstanding claims provided, based on expertise report or the documents provided from legal authorities in case of catastrophe, from the equalization reserve. However, the related net off should not be done from current year equalization reserve. In accordance with the modification of the regulation issued by the Undersecretariat of Treasury dated 28 July 2010, numbered 27655 regarding “Reinsurance and Pension Companies’ Technical Reserves and the Funding Related to Such Reserves”, the companies which do not have past data to make the required calculations will consider 11% of the premium for death coverage as the earthquake coverage premium and they will reserve 12% of this amount. Accordingly, as of 31 December 2012, the Company booked equalization reserve of TRY 4,191,989 (31 December 2011: TRY 2,478,584), b. Premium Income, Claims and Commission Expenses Premium income represents premiums on policies written during the year and the current year portion of the installments of the accumulating life insurance policies and long term insurance policies that are written in the previous years, deducted by the reinsurers’ shares. In the life branch, the premium income is accrued at installment dates. 69
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
The Company records agency commission payables based on premiums income that are accrued but not yet collected as at the balance sheet date. For non-life and life policies branches, the commission amounts that will be paid once the premiums are collected are calculated in policy basis. Claims are recognized as expense as they are paid. Outstanding claims provision is provided for both reported unpaid claims at period-end and incurred but not reported claims. Reinsurers’ shares of claims paid and outstanding loss provisions are off-set against these reserves. c. Receivables From Insurance and Pension Operations / Payables From Pension Operations Receivables are impaired where there is objective evidence that the estimated future cash flows of the receivables due from insurance operations have been impacted. Those receivables that are deemed as not collectible are written–off. As of 31 December 2012, the Company does not have any uncollectable receivables (31 December 2011: The Company’s uncollectable receivables amounting to TRY 1,256,139 which belongs to 38,758 policies are written-off). The Company presents its receivables from and payables to reinsurance companies by netting off on company basis. Receivables from pension operations include entrance fees, fund management fees, sales orders account and receivables from the custodian. The Company records the fund management fees that were charged but not collected on the same day in the fund management fees receivable. Receivable from custodian on behalf of participants are presented under the receivables from custodian account. This amount is also recorded as the payables to the participants under payables for pension operations for the pension funds sold. Payables from pension operations include payables to participants, participants’ temporary account, purchase orders accounts and payables to intermediary agents of Pensions. Payables to the participants account include the contributions invested on behalf of the participants and the investment income from such investments which in total indicate the liabilities to the pension participants. Participants’ temporary account includes contributions by the participants which are not yet invested. Also, this account includes the amounts to be paid to participants after the sales of these funds (net of deductions of entrance fees) in cases the participants leave the pension fund plan. Payables to intermediary agents of pension plans include the payables for the services provided by intermediary agencies. d. Leasing Transactions Leasing – Company as a Lessee Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. 70
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. e. The Effect of Changes in Foreign Exchange Rates The Company values its assets and its liabilities with the Central Bank of Turkey foreign exchange bid rate as at the balance sheet date. Gains and losses arising from exchange rate transactions are recognized in the income statement. Premium receivables denominated in foreign currencies are valued with the Central Bank of Turkey foreign exchange rate as at the policy initialization date and the gains and losses arising from exchange rate transactions are reflected to the financial statements at the date of the premium collection. f. Subsequent Events Subsequent events cover the events between the balance sheet date and the issuance of the financial statements, even if they are occurred subsequent to the disclosures made on profit or other selected financial information. The Company adjusts its financial statements in the occurrence of any adjusting subsequent events. 2.1.3. Functional currency The Company’s financial statements are presented in Turkish Lira, the currency of the primary economic environment in which the Entity operates (its functional currency). The financial statements of the Entity are presented as TRY. 2.1.4. Rounding degree used in the financial statements All the balances presented in the financial statements are expressed in full in Turkish Lira (TRY). 2.1.5. Valuation method(s) used in the presentation of financial statements Financial statements, except for valuation of financial instruments, are prepared based on the historical cost method. 2.1.6. New and revised international financial reporting standards (a) New and Revised IFRSs affecting presentation and disclosure only There are not any new and revised IFRSs affecting presentation and disclosure of the Company. (b) New and Revised IFRSs affecting financial performance and/or balance sheet of the Company There are not any new and revised IFRSs affecting financial performance and/or balance sheet of the Company. 71
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
(c) Standards and Interpretations that are effective in 2012 with no impact on the 2012 financial statements The following new and revised standards below have been applied in the current year. The standards have not affected the amounts reported in the financial statements for the current and previous years but may affect the accounting of the transactions that will be made in the future. Amendments to IAS 12 Deferred Taxes – Recovery of Underlying Assets The amendment is effective for annual periods beginning on or after 1 January 2012. IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally be, through sale. The Company does not have investment property so the amendment did not have any effect on the financial statements. Amendments to IFRS 7 Disclosures - Transfers of Financial Assets The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. These amendments to IFRS 7 did not have a significant effect on the Company’s disclosures. However, if the Company enters into other types of transfers of financial assets in the future, disclosures regarding those transfers may be affected. (d) New and revised IFRSs in issue but not yet effective Amendments to IAS 1 Amendments to IAS 1 IFRS 9 IFRS 10 IFRS 11 IFRS 12 IFRS 13 Amendments to IFRS 7 Amendments to IFRS 9 and IFRS 7 Amendments to IFRS 10, IFRS 11 and IFRS 12 IAS 19 (as revised in 2011) IAS 27 (as revised in 2011) IAS 28 (as revised in 2011) Amendments to IAS 32 Amendments to IFRSs IFRIC 20
72
Presentation of Items of Other Comprehensive Income1 Clarification of the Requirements for Comparative Information2 Financial Instruments5 Consolidated Financial Statements3 Joint Arrangements3 Disclosure of Interests in Other Entities3 Fair Value Measurement3 Disclosures – Offsetting Financial Assets and Financial Liabilities3 Mandatory Effective Date of IFRS 9 and Transition Disclosures5 Consolidated Financial Statements, Joint Arrangements and Disclosures of Interests in Other Entities: Transition Guide3 Employee Benefits3 Separate Financial Statements3 Investments in Associates and Joint Ventures3 Offsetting Financial Assets and Financial Liabilities4 Annual Improvements to IFRSs 2009-2011 Cycle except for the amendment to IAS 13 Stripping Costs in the Production Phase of a Surface Mine3
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
1 2
3 4 5
Effective for annual periods beginning on Effective for annual periods beginning on 2009-2011 Cycle issued in May 2012. Effective for annual periods beginning on Effective for annual periods beginning on Effective for annual periods beginning on
or after 1 July 2012. or after 1 January 2013 as part of the Annual Improvements to IFRSs or after 1 January 2013. or after 1 January 2014. or after 1 January 2015.
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income The amendments to IAS 1 Presentation of Items of Other Comprehensive Income are effective for the annual periods beginning on or after 1 July 2012. The amendments introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the ‘statement of comprehensive income’ is renamed the ‘statement of profit or loss and other comprehensive income’ and the ‘income statement’ is renamed the ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments can be applied retrospectively. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. Amendments to IAS 1 Presentation of Financial Statements (as part of the Annual Improvements to IFRSs 2009-2011 Cycle issued in May 2012) The amendments to IAS 1 as part of the Annual Improvements to IFRSs 2009-2011 Cycle are effective for the annual periods beginning on or after 1 January 2013. IAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). The amendments to IAS 1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position. IFRS 9 Financial Instruments IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition. 73
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Key requirements of IFRS 9: All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability, that is attributable to changes in the credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss. The Company management anticipates that the application of IFRS 9 in the future may have a significant impact on amounts reported in respect of the Company’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until a detailed review has been completed. In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011). Key requirements of these five Standards are described below. IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements. SIC-12 Consolidation - Special Purpose Entities will be withdrawn upon the effective date of IFRS 10. Under IFRS 10, there is only one basis for consolidation, that is, control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s return Extensive guidance has been added in IFRS 10 to deal with complex scenarios. 74
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. SIC-13 Jointly Controlled Entities - Non-monetary Contributions by Venturers will be withdrawn upon the effective date of IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportional consolidation. IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards. In June 2012, the amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the application of these IFRSs for the first time. These five standards together with the amendments regarding the transition guidance are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted provided all of these standards are applied at the same time. IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments: Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope. IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. The Company management anticipates that IFRS 13 will be adopted in the Company's financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements. 75
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Amendments to IFRS 7 and IAS 32 Offsetting Financial Assets and Financial Liabilities and the Related Disclosures The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realization and settlement’. The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement. The Company management anticipates that the application of these amendments to IAS 32 and IFRS 7 may result in more disclosures being made with regard to offsetting financial assets and financial liabilities in the future. IAS 19 Employee Benefits The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognized immediately through other comprehensive income in order for the net pension asset or liability recognized in the statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a ‘net-interest’ amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. The amendments to IAS 19 require retrospective application. Annual Improvements to IFRSs 2009 - 2011 Cycle Issued in May 2012 The Annual Improvements to IFRSs 2009 - 2011 Cycle include a number of amendments to various IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2013. Amendments to IFRSs include: • Amendments to IAS 16 Property, Plant and Equipment; and • Amendments to IAS 32 Financial Instruments: Presentation. Amendments to IAS 16 The amendments to IAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16 and as inventory otherwise. The Company management does not anticipate that the amendments to IAS 16 will have a significant effect on the Company’s financial statements. 76
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Amendments to IAS 32 The amendments to IAS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes. The Company management does not anticipate that the amendments to IAS 32 will have a significant effect on the Company’s financial statements. IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (production stripping costs). Under the Interpretation, the costs from this waste removal activity (stripping) which provide improved access to ore is recognized as a non-current asset (stripping activity asset) when certain criteria are met, whereas the costs of normal on-going operational stripping activities are accounted for in accordance with IAS 2 Inventories. The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset and classified as tangible or intangible according to the nature of the existing asset of which it forms part. IFRIC 20 is effective for annual periods beginning on or after 1 January 2013. Specific transitional provisions are provided to entities that apply IFRIC 20 for the first time. However, IFRIC 20 must be applied to production stripping costs incurred on or after the beginning of the earliest period presented. The Company management anticipates that IFRIC 20 will have no effect to the Company’s financial statements as the Company does not engage in such activities. 2.2. Consolidation As of balance sheet date, the Company has no subsidiaries, associates and entities under common control. 2.3. Segment Reporting The Company operates in activities related with life insurance, the accident insurance related with life insurance and pension investment. The Company has segment reporting due to the diversification of the nature of its products. 2.4. Reserves in Foreign Currencies The Company’s financial statements are presented in the currency of the primary economic environment in which the Entity operates (its functional currency). The financial statements are expressed in TRY, the functional currency of Company. In preparing the financial statements of the Company, transactions in currencies other than TRY (foreign currencies) are recognized at exchange rates prevailing at the transaction date. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are retranslated to Turkish Liras at the rates prevailing on the balance sheet date. The non-monetary items which are followed at fair values and which are booked as their foreign currency amounts are translated to TRY with the exchange rate that is determined at the date of change of fair value. 77
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
2.5. Property, Plant and Equipment Property, plant and equipment are carried at cost, less any accumulated depreciation and impairment losses. Assets, other than land and ongoing constructions, are depreciated over their expected useful lives by using the straight line method. Estimated useful life, residual value, and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Assets acquired under finance lease are depreciated as the same basis as property, plant and equipment or, where shorter, the term of the relevant lease. Gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Property, plant and equipment, based on asset type, are depreciated with useful lives stated below: Useful Life Furniture and fixtures
4-5 years
Intangible assets
3-5 years
2.6. Investment Properties As of balance sheet date, no investment properties are held by the Company. 2.7. Intangible Assets Intangibles assets acquired separately are measured at cost value at initial recognition. Intangible assets acquired separately are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. Estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Acquired computer software licenses are capitalized on the basis of the costs incurred from the date of acquisition to the date to bring the specific software in use. These costs are amortized over their estimated useful lives (3-5 years). 78
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
2.8. Financial Assets Financial assets are classified into the following specified categories: financial assets as “at fair value through profit or loss”, “held-to-maturity investments”, “available-for-sale’ financial assets and “loans and receivables”. Effective interest method Effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Financial assets at fair value through profit and loss (Held-for-trading financial assets) Income related to the financial assets except for the financial assets at fair value through profit and loss is calculated by using the effective interest method. Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset can be classified as financial asset at fair value through profit and loss, if it is acquired principally for the purpose of selling in the short-term. Derivatives are also classified as held for trading unless they are designated as hedging instruments. Assets in this category are classified as current assets. Held-to-maturity investments Investments in debt securities with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as heldto-maturity investments. Held-to-maturity investments are recorded at amortized cost using the effective interest method less impairment, with revenue recognized on an effective yield basis. As of the balance sheet date, the Company has no held-to-maturity investments. Available-for-sale financial assets The Company has investments in unquoted equity investments that are not traded in an active market, but are classified as available-for-sale financial assets and stated at cost since their value cannot be reliably measured. Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognized in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. 79
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective interest method, less any impairment. 2.9. Impairment of Assets Impairment of non-financial assets Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For loans and receivables, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. For AFS equity securities, any increase in fair value subsequent to an impairment loss is recognized directly in equity. 2.10. Derivative Financial Instruments As of the balance sheet date, the Company has no derivative financial instruments. 80
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
2.11. Offsetting Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 2.12. Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments which their maturities at most three months from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 2.13. Share Capital The shareholding structure of the Company as of the balance sheet date is presented below: 31 December 2012 Shareholding Amount (TL)
Shareholding Rate (%)
Cigna Nederland Gamma B.V.
22,950,000
51
Finansbank A.Ĺž.
22,049,995
49
Other
5
<1
Total
45,000,000
100
Shareholding Amount (TL)
Shareholding Rate (%)
31 December 2011 Finansbank A.Ĺ&#x17E;.
44,999,995
100
Other
5
<1
Total
45,000,000
100
Profit reserves consist of legal reserves and extraordinary reserves. The legal reserves are funded in accordance with the requirements of Law. Extraordinary reserves are funded based on the General Assemblyâ&#x20AC;&#x2122;s decision for the use of capital addition. 2.14. Insurance and Investment Contracts - Classification Insurance Contracts Insurance contracts are contracts in which one party (insurer) accepts a significant insurance risk and pays compensation to the other party (insured) when any uncertain case affects the insured. The Company makes reinsurance agreements in which the Company (ceding company) is compensated by the insurer (reinsurer company) for one or more claims. Insurance contracts entered into by the Company under which the contract holder is another insurer (reinsurance) are included with insurance contracts. 81
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Insurance contracts are accounted for when the insurance risk is transferred, and classified as an insurance contract as of the maturity date and/or amortization of the all contractual rights and liabilities. Investment Contracts The Company does not have any investment contract as of the balance sheet date (31 December 2011: None) 2.15. Insurance and Investment Contracts With Discretionary Contribution Features Insurance and investments contracts with discretionary contribution features are described and disclosed in the Note 17. 2.16. Investment Contracts Without Discretionary Contribution Features None. 2.17. Borrowings The Company has no financial debt except for the finance lease payables accounted for in accordance with â&#x20AC;&#x153;TAS 17 Leasesâ&#x20AC;?. 2.18. Deferred Tax Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which is used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. 82
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Deferred tax assets and liabilities are stated on a net basis in the accompanying financial statements. Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity. 2.19. Employee Benefits Employee benefits / Provisions related to employee benefits: Under the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the Company. Such payments are considered as being part of defined retirement benefit plan in accordance with TAS 19 â&#x20AC;&#x153;Employee Benefitsâ&#x20AC;?. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation in the future. All actuarial gains and losses are accounted for in the statement of income. Profit-sharing and bonus plans The Company recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the companyâ&#x20AC;&#x2122;s shareholders after certain adjustments. The group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation. 2.20. Provisions Provisions, Contingent Liabilities and Contingent Assets As of balance sheet date total legal cases against the Company amount to TRY 3,216,895 for insurance claims (31 December 2011: TRY 2,024,706) and TRY 43,653 (31 December 2011: TRY 52,922) for others. As of 31 December 2012, outstanding claims reserve amounting to TRY 3,212,666 and provision for legal cases amounting to TRY 43,653 (31 December 2011: TRY 2,024,706 and TRY 52,922) have been provided for the aforementioned claims respectively. 2.21. Accounting of Income Premium and commission income Premium income represents premiums on policies written during the year. Unearned premiums, set aside to provide for the period of risk extending beyond the end of the financial year, are determined from premiums written during the year on a daily pro-rata basis. Commissions received in return for the premiums ceded to the reinsurance companies in the current period but relate to subsequent financial periods are accounted as deferred commission income. 83
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Interest income and expenses Interest income and expenses are accounted for on an accrual basis. Income related to the financial assets except for the financial assets at fair value through profit and loss is calculated by using the effective interest method in accordance with the â&#x20AC;&#x153;TAS 39 Financial Instruments: Recognition and Measurementâ&#x20AC;?. Financial assets at fair value through profit or loss are financial assets held for trading. Gains or losses related to held-for-trading financial assets are calculated based on the fair value of these assets. Held-to-maturity investments are recorded at amortized cost using the effective interest method less impairment, with revenue recognized on an effective yield basis. Available-for-sale financial assets are measured at subsequent reporting dates at fair value except available-for-sale investments that do not have quoted prices in an active market and their fair values cannot be reliably measured are stated at cost. Realized gains and losses related with the available-for-sale financial assets are included in profit or loss for the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognized directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in the profit or loss for the period. Impairment losses recognized in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss. Impairment losses recognized in profit or loss for debt instruments classified as available-for-sale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss. Management fee for fund administration Management fee income is calculated on a daily basis out of the net asset value of each fund at a maximum of 0.010%. Insured partyâ&#x20AC;&#x2122;s share in administrative expenses A portion at a rate of 8% at maximum is deducted out of the contributions of each participant as the share in the administrative expenses. 84
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Entrance fee income Entrance fee income is accrued on the signed date of the proposal form of the pension contract either at the initial entry to the system or at the formation of a new pension account. The amount is not to exceed half of the monthly minimum wage level set by the State. 2.22. Leasing â&#x20AC;&#x201C; the Company as Lessee The Company has no leasing receivables as of the balance sheet date. 2.23. Profit Distribution As stated in the Companyâ&#x20AC;&#x2122;s Articles of Association, profit can be distributed following the allocation of legal reserves from earnings after tax under Article 519 of TCC and arriving at the estimated capital level set out in the business plan (excluding amendments to Article 6) that can be changed from some time to time and is determined upon the mutual consent of A1 Group and B1 Group shareholders. Each year 100% of the disributable profit can be distributed. A decision against this can only be made upon full consent of all the shareholders. 100% of the distributable profit for the years 2012-2027 can only be distributed to the A1 Group and B1 Group shareholders upon the common decision of the all General Assembly members and within the amounts determined in this General Assembly meeting. General Assembly may decide to distribute dividend to A1 Group and B1 Group shareholders in different rates. Clauses of the Article 509 of Turkish Commercial Code are reserved. 2.24. Related Parties For the purpose of the accompanying financial statements, shareholders, key management and members of board of directors together with their families and companies controlled by or affiliated with them, and associated companies are considered and referred to as related parties. 2.25. Earnings Per Share The companies whose equity shares are not traded on the stock exchange are not obliged to present earnings per share per TAS 33. Since the Companyâ&#x20AC;&#x2122;s shares are not traded in the stock market, earnings per share are not calculated in the accompanying financial statements.
3. Significant Accounting Estimates and Requirements Preparation of financial statements requires forecasting and comments that could affect the application of accounting principles, the reported amounts of assets and liabilities, and income and expenses. Actual results may differ from these estimates. Updates on accounting estimates are recorded in the period when the update is done or in the following periods that are affected by the updates. 85
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
In particular, with the largest effect on the amounts presented in the accompanying financial statements, the significant estimation uncertainty and critical information are described in the following notes: Note Note Note Note Note Note Note Note Note Note Note Note
4.1 4.2 6 8 10 11 12 14 17 21 22 23
– – – – – – – – – – – –
Insurance and financial risk management Financial risk Tangible assets Intangible assets Reinsurance assets Financial assets Receivables and payables Cash and cash equivalents Insurance liabilities and reinsurance assets Deferred income taxes Retirement benefits Other liabilities and expense accruals
4. Insurance and Financial Risk Management 4.1. Insurance Risk 4.1.1. Objective of managing risks arising from insurance contracts and policies used to minimize such risks Insurance risk is defined as the probability of the exposure to a risk covered by an insurance contract and the uncertainty related with the size of the damage. The most crucial risks arising from insurance contracts in life insurance companies are mortality, investment and the reinsurance risks. The Company has established several committees in addition to the related management units and applies internal control procedures in order to minimize operational risks. A risk underwriting method, in accordance with the risk evaluation criteria determined with the contracted reinsurers and the guarantees requested by the targeted insurer segments, is determined for the risk management related with the provision of insurance guarantees. In accordance with the framework of the reinsurance agreements agreed upon with contracted reinsurers, the Company accepts or denies the insurance risks that are under a specific level and cedes the risks that are above a certain level to contracted reinsurance companies or to uncontracted reinsurance companies in a facultative manner. The Company also has a Catastrophic Excess of Loss Reinsurance Contract to protect its conservation against risks of natural disasters such as earthquakes, floods, storms and against massive deaths after traffic accidents and terrorist attacks. The Company considers the geographical distribution of the current and future potential insurers and the possible catastrophic scenarios in determining the coverage of this reinsurance policy. 86
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
A Risk Underwriting Regulation has been implemented to effectively manage the Companyâ&#x20AC;&#x2122;s insurance risks by which the risk underwriting processes are applied. A Risk Evaluation Committee is established for the purpose of effective valuation of insurance risks. Following the realization of the life risks that are guaranteed by the Company, it is crucial to evaluate the valid claims in the possible shortest time and to pay the determined claims to the benefit holders without any delay. As the Company has no accumulated life insurance contracts as of the balance sheet date, there is no guaranteed profit share liability. 4.1.2. Information about insurance risk including the information about the followings (before and after the reduction of risk through reinsurance) 4.1.2.1. Sensitivity to insurance risk Sensitivity to insurance risk has several reasons. The Company manages these risks by the effective risk underwriting policy and the claim payment process together with appropriate reinsurance contracts. The purpose for underwriting risk for companies is to build profitable business volume and to enlarge this business volume in line with actuarial principles. For this purpose, it is crucial to make the risk selection process cautiously and to avoid inappropriate decisions and applications. The most significant error would be the realization of claims at a higher level than expected. Additionally, to protect the insurance company from fraudulent activities arising from risks related with candidates with intentions to deceive at the stage of issuing life insurance contracts is an important matter. Consequently, risk underwriting is a process by which the Company covers itself against risks for payments of claims in a short period of time to insured parties whose lives are in high risk situations. Although the probability of such risky situations in the total portfolio is low, the risk constitutes significance for the financial position of the Company when incurred, due to the size of the claims to be paid. Occasionally, it is not possible to anticipate these risks beforehand accurately. The purposes of risk underwriting can be classified under three main categories: (a) To have reasonable risk premium ratios for insured parties exposed to a reasonable level of risk, (b) To benefit from the mortality values formed for normal and non-standard risk classifications in determining pricing of an insurance product, (c) Preventing price discrepancies applied to normal and non-standard risk groups. Companyâ&#x20AC;&#x2122;s risk underwriting policy depends on the premium production strategy, the type, the size and the appropriate geographical distribution of the risk incurred. The risk limits determined in the Risk Underwriting Regulation are reviewed in line with the needs of the Company and the structure of the changing life insurance portfolio. Special attention is paid in the process of selection of the correct risk level. 87
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Generally accepted and internationally recognized insurance risk valuation tools are used in the Company’s risk underwriting processes. In valuation of medical, personal and financial technical risks, the numeric risk valuation results obtained from the web based insurance underwriting tool, MIRA (Munich Re Internet Risk Assessor), of Munich Re, the leader of the reinsurance program, is used for controls. The Risk Underwriting Regulation is reviewed annually in line with the changes in the guarantees provided, the customers and the needs of the sale channels of the portfolio and is revised upon the discussions held at the Risk Evaluation Committee so as to help increase the Company’s profitability and provide an effective risk underwriting process. In the process of medical risk assessment, assistance is received from a contract medical risk assessment institution. Furthermore, personal (professional work, interests, life style, geographical location and moral risk) and financial risk assessments are taken into consideration. In accordance with the reinsurance contract (treaty) limits set in the reinsurance program, the Company accepts or denies the insurance risks that are under a specific level and cedes the risks that are above a certain level to contracted reinsurance companies or to uncontracted reinsurance companies in a facultative manner. This leads to an opportunity to enter into high level insurance contracts. The Company makes formal declarations according to legislation in relation with the transaction acceptances. Company’s reinsurance contracts in the life and accident branches consist of quota- share, excess loss and catastrophic excess of loss reinsurance contracts. Also, the Company may enter into facultative reinsurance contracts in the international reinsurance market for risks exceeding automatic treaty limits. For the life insurance policies with the risk elements, an amount not to exceed the maximum retention (based on actuarial calculations) for the death and other additional coverage is held by the Company. Amounts exceeding that level are ceded to reinsurers via quota-share and excess of loss reinsurance contracts. However, Company’s retention for some recently started insurances such as Critical illness and non-voluntary unemployment are very limited. The leader reinsurer in the Company’s proportional reinsurance contracts is Münchener Rückversicherungs-AG (Munich Re), located in Munich. The second largest reinsurance company in the reinsurance contracts is Milli Reasürans T.A.Ş. (Milli Re). The third largest reinsurer is Mapfre Re, located in Madrid. The most recent ratings of these companies are presented below: S&P
A.M. Best
Reinsurer
Rating
Outlook
Date
Rating
Munich Re
AA- (very strong)
Stable
27 September 2012
A+(Superior)
Milli Re Mapfre Re
Outlook
Date
Stable 30 November 2012
trAA
-
31 July 2012
B+ (Good)
Negative
10 October 2012
BBB+
Negative
25 October 2012
A (Excellent)
Negative
26 June 2012
Outstanding claims are examined and updated periodically as the payment of insurance claims to the benefits holders in the possible shortest time is essential. 88
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
4.1.2.2. Insurance risk concentrations, which include the methods used by the management to identify the concentrations and common characteristics of each concentration criteria (the nature of the insured event, geographical area or currency) The Company issues insurance contracts in the life and accident branches. The Companyâ&#x20AC;&#x2122;s gross and net insurance risk concentrations (after reinsurance) in terms of insurance branches are summarized as below: 31 December 2012 Branch Life
Total Gross Claim Liability (*)
Reinsurer Share in Total Claim Liability
Companyâ&#x20AC;&#x2122;s Net Claim Liability
11,596,538
1,382,755
10,213,783
Accident Total
4,962
1,552
3,410
11,601,500
1,384,307
10,217,193
Total Gross Claim Liability (*)
Reinsurer Share in Total Claim Liability
Companyâ&#x20AC;&#x2122;s Net Claim Liability
8,852,856
1,079,313
7,773,543
31 December 2011 Branch Life Accident Total
3,036
775
2,261
8,855,892
1,080,088
7,775,804
(*) Total claim includes all reserves provided as of the balance sheet date; outstanding claims reserve. The Company issues its insurance contracts in the Turkish Republic. The insurance policies that constitute the outstanding claims reserve of the Company as of the balance sheet date are policies issued in TRY. 4.1.2.3. Comparison of claims incurred with past estimations 31 December 2012 Claim Year
2008
2009
2010
2011
2012
Total
Claim Year
3,132,875
7,429,471
9,636,803
16,187,690
21,245,042
57,631,881
1 Years Later
1,344,049
3,784,708
3,053,013
3,500,325
-
11,682,095
2 Years Later
13,416
113,071
115,299
-
-
241,786
3 Years Later
22,540
113,440
-
-
-
135,980
4 Years Later
3,359
-
-
-
-
3,359
4,516,239
11,440,690
12,805,115
19,688,015
21,245,042
69,695,101
3,359
113,440
115,299
3,500,325
21,245,042
24,977,465
Payments for incurred claims per year Total claim payments on 1 January -31 December 2012
89
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
31 December 2011 Claim Year
2008
2009
2010
2011
Total
Claim Year
3,132,875
7,429,471
9,636,803
16,187,690
36,386,839
1 Year Later
1,344,049
3,784,708
3,053,013
-
8,181,770
13,416
113,071
-
-
126,487
2 Years Later 3 Years Later Payments for incurred claims per year Total claim payments on 1 January -31 December 2011
22,540
-
-
-
22,540
4,512,880
11,327,250
12,689,816
16,187,690
44,717,636
22,540
113,071
3,053,013
16,187,690
19,376,314
4.1.2.4. Effects of the changes in assumptions used in the measurement of insurance assets and liabilities showing the effect of each change separately that has significant effect on financial statements Explained ‘’Significant Accounting Estimates and Requirements’’ Note 3. 4.2. Financial Risk The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company is subject to market risk (exchange rate risk, interest rate risk, and price risk), liquidity risk and credit risk due to its financial assets and liabilities. The Company’s risk management program focuses on minimizing the negative effects of the ambiguities in financial markets on the Company’s financial statements. The Company is mostly exposed to interest risk and price risk in relation with financial investments, to credit risk in relation with insurance receivables and exchange rate risk due to policies and assets in foreign currencies. Risk management is carried out by the Risk Management Committee in accordance with policies approved by the Board of Directors. The foreign currency risk, interest rate risk, loan risk, risk of financial instruments and the other non derivative financial instruments and liquidity surplus procedures are decided by the Board of Directors. Capital requirement is calculated at each reporting period in accordance with the Decree “Measurement of Capital Adequacy of Insurance, Reinsurance and Private Pension Companies” published in the Official Gazette No: 262761 on 19 January 2008. The Company’s existing capital meets the minimum capital requirement calculated by both methods. The Company’s capital adequacy table prepared as at 31 December 2012 is summarized below. As of 31 December 2012, the capital adequacy of the Company is TRY 25,317,411 (31 December 2011: TRY 20,767,265) and TRY 30,073,076 (31 December 2011: TRY 23,415,710) based on the first and second method, respectively. The capital requirement calculated in both methods is lower than the Company’s equity as of 31 December 2012. The equity as of 31 December 2012 calculated in accordance with the Decree is TRY 80,678,996 (31 December 2011: TRY 58,797,850). 90
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
CAPITAL ADEQUACY TABLE 31 December 2012
31 December 2011
19,334
9,293
23,789,536
19,969,920
1,508,541
788,052
25,317,411
20,767,265
14,948,267
11,719,274
1 METHOD st
According to Non-Life Branches According to Life Branches According to Pension Branch TOTAL REQUIRED CAPITAL
2nd METHOD Asset Risk Reinsurance Risk Excessive Premium Increase Outstanding Claims Risk Retention Risk Interest and Exchange Rate Risk
202,852
597,751
6,910,895
5,047,541
255,430
194,395
7,739,445
5,853,676
16,187
3,073
TOTAL REQUIRED CAPITAL
30,073,076
23,415,710
CAPITAL (*)
80,678,996
58,797,850
TOTAL REQUIRED CAPITAL
30,073,076
23,415,710
CAPITAL ADEQUACY RESULT
50,605,920
35,382,140
(*) This figure also includes equalization reserve. Interest rate risk The Company is exposed to interest rate risk arising from fluctuations in prices of financial instruments caused by changes in interest rates. The Companyâ&#x20AC;&#x2122;s sensitivity to interest rate risk is related to the unmatching maturities of assets and liabilities. This risk is managed through meeting the assets that are affected by the changes in interest rate with the same type of liabilities. The remaining maturity of assets and liabilities with regard to repricing is the same as the remaining maturity described in liquidity risk. For this reason, there is not an additional table about interest rate risk in the footnotes of the financial statements. Sensitivity of exchange rate risk As of the balance sheet date the Entity faces an exchange rate risk for the currency, EURO and USD. 31 December 2012 Deposits and Guarantees Given Expense Accruals
TRY Equivalent (Functional currency)
EURO
USD
7,130
-
4,000
(13,181)
(5,605)
-
Due to Shareholders
(209,776)
-
(117,680)
Net Foreign Currency Position
(215,827)
(5,605)
(113,680)
91
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
TRY Equivalent (Functional currency)
31 December 2011 Deposits and Guarantees Given
EURO
USD
7,556
-
4,000
Other Liabilities
(48,545)
(19,865)
-
Net Foreign Currency Position
(40,989)
(19,865)
4,000
The Company’s sensitivity to an increase and decrease by 10% in Euro exchange rate and the gain and loss due to this sensitivity is presented in the table below. 10% is the rate which is used by senior management for sensitivity analysis and represents management’s expectation for the probable changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as of the end of the financial period and shows the effects of the 10% change in exchange rate as of the end of the year. A positive amount indicates an increase in profit/loss and shareholders’ equity. 31 December 2012 EURO USD
31 December 2011
10% increase in rate
10% decrease in rate
10% increase in rate
10% decrease in rate
(1.318)
1.318
(4.855)
4.855
(20.265)
20.265
756
(756)
Market risk The Company is exposed to the price differences on government bonds and investment funds as of the balance sheet date. A 10% increase/decrease in government bonds prices as of 31 December 2012 leads to an increase/decrease in profit/loss before tax at an amount of TRY 2,059,436 (31 December 2011: TRY 2,761,088). A 10% increase/decrease in investment fund prices as of 31 December 2012 leads to an increase/decrease in profit/loss before tax at an amount of TRY 41,450 (31 December 2011: TRY 32,050). Credit risk Credit risk is the risk that the debtor defaults on its obligations related with receivables from insurance operations, under the terms of the insurance transactions. As the agencies of the Company are not given the right for collection, the premium receivables are followed on the basis of each insurer. The policies for which premium collections cannot be realized are cancelled in regular intervals. The Company has provided allowance amounting to TRY 55,157 for the impaired receivables of entrance fees in the accompanying financial statements (31 December 2011: TRY 76,623). Liquidity risk Liquidity risk is the possibility of Company’s not meeting its net funding liabilities. Cases such as deteriorations in markets or decreasing the credit rating which are resulted in decrease in fund resources generate liquidity risk. As of 31 December 2012 and 2011, the distribution of the assets and liabilities in terms of remaining maturities is presented in the below table: 92
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
31 December 2012 No Maturity
Up to 1 Month
1-3 Months
3-12 Months
1 Year to 5 Years
5 Years and over
Unallocated
Total
2,767,346
57,460,808
73,494,250
-
-
-
-
133,722,404
Financial Assets
-
-
-
9,629,200
-
10,965,160
776,519
21,370,879
Receivables from Main Operations
-
8,624,063
6,519,160
13,532,269
-
-
212,529,034
241,204,526
Prepaid Expenses and Income Accruals
-
99,149
770,811
16,691,405
-
-
-
17,561,365
Other Current Assets
-
-
-
-
27,465
-
-
27,465
Tangible Assets
-
-
-
-
-
-
1,153,925
1,153,925
Intangible Assets
-
-
-
-
-
-
1,381,891
1,381,891
Prepaid Expenses and Income Accruals (Long Term)
-
-
-
-
2,029
-
-
2,029
Other Non-Current Assets
-
-
-
-
-
1,444,691
-
1,444,691
2,767,346
66,184,020
80,784,221
39,852,874
29,494
12,409,851
215,841,369
417,869,175
Payables from Main Operations
-
13,682,022
580,723
4,571,059
-
-
209,549,234
228,383,038
Due to Related Parties
-
236,219
-
-
-
-
-
236,219
Other Payables
-
790,936
-
-
-
-
-
790,936
Insurance Technical Reserves
-
180,396
2,067,104
44,766,254
36,505,146
7,387,705
14,475,470
105,382,075
Taxes and Other Liabilities and Provisions
-
790,761
2,610,291
-
-
-
-
3,401,052
Deferred Income and Expense Accruals
-
121,999
2,824
60,073
4,677
1,352
-
190,925
Other Short Term Liabilities
-
21,357
-
2,300,666
-
-
405,245
2,727,268
Provisions for Other Risks
-
-
-
-
-
270,655
-
270,655
Equity
-
-
-
-
-
-
76,487,007
76,487,007
Total Liabilities and Equity
-
15,823,690
5,260,942
51,698,052
36,509,823
7,659,712
300,916,956
417,869,175
2,767,346
50,360,330
75,523,279
(11,845,178)
(36,480,329)
4,750,139
(85,075,587)
-
Assets Cash and Cash Equivalents
Total Assets Liabilities
Net liquidity surplus / (deficit)
93
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
31 December 2011 No Maturity
Up to 1 Month
1-3 Months
3-12 Months
1 Year to 5 Years
5 Years and over
Unallocated
Total
1,657,680
2,030,152
82,672,303
-
-
-
-
86,360,135
Financial Assets
-
-
-
-
20,822,302
6,788,580
682,516
28,293,398
Receivables from Main Operations
-
4,734,651
1,309,123
14,439,081
-
-
108,010,960
128,493,815
Prepaid Expenses and Income Accruals
-
51,395
524,563
13,462,856
-
-
-
14,038,814
Other Current Assets
-
41,587
-
-
27,890
-
-
69,477
Tangible Assets
-
-
-
-
-
-
1,200,494
1,200,494
Intangible Assets
-
-
-
-
-
-
856,241
856,241
Prepaid Expenses and Income Accruals (Long Term)
-
-
1,014
3,043
2,029
-
-
6,086
Other Non-Current Assets
-
-
-
-
-
907,221
-
907,221
1,657,680
6,857,785
84,507,003
27,904,980
20,852,221
7,695,801
110,750,211
260,225,681
Payables from Main Operations
-
9,048,131
25,979
4,326,271
-
-
106,346,619
119,747,000
Due to Related Parties
-
73,496
-
-
-
-
-
73,496
Other Payables
-
790,275
-
-
-
-
-
790,275
Insurance Technical Reserves
-
145,624
1,259,865
33,798,648
26,210,638
6,790,667
10,254,387
78,459,829
Taxes and Other Liabilities and Provisions
-
885,301
1,284,516
-
-
-
-
2,169,817
Deferred Income and Expense Accruals
-
376,206
1,589
50,270
-
-
-
428,065
Other Short Term Liabilities
-
-
1,720,000
-
-
372,478
2,092,478
Provisions for Other Risks
-
-
-
-
-
145,455
Equity
-
-
-
-
-
-
56,319,266
56,319,266
Total Liabilities and Equity
-
11,319,033
2,571,949
39,895,189
26,210,638
6,936,122
173,292,750
260,225,681
1,657,680
(4,461,248)
81,935,054
(11,990,209)
(5,358,417)
759,679
(62,542,539)
-
Assets Cash and Cash Equivalents
Total Assets Liabilities
Net liquidity surplus / (deficit)
145,455
In order to meet its current and potential liabilities, the Company holds adequate cash and similar resources and the Company management manages its liquidity risk by allocating its funding resources. The Companyâ&#x20AC;&#x2122;s liabilities are settled through its own equity.
94
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Fair value of financial assets The estimated fair values of financial instruments are determined using market data and, if possible, appropriate valuation methodologies. The Company measured its trading securities over the prices of stock market at the end of period and classified them as held for trading or financial assets available for sale. Management of the Company estimates that fair value of financial assets and liabilities are not significantly different from their registered value. Classification of fair value measurement The amendments to TFRS 7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. Fair value of financial assets and liabilities presented in the financial statements at fair value are determined as follows: Level 1: Financial assets and liabilities are valued at market price of its identical assets and liabilities traded in active market. Level 2: Except for the market value specified in the first level, financial assets and liabilities are valued by using inputs which determine the price observable in the market directly or indirectly. Level 3: Financial assets and liabilities are valued based on the data used to calculate the fair value of the assets and liabilities but not observable in the market. Classification, if available to be used, requires the use of observable market data. In this context, financial assets and liabilities measured at fair value, their fair value classification is as follows: 31 December 2012 Level 1
Level 2
Level 3
Total
-
-
-
*
-
-
Financial Assets: Financial assets available for sale (Note 11) (*) Financial assets held for trading (Note 11)
21,008,860
Total Financial Assets
21,008,860
21,008,860 21,008,860
(*) The Company has equity instruments classified as financial assets available for sale amounting to TRY 362,019 which is not listed and traded in an active market and it is recorded with its cost value since the fair value cannot be reliably measured. 31 December 2011 Level 1
Level 2
Level 3
-
-
-
Total
Financial Assets: Financial assets available for sale (Note 11) (*) Financial assets held for trading (Note 11)
27,931,377
Total Financial Assets
27,931,377
* 27,931,377
-
-
27,931,377
(*) The Company has equity instruments classified as financial assets available for sale amounting to TRY 362,021 which is not listed and traded in an active market and it is recorded with its cost value since the fair value cannot be reliably measured. 95
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Financial assets It is anticipated that fair value of the financial assets including cash and cash equivalents and other financial assets carried at cost will approximate to their book value based on their short term nature and having insignificant potential losses. Market value is taken as a basis in the measurement of fair value of government bonds, investment funds and pension funds. Financial liabilities It is anticipated that fair value of monetary liabilities will approximate to their carrying value based on their short term nature.
5. Segment Information The segment reporting of the Company per non-life, life and pension operations are disclosed below. 1 January â&#x20AC;&#x201C; 31 December 2012 Continuing operations Technical income Technical expense Operating expenses Technical profit / (loss)
Non-life
Life
Private Pension
Total
1,299
143,458,114
10,362,297
153,821,710
(121,149)
(37,542,234)
(737,890)
(38,401,273)
(55,880)
(79,045,177)
(12,558,862)
(91,659,919)
(175,730)
26,870,703
(2,934,455)
23,760,518
Other income / (expenses), net
12,736,825
Profit for the year
36,497,343
Income tax provision
(7,729,602)
Net profit for the year
28,767,741
1 January â&#x20AC;&#x201C; 31 December 2011 Continuing operations
Non-life
Life
Private Pension
Total
Technical income
81,970
103,789,972
8,997,860
112,869,802
Technical expense Operating expenses Technical profit / (loss) Other income / (expenses), net
5,231
(34,566,619)
(405,011)
(34,966,399)
(80,945)
(58,137,015)
(10,184,254)
(68,402,214)
6,256
11,086,338
(1,591,405)
9,501,189 3,441,447
Profit for the year
12,942,636
Income tax provision
(3,141,716)
Net profit for the year
96
9,800,920
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
6. Tangible Assets 31 December 2012 Furniture and Fixtures (*)
Leasehold Improvements
Total
2,724,626
Cost 1,920,514
804,112
Additions
Opening balance as of 1 January 2012
402,043
78,641
480,684
Disposals
(40,090)
-
(40,090)
2,282,467
882,753
3,165,220
(1,123,191)
(400,941)
(1,524,132)
(306,471)
(209,943)
(516,414)
29,251
-
29,251
(1,400,411)
(610,884)
(2,011,295)
882,056
271,869
1,153,925
Closing balance as of 31 December 2012 Accumulated Depreciation Opening balance as of 1 January 2012 Charge for the year Disposals Closing balance as of 31 December 2012 Carrying value as of 31 December 2012
(*) Since the finance lease contracts have expired as of 31 March 2012, the assets acquired through financial leases are followed as furniture and fixtures. 31 December 2011 Furniture and Fixtures (Including Leased Assets)
Leasehold Improvements
Total
Cost Opening balance as of 1 January 2011
1,617,966
694,069
2,312,035
Additions
302,548
110,043
412,591
Disposals
-
-
-
1,920,514
804,112
2,724,626
Opening balance as of 1 January 2011
(767,206)
(148,321)
(915,527)
Charge for the year
(355,985)
(252,620)
(608,605)
-
-
-
(1,123,191)
(400,941)
(1,524,132)
797,323
403,171
1,200,494
Closing balance as of 31 December 2011 Accumulated Depreciation
Disposals Closing balance as of 31 December 2011 Carrying value as of 31 December 2011
7. Investment Properties As of the balance sheet date, the Company does not have any investment properties (31 December 2011: none).
8. Intangible Assets
Rights 31 December 2012
Rights 31 December 2011
Opening balance as of 1 January
3,945,043
3,166,841
Additions
1,129,956
778,202
Closing balance as of 31 December
5,074,999
3,945,043
(3,088,802)
(2,472,173)
Cost
Accumulated Amortization Opening balance as of 1 January Charge for the year Closing balance as of 31 December Carrying value as of 31 December
(604,306)
(616,629)
(3,693,108)
(3,088,802)
1,381,891
856,241
97
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
9. Investments in Associates As of balance sheet date, the Company does not have any investments in associates (31 December 2011: None).
10. Reinsurance Assets 10.1. Assets, liabilities, income and expense from insurance contracts As of the balance sheet date reinsurance liabilities from insurance contracts are stated below: Payables to/ (receivables from) reinsures
31 December 2012
31 December 2011
(1,612,067)
(317,730)
Reinsurance income and expenses from insurance contracts are disclosed in Note 10.2. 10.2. Amounts recognized in profit or loss as a result of purchased reinsurance agreements The details of the amounts recognized in profit or loss as a result of reinsurance agreements are presented in the below table: Reinsurance Operation (Life Branch) Ceded Premiums to reinsurers (-)
1 January-31 December 2012 1 January-31 December 2011 (6,428,860)
(7,704,008)
Commissions received from reinsurers (+)
3,410,287
2,623,502
Reinsurer share of claims paid (+)
3,120,034
1,545,029
Reinsurers share of unearned premium reserve (+/-)
(608,610)
1,502,292
Reinsurers share of outstanding claims reserve (+/-)
303,442
116,235
Reinsurance Operation (Non-Life Branch) Ceded Premiums to reinsurers (-) Commissions received from reinsurers (+) Reinsurers share of claims paid (+)
1 January-31 December 2012 1 January-31 December 2011 (24,300)
(13,173)
5,537
9,485
280,000
-
Reinsurers share of unexpired risk reserve (+/-)
35,255
-
Reinsurers share of unearned premium reserve (+/-)
10,457
(658)
Reinsurers share of outstanding claims reserve (+/-)
778
192
11. Financial Assets The Company classifies its financial assets under categories of “held for trading” and “available for sale” financial assets.
Financial assets held for trading Financial assets available for sale Total
98
31 December 2012
31 December 2011
21,008,860
27,931,377
362,019
362,021
21,370,879
28,293,398
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
The details of financial assets available for sale and held for trading are presented below: 31 December 2012 Financial assets held for trading Government bonds
Cost Value
Fair Value
Book Value
17,795,391
20,594,360
20,594,360
390,500
414,500
414,500
18,185,891
21,008,860
21,008,860
Investment funds Total
Cost Value
Fair Value
Book Value
Unlisted equity shares (*) (**)
Financial assets available for sale
362,019
-
362,019
Total
362,019
-
362,019
(*) Unlisted equity shares consist of the shares of “Emeklilik Gözetim Merkezi” and ‘’Finans Faktoring A.Ş.’’ owned by the Company. (**) Company has transferred 2 Finans Faktoring A.Ş. shares amounting to TRY 2 to IBTECH Uluslararası Bilişim Ve İletişim Teknolojileri Araştırma, Geliştirme, Danışmanlık, Destek San. ve Tic. A.Ş. by share transfer agreement. 31 December 2011 Financial assets held for trading
Cost Value
Fair Value
Book Value
26,843,450
27,610,882
27,610,882
190,398
320,495
320,495
27,033,848
27,931,377
27,931,377
Cost Value
Fair Value
Book Value
Unlisted equity shares (*)
362,021
-
362,021
Total
362,021
-
362,021
Government bonds Investment funds Total Financial assets available for sale
(*) Unlisted equity shares consist of the shares of “Emeklilik Gözetim Merkezi” and ‘’Finans Faktoring A.Ş.’’ owned by the Company. The details of pension funds of the Company are disclosed in Notes 17.4 and 17.5. The Company did not issue any securities in the current period and did not hold any debt securities, which matured in the current period. The Company does not hold any marketable securities issued by the shareholders, affiliates and subsidiaries of the Company classified under marketable securities (31 December 2011: None). Value increases of financial assets in the last three periods as follows: Type of financial assets
31 December 2012
31 December 2011
31 December 2010
Financial assets held for trading
2,822,969
897,529
2,474,127
Total
2,822,969
897,529
2,474,127
Value increases reflect the differences between the carrying value as of the balance sheet date and the cost of the financial assets. The Company does not apply any hedge accounting. 99
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
12. Receivables and Payables Details of the Companyâ&#x20AC;&#x2122;s receivables are stated below: 31 December 2012 Receivables from insurance operations Receivables from pension operations Doubtful receivables from main operations Provisions for doubtful receivables from main operations (-) Total receivables
31 December 2011
25,215,391
14,286,891
215,989,135
114,206,924
55,157
76,623
(55,157)
(76,623)
241,204,526
128,493,815
The aging of overdue receivables from insurance operations is as follows: 31 December 2012
31 December 2011
1,247,112
574,889
31-60 days
372,607
133,479
Over 60 days
772,903
460,907
2,392,622
1,169,275
0-30 days
Total
As of balance sheet date, total entrance fee receivables amount to TRY 2,158,418 (31 December 2011: TRY 2,235,785). Aging of the overdue entrance fee receivables is as follows: 31 December 2012
31 December 2011
0-30 days
55,370
82,283
31-60 days
47,023
58,714
Over 60 days
1,374,103
874,818
Total
1,476,496
1,015,815
There are no guarantees received for the receivables of the Company. As of 31 December 2012, TRY 55,157 of entrance fee receivables has been classified into the impaired receivables from operations and a provision of TRY 55,157 has been provided for this balance at the financial statements (31 December 2011: TRY 76,623). Aging of doubtful receivables from overdue and undue insurance receivables are stated below:
0-30 days 31-60 days
31 December 2012
31 December 2011
2,508
5,684
3,162
6,565
Over 60 days
49,487
64,374
Total
55,157
76,623
The payables of the Company are disclosed in Note 19.
13. Derivative Financial Instruments None (31 December 2011: None). 100
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
14. Cash and Cash Equivalents 31 December 2012
31 December 2011
125,778,170
81,142,222
2,767,346
1,657,679
123,010,824
79,484,543
Cash at banks Demand deposits Time deposits Other cash and cash equivalents Total Interest accruals Cash and cash equivalents in the cash flows statement
7,944,234
5,217,913
133,722,404
86,360,135
(708,580)
(401,380)
133,013,824
85,958,755
As of the balance sheet date, time deposits of TRY 50,667,669 and TRY 72,343,156 TRY mature within one month and one to three months, respectively. The interest rates range from 4%-9% (31 December 2011: 2,030,152 and TRY 77,454,391 mature within one month and one to three months, respectively. The interest rates range from 8% - 12.35%.) As of the balance sheet date, the restricted time deposits amount to TRY 52,262,418 (31 December 2011: TRY 37,116,549). The Company does not have any cash and cash equivalents in foreign currency (31 December 2011: None).
15. Share Capital The Companyâ&#x20AC;&#x2122;s shareholding structure as of balance sheet date is disclosed in Note 1.1. The Company's nominal capital is TRY 45,000,000 as of 31 December 2012 (31 December 2011: 45,000,000) and it consists of 45,000,000 paid shares valued TRY 1 each share (31 December 2011: 45,000,000). There are no privileged shares. The Company is not under registered capital system. There are no treasury shares (31 December 2011: None). The Company does not have any future sales of shares in relation to any forward transactions or contracts. (31 December 2011: None).
16. Other Provisions and Capital Component of Discretionary Participation As of balance sheet date the Company does not have any income and expense item accounted for under shareholdersâ&#x20AC;&#x2122; equity. (31 December 2011: None). There is no exchange differences classified separately as an equity item. (31 December 2011: None). 101
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
17. Insurance Liabilities and Reinsurance Assets 17.1. Guarantees to be provided for life and non-life insurances and guarantees provided for life and non-life insurances based on assets 31 December 2012 Required Blockage Branch Life Non-life Total
Current Blockage
TRY
TRY
56,578,597
51,966,820
167,470
295,598
56,746,067
52,262,418
Required Blockage
Current Blockage
TRY
TRY
42,358,091
36,846,635
167,357
269,914
42,525,448
37,116,549
31 December 2011 Branch Life Non-life Total
According to the article 17 of the Insurance Law No: 5684 dated 14 June 2007, insurance companies are required to provide guarantees for the liabilities from domestic insurance contracts. According to the article 7 of The CommuniquĂŠ for the Financial Structure of Insurance, Reinsurance and Pension Plan Entities, published in the Official Gazette, dated 17 August 2007 and numbered 26616, insurance companies and pension plan entities operating in life and personal accident branches are required to provide their guarantees within two months following the period of calculating capital adequacy ratios. The Company has rectified the gap for the guarantees that existed as of 31 December 2012, on 28 February 2013. The guarantees provided by the Company for the life and non-life branch operations consist of the time deposits (31 December 2011: Time deposits). 17.2. Number of life insurance policies, additions, disposals in the current period, and current life insured parties and their mathematical reserves Unit 31 December 2012
Unit 31 December 2011
1,340,024
1,042,684
Addition
1,470,303
1,291,494
Disposal
(1,138,812)
(994,154)
1,671,515
1,340,024
1 January, Existing
31 December, Existing
As of 31 December 2012, life mathematical reserve amounting to TRY 45,821,650 (31 December 2011: TRY 34,290,491) has been provided in the financial statements for a total of 1,008,098 units (31 December 2011: 759,434 units) long term life policies issued by the Company. 102
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
17.3. Insurance guarantees given to non-life insurances per each branch 31 December 2012
31 December 2011
Death Benefit for deceased
35,506,251
23,949,157
Death Benefit for disabled
35,506,251
23,949,157
Death Benefit for deceased at accident in public transportation
35,106,251
23,149,158
106,118,753
71,047,472
Total
17.4. Unit prices of pension funds established by the Company 31 December 2012 Unit Price TRY FHE
Flexible PMF (“Pension Fund”)
0,018193
FHH
Stock Growth PMF
0,026168
FHK
Government Bonds and Bills Income PMF
0,017052
FHL
Government Bonds and Bills Liquid PMF
0,013240
FHU
International Composite PMF
0,013806
FGE
Flexible Group PMF
0,011590
FGG
Government Bonds and Bills Income Group PMF
0,011200
31 December 2011 Unit Price TRY FHE
Flexible PMF (“Pension Fund”)
0,015603
FHH
Stock Growth PMF
0,016769
FHK
Government Bonds and Bills Income PMF
0,014788
FHL
Government Bonds and Bills Liquid PMF
0,012429
FHU
International Composite Growth PMF
0,013652
FGE
Flexible Group PMF
0,010134
FGG
Government Bonds and Bills Income Group PMF
0,010134
17.5. Number and amount of contribution certificates in portfolio and circulation 31 December 2012 Pension Certificates in Circulation FHE
Flexible PMF
Number
Amount (TRY)
2,884,815,694.160
52,483,451.92
FHH
Stock Growth PMF
796,083,509.020
20,831,913.26
FHK
Government Bonds and Bills Income PMF
6,388,592,232.840
108,938,274.75
FHL
Government Bonds and Bills Liquid PMF
1,537,211,011.990
20,352,673.80
FHU
International Composite Growth PMF
189,078,228.380
2,610,414.02
FGE
Flexible Group PMF
118,306,299.770
1,371,170.01
FGG
Government Bonds and Bills Group PMF
185,071,196.230
2,072,797.40
103
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
31 December 2011 Pension Certificates in Circulation FHE
Flexible PMF
FHH
International Composite Growth PMF
Number
Amount (TRY)
1,765,964,805.550
27,554,348.86
581,507,067.120
9,751,292.01
FHK
Government Bonds and Bills Income PMF
3,778,572,471.990
55,877,529.72
FHL
Government Bonds and Bills Liquid PMF
839,287,162.060
10,431,500.14
FHU
Stock Growth PMF
166,070,605.140
2,267,195.90
31 December 2011 Pension Certificates in Company
Number
Amount (TRY)
FGE
Flexible Group PMF
100,000,000
1,013,400
FGG
Government Bond and Bills Income Group PMF
100,000,000
1,013,400
17.6. Numbers and portfolio amounts of additions, disposals, reversals and current individual and group pension participants 31 December 2012 Individual
Group
Number
Portfolio Amount TRY
Number
Portfolio Amount TRY
19,199
48,492,690
11,525
5,421,730
(13,130)
(29,833,362)
(4,801)
(6,127,920)
60,163
166,791,244
20,319
34,347,579
Number
Portfolio Amount TRY
Number
Portfolio Amount TRY
Current period additions (*)
30,130
28,513,770
7,458
3,971,620
Current period disposals (**)
(9,871)
(15,079,797)
(2,435)
(2,700,982)
Current (*)
54,137
86,074,405
13,552
18,999,185
Current period additions (*) Current period disposals (**) Current (*)
31 December 2011 Individual
Group
(*) The amount of the portfolio (TRY) field refers to the TRY value of units in current fund as at the end of the period. (**) Terminations are included in the current period disposals. Contracts ending with internal account merger have been included in the numbers of current period disposals but have not been included in the portfolio amount disposed. There is no internal account merger as of 31 December 2011. 17.7. Valuation methods used in profit share calculation for life insurances with profit shares None (31 December 2011: None).
104
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
17.8. Number of additions and their group or individual gross and net share contributions in the current period 1 January – 31 December 2012 Number of Contracts Contribution Share (Gross) TRY
Contribution Share (Net) TRY
Individual (*)
19,199
49,192,679
48,548,239
Corporate (*)
11,525
5,579,635
5,498,813
Total
30,724
54,772,314
54,047,052
1 January – 31 December 2011 Number of Contracts Contribution Share (Gross) TRY Contribution Share (Net) TRY Individual (*)
30,130
31,893,141
30,924,957
Corporate (*)
7,458
4,162,137
4,111,130
37,588
36,055,278
35,036,087
Total
(*) New contracts in the period are included that are not in the portfolio at the end of the period (Transfers from other companies are included in additions of the period). 17.9. Number of additions from the other companies and their group or individual gross and net share contributions in the current period 1 January – 31 December 2012 Number
Contribution Share (Gross) TRY Contribution Share (Net) TRY
Individual (*)
321
4,728,717
4,728,717
Corporate (*)
90
1,182,442
1,182,442
411
5,911,159
5,911,159
Total
1 January – 31 December 2011 Number
Contribution Share (Gross) TRY Contribution Share (Net) TRY
Individual (*)
576
6,222,718
6,222,718
Corporate (*)
111
1,263,833
1,263,833
Total
687
7,486,551
7,486,551
(*) Transfers from other companies are included that are not in the portfolio at the end of the period.
105
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
17.10. Number of transfers from the Company’s life portfolio to pension portfolio and their group or individual gross and net share contributions None (31 December 2011: None). 17.11. Number of transfers from the Company’s pension portfolio to other company or not, and together their personal and corporate allocation and gross and net share contributions
1 January – 31 December 2012 Number of Contracts (*)
Contribution Share (Gross) TRY Contribution Share (Net) TRY
Individual
13,130
27,911,050
26,718,250
Corporate
4,801
5,639,675
5,570,883
17,931
33,550,725
32,289,133
Total
1 January - 31 December 2011 Number of Contracts (*)
Contribution Share (Gross) TRY Contribution Share (Net) TRY
Individual
9,871
14,650,708
14,004,213
Corporate
2,435
2,583,599
2,554,827
12,306
17,234,307
16,559,040
Total
(*) Terminations are included in the current period disposals. Contribution share of the contracts ending with internal account merge has not been included in the calculation. There is no internal account merger as of 31 December 2011. 17.12. Number of additions of life insurances and their group or individual allocation and gross and net premiums 1 January – 31 December 2012 Number
Net Premium TRY
54,558
7,379,684
Group
1,415,745
147,232,427
Total
1,470,303
154,612,111
Number
Net Premium TRY
7,658
1,183,029
Group
1,283,836
115,746,234
Total
1,291,494
116,929,263
Individual
1 January - 31 December 2011
Individual
106
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
17.13. Number of disposals of life insurances and their group or individual allocation and gross net mathematical reserves 1 January – 31 December 2012
1 January – 31 December 2011
10,845
923
Group
1,127,967
993,231
Total
1,138,812
994,154
Individual
During the periods of 1 January – 31 December 2012 and 1 January – 31 December 2011, the insurance contracts which left the portfolio included the ones which were cancelled, purchased long term life insurance, expired or terminated due to death. As of 31 December 2012 the Company did not issue any life insurance policies with cumulative benefits. Thus there is no mathematical reserve for this product group in the financial statements (31 December 2011: None). As of 31 December 2012 the Company has a total of 208,892 long term life insurance policies. The number of units of policies and their respective mathematical reserves which left the portfolio during the year is presented below (31 December 2011: 168,911). 1 January - 31 December 2012 Actuarial Mathematical Reserve TRY
Number 40
2,286
Group
Individual
208,852
4,957,026
Total
208,892
4,959,312
1 January - 31 December 2011 Number Individual
Actuarial Mathematical Reserve TRY
-
-
Group
168,911
4,746,323
Total
168,911
4,746,323
17.14. Profit share distribution rate of life insurances in the current period None (31 December 2011: None). 17.15. Amounts from insurance contracts As of the balance sheet date, life mathematical reserve of TRY 45,821,650 is provided in the financial statements for 1,008,098 long term life policies issued by the Company (31 December 2011: Life mathematical reserve of TRY 34,290,491 is provided in the financial statements for 759,434 long term life policies issued by the Company). 17.16. Assets, liabilities, income and expense and cash flows from insurance contracts recognized when the insurer is a ceding company The details of the amounts recognized in the profit or loss as a result of purchased reinsurance agreements are disclosed in Note 10. 107
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
17.17. Comparison of the incurred claims with past estimates The process of the incurred claims is disclosed in Note 4.1.2.3. 17.18. Effects of changes in the assumptions used in the measurement of insurance assets and liabilities, showing the effects of each change that has significant effect on the financial statements separately Disclosed in Note 4.1.2.4.
18. Investment Contract Liabilities The Company has no investment contracts (31 December 2011: None).
19. Trade and Other Payables, Deferred Income
Payables from insurance operations Other Payables (*) Payables from pension operations Deferred income Expense accruals Due to employees Due to shareholders Total
31 December 2012
31 December 2011
9,141,222
6,027,180
790,936
790,275
219,241,816
113,719,820
69,102
52,022
121,823
376,043
49,884
35,155
186,335
38,341
229,601,118
121,038,836
(*) Payables from other operations consist of payables to the suppliers. Details of the related party transactions and balances at year end are disclosed in Note, “Related Parties”.
20. Payables The Company’s payables are disclosed in Note 19.
108
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
21. Deferred Tax Asset The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial statements as reported for Turkish Financial Reporting Standards (TFRS) purposes and its statutory tax financial statements. These differences usually result in the recognition of revenue and expenses in different reporting periods for TAS and tax purposes. The mentioned differences are presented below. 20% is applied in the calculation of deferred tax asset and liabilities (31 December 2011: 20%). Deferred tax assets/(liabilities):
31 December 2012
31 December 2011
Differences between cost value and statutory records of tangible/ intangible assets
78,072
4,890
Retirement pay provision
54,131
29,091
Unused vacation accrual
72,318
62,633
Discount of receivables and payables
(94,017)
(55,018)
Bonus accrual
460,133
344,000
8,731
10,584
838,398
495,717
13,258
-
2,636
-
11,031
15,324
1,444,691
907,221
Provision for legal claims Provision for equalization reserve Provision of unexpired risk reserve Accrued expenses Provision for doubtful receivables Deferred tax asset/(liability)
The movement of the deferred tax assets/ (liabilities) for the periods ended 1 January-31 December 2012 and 1 January-31 December 2011 is as follows: The movement of deferred tax assets/(liabilities):
31 December 2012
31 December 2011
Opening balance, 1 January
907,221
539,043
Deferred tax benefit / (charge) accounted for in the statement of income
537,470
368,178
Deferred tax benefit / (charge) accounted for in the shareholdersâ&#x20AC;&#x2122; equity
-
-
1,444,691
907,221
Closing balance, 31 December
109
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
22. Provision for Employment Termination Benefits Under Turkish Labour Law, the Company is required to pay employment termination benefits to each employee who has qualified. Also, employees are required to be paid their retirement pay provisions who retired by gaining right to receive retirement pay provisions according to current 506 numbered Social Insurance Law’s 6 March 1981 dated, 2422 numbered, 25 August 1999 dated and 4447 numbered with 60th article that has been changed. Some transition provisions related to the pre-retirement service term was excluded from the law since the related law was changed as of 23 May 2002. The amount payable consists of one month’s salary limited to a maximum of TRY 3,033.98 for each period of service as of 31 December 2012 (31 December 2011: TRY 2,731.85). Retirement pay provision is not subject to any funding by law. The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of employees. TAS 19 requires actuarial valuation methods to be developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability: The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanying financial statements as of 31 December 2012, the provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The provisions at the respective balance sheet dates have been calculated assuming an annual inflation rate of 5.00% and a discount rate of 7.64%, resulting in a real discount rate of approximately 2.51%. (31 December 2011: an annual inflation rate of 5.00%, and a discount rate 9.48% and in a real discount rate of 4.27%). As the maximum severance pay is updated semi-annually, the maximum amount of TRY 3,125.01 effective from 1 January 2013 has been taken into consideration in calculation of provision from employment termination benefits (31 December 2011: As of 1 January 2012, the ceiling on severance pay is TRY 2,917.27, this amount has been taken into calculation of severance pay). The movement of the retirement pay provision is stated below:
Retirement pay provision
1 January-31 December 2012
1 January-31 December 2011
Provision at 1 January
145,455
103,406
Service cost
127,987
94,172
Interest cost
31,986
20,424
(285,609)
(265,980)
Actuarial gain/loss
250,836
193,433
Provision at 31 December
270,655
145,455
Retirement and termination pay paid (*)
110
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
23. Other Liabilities and Expense Accruals 23.1. Provisions related to employee benefits and others 31 December 2012
31 December 2011
Unused vacation accrual
361,592
313,164
Social security premiums payable
320,453
305,271
2,300,666
1,720,000
1 January-31 December 2012
1 January-31 December 2011
313,164
221,485
48,428
91,679
361,592
313,164
1 January-31 December 2012
1 January-31 December 2011
1,720,000
1,600,000
(1,563,885)
(1,425,000)
Charge for the year
2,300,666
1,720,000
Bonus accrual reversed
(156,115)
(175,000)
Closing balance at 31 December
2,300,666
1,720,000
Bonus accrual
Unused vacation accruals Opening balance at 1 January Charge for the year Closing balance at 31 December
Bonus accrual Opening balance at 1 January Payment for the year
23.2. Off-balance sheet commitments Lease contracts: The Company signed a lease agreement for the head office building for an annual rent of USD 269,040 (excluding taxes) with Finansbank A.Ĺ&#x17E;. on 1 April 2012 (31 December 2011: USD 269,040 (excluding taxes)).
24. Net Insurance Premium Revenue 1 January-31 December 2012
1 January-31 December 2011
53,357
38,452
Life
154,612,111
116,929,263
Total
154,665,468
116,967,715
Non life
111
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
25. Fee (Contribution) Income Life/ non life
1 January-31 December2012
1 January-31 December2011
3,415,824
2,632,987
Commissions received from reinsurers
1 January-31 December2012
1 January-31 December2011
Entrance fee income
4,093,334
4,716,965
Management fee deduction
3,048,904
2,546,029
Fund management fee
3,220,059
1,708,066
10,362,297
8,971,060
1 January-31 December2012
1 January-31 December2011
Gain/ (loss) from assets held for sale (*)
157,145
157,640
Interest income from assets held for trading
824,750
1,057,850
Financial assets held-for-trading gain/(loss)
4,896,782
148,355
Interest income on time deposits (**)
9,549,206
5,477,287
15,427,883
6,841,132
Total
26. Investment Income/ Expense
Total(***)
(*) Includes reverse repo transaction income for the period 1 January â&#x20AC;&#x201C; 31 December 2011. (**) Includes TRY 30,238 investment income which transferred from non-technical division for the period of 1 January - 31 December 2012 (1 January - 31 December 2011: TRY 24,785). (***) Depreciation and amortization expenses, foreign exchange gains and losses and investment management expenses are not included.
27. Net Income Accrual on Financial Assets Net income accruals on financial assets are disclosed in Note 26.
28. Assets Held At Fair Value Through Profit and Loss The net gain of assets held at fair value through profit and loss reflected to the income statement as of the balance sheet date is TRY 2,822,969 (31 December 2011: TRY 924,329).
29. Insurance Rights and Demands There is no subrogation income/ (expense) based on branches for the period 1 January â&#x20AC;&#x201C; 31 December 2012 (1 January - 31 December 2011: None).
112
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
30. Investment Agreement Rights None (31 December 2011: None).
31. Other Expenses The functional classification of the expenses is disclosed in Note 32.
32. Operational Expenses The operational expenses of the life, non life and pension branches for the current and prior periods are stated below. 1 January-31 December2012
1 January-31 December2011
(58,301,245)
(41,906,878)
3,415,823
2,632,987
(19,801,414)
(16,657,840)
Administrative expenses
(7,386,094)
(6,003,049)
Marketing and sales expenses
(6,792,456)
(3,299,622)
Services received
(1,646,200)
(1,317,488)
Other expenses
(1,148,333)
(1,850,324)
(91,659,919)
(68,402,214)
1 January-31 December2012
1 January-31 December2011
(125,200)
(42,049)
(19,801,414)
(16,657,840)
Remuneration and fringe benefits provided to management
(2,245,394)
(1,616,867)
Bonus accrual
(2,300,666)
(1,545,000)
Commission expenses Reinsurance commission income Employees expenses
Total
33. Employee Benefit Expenses Retirement pay provision expense Employees salaries and expenses (*)
(*) The retirement pay paid in 1 January â&#x20AC;&#x201C; 31 December 2012 period amounting to TRY 285,609 is presented in employees salaries and expenses. (1 January - 31 December 2011: TRY 265,980) There is no equity share-based payment in accordance with TFRS 2 in the current period (1 January - 31 December 2011: None).
113
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
34. Finance Costs There is not any financial expense related to production costs or related to tangibles of the Company.
35. Income Tax Current tax payable
1 January-31 December2012
1 January-31 December2011
7,729,602
3,141,716
(5,119,311)
(1,857,200)
2,610,291
1,284,516
Current tax liability Less: Prepaid taxes and surcharges
Tax expense in the statement of income
1 January-31 December2012 1 January-31 December2011
Current tax expense
(7,708,103)
(3,141,716)
Corporate tax adjustments in prior period (Note 47)
(21,499)
-
Deferred tax benefit / (charge)
537,470
368,178
(7,192,132)
(2,773,538)
Total
There is no income tax recognized directly in equity (31 December 2011: None). Corporate Tax The Company is subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the estimated liabilities on the Companyâ&#x20AC;&#x2122;s current operational results. Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment incentives utilized. The effective tax rate used in 2012 is 20% (2011: 20%). In Turkey, advance tax returns are filed on a quarterly basis. The advance corporate income tax rate used in 2012 is 20% (2011: 20%). Losses are allowed to be carried 5 years maximum to be deducted from the taxable profit of the following years. Tax carry back is not allowed. In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between 1-25 April following the closing of the accounting year to which they relate. Tax authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years. 114
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
Income Withholding Tax In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any dividends distributed, except for companies receiving dividends who are resident companies in Turkey and Turkish branches of foreign companies. The rate of income withholding tax is announced 10% starting from 24 April 2003. However, this rate was changed to 15% commencing from 22 July 2006 with the resolution of Council of Ministers, numbered 2006/10731. Undistributed dividends incorporated in share capital are not subject to income withholding taxes. Withholding tax at the rate of 19.8% is still applied to investment allowances relating to investment incentive certificates obtained prior to 24 April 2003. Subsequent to this date, the investments without investment incentive certificates do not qualify for tax allowance. The current tax expense for the period for the period can be reconciled to accounting profit as follows: Reconciliation of current tax provision
1 January-31 December2012
1 January-31 December2011
Profit before tax
35,959,873
12,574,458
Expected tax: 20%
(7,191,975)
(2,514,892)
(39,259)
(320,886)
Effect of non-deductible expenses Effect of deductions Current tax expense (*)
39,102
62,240
(7,192,132)
(2,773,538)
(*) Deferred tax expenses / (income) are included in the amount.
36. Net Income From the Changes in Foreign Exchange Rates Recognized in profit/loss Foreign exchange gains Foreign exchange losses
1 January-31 December2012
1 January-31 December2011
40,192
27,657
(39,995)
(70,078)
197
(42,421)
115
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
37. Earnings Per Share The companies whose equity shares are not traded on the stock exchange are not obliged to present earnings per share per TAS 33. Since the Companyâ&#x20AC;&#x2122;s shares are not traded in the stock market, earnings per share are not calculated in the accompanying financial statements.
38. Dividends Per Share On 16 April 2012, TRY 8,600,000 of the profit of the year 2011 was distributed to shareholders in accordance with the decision of the Ordinary General Assembly held on 30 March 2012. Each share with par nominal value of TRY 1 is paid in cash amounting to TRY 0.19 (2011: On 15 June 2011, TRY 8,200,000 of the profit of the year 2010 was distributed to shareholders in accordance with the decision of the Ordinary General Assembly held on 20 May 2011. Each share with par nominal value of TRY 1 is paid in cash amounting to TRY 0.20).
39. Cash Generated from the Operations Statement of cash flows is presented with the financial statements.
40. Convertible Bonds None (31 December 2011: None).
41. Cash Convertible Preferred Shares None (31 December 2011: None).
42. Risks Risks are presented in the Notes 2.20 and 4.
43. Commitments The insurance guarantees undertaken by the Company and not represented in the liabilities are stated in the table below: Life Accident Total
44. Business Combinations None (31 December 2011: None).
116
31 December 2012
31 December 2011
23,786,343,926
20,060,739,817
106,118,753
71,047,472
23,892,462,679
20,131,787,289
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
45. Related Parties a. Parent Company and the ultimate owner of the Group The shareholders of the Company are Finansbank A.Ş. with a shareholding of 49% and Cigna Nederland Gamma B.V with a shareholding of 51% (31 December 2011: The parent company is Finansbank AŞ. with a shareholding of 100%). b. Subclasses of the main activities of the Company The operations of the Company involve providing individual and group insurance and reinsurance services relating to group life, individual life, Pension and sickness benefit branches, establishing pension funds, developing internal rules and regulations related to these funds, carrying out retirement, annual income insurance, portfolio management and custody contracts for the assets of the funds held in custody. As of the balance sheet date, there are 5 Pension Investment Funds and 2 Group Pension Investment Funds which are established by the Company (31 December 2011: 5 Private Pension Investment Fund and 2 Group Pension Investment Fund). c. Doubtful provision for receivables from shareholders, affiliates and subsidiaries and their payables. None (31 December 2011: None). d. The affiliates and subsidiaries having indirect capital and management relationships with the Company, names, amounts and rates of participations in the affiliates and subsidiaries account; profit/loss for the period presented in the recent financial statements of such participations; net profit/loss for the period and period covered by the financial statements; information about whether these financial statements are prepared in accordance with the Capital Markets Board standards; information about whether these financial statements are audited; details of the audit opinion (if the report includes unqualified, adverse or qualified opinion. The Company does not have any investments in associates or subsidiaries (31 December 2011: None). e. Bonus shares acquired due to capital increase through internal resources of affiliates and subsidiaries None (31 December 2011: None). f. Liabilities such as guarantees, commitments, suretyships, advances and endorsements given in favour of shareholders, affiliates and subsidiaries None (31 December 2011: None). g. Related party disclosures Receivables from related parties(*) Finansbank A.Ş. Finans Portföy Yönetimi A.Ş. Ibtech A.Ş
31 December 2012
31 December 2011
3,372,394
2,076,205
70,292,390
42,007,152
(25)
-
73,664,759
44,083,357
117
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
(*) TRY 70,292,390 consists of indirect deposit over current account, TRY 3,220,897 bank accounts and TRY 151,472 consists of insurance premium receivables as of the balance sheet date (31 December 2011: TRY 42,006,428 consists of indirect deposit over current account, TRY 2,019,245 bank accounts, TRY 56,944 information technology expenses and TRY 740 consists of insurance premium receivables as of the balance sheet date). Payables to related parties (*) Finansbank A.Ş. Finans Portföy Yönetimi A.Ş. IBTech A.Ş.
31 December 2012
31 December 2011
10,964,682
6,974,401
74,442
38,341
209,776
-
11,248,900
7,012,742
(*) As of 31 December 2012 trade payables to related parties is TRY 10,964,682 and non-trade payables to related parties is TRY 284,218 (As of 31 December 2011 trade payables to related parties is TRY 6,647,005 and non-trade payables to related parties is TRY 365,737 ). 1 January-31 December2012 1 January-31 December2011 Interest income from related parties Finansbank A.Ş. Finans Portföy Yönetimi A.Ş.
43,033
13,769
4,145,390
2,299,813
(58,301,246)
(41,906,878)
(533,820)
(507,657)
(13,605)
(25,496)
(162)
(1,453)
(442,005)
(407,217)
(1,312,878)
(1,101,635)
(644,012)
(341,613)
(249,002)
(173,724)
(297,360)
(233,640)
(1,633)
(14,548)
56,516
9,047
(2,375)
(127,863)
Commissions paid to related parties Finansbank A.Ş. Rent expenses paid to related parties Finansbank A.Ş. Building management fees paid to related parties Finansbank A.Ş. Finance lease expenses paid to related parties Finansbank A.Ş. Information technology expenses paid to related parties Finansbank A.Ş. IBTech A.Ş. Fund management fee paid to related parties Finans Portföy Yönetimi A.Ş. Investment management payments to related parties Finans Portföy Yönetimi A.Ş. Operational expenses paid to related parties Finans Yatırım Menkul Değerler A.Ş. Lighting expenses paid to related parties Finansbank A.Ş. Investment income received from related parties Finansbank A.Ş. Banking services commission paid to related parties Finansbank A.Ş.
118
Financial Information and Assessment Risk Management
Notes to the Financial Statements as of 31 December 2012
1 January-31 December2012
1 January-31 December2011
568,931
537,455
1,886
3,011
15,954
14,439
8,487
8,857
64,172
53,079
5,875
3,850
(58)
755
1 January-31 December2012
1 January-31 December2011
(151,564)
-
Premiums received from related parties Finansbank A.Ş. Finans Portföy Yönetimi A.Ş. Finans Yatırım Menkul Değerler A.Ş. Finans Finansal Kiralama A.Ş. Ibtech A.Ş. Finans Faktoring A.Ş. Finans Tüketici Finansman A.Ş.
Profit for risk shares (*) Finansbank A.Ş. Finans Portföy Yönetimi A.Ş. Finans Yatırım Menkul Değerler A.Ş. Finans Finansal Kiralama A.Ş. Ibtech A.Ş. Finans Faktoring A.Ş.
(780)
-
(6,297)
-
(3,797)
-
(24,774)
-
(1,609)
-
(*) 31 December 2011: None
46. Subsequent Events “Finans Emeklilik ve Hayat A.Ş. Büyüme Amaçlı Uluslararası Karma Emeklilik Yatırım Fonu” was transferred to “Finans Emeklilik ve Hayat A.Ş. Büyüme Amaçlı Esnek Emeklilik Yatırım Fonu” as of 11 January 2013. David Jerry Fike was assigned as General Manager of Finans Emeklilik ve Hayat A.Ş. as of 2 January 2013.
47. Other 47.1. Items and amounts classified under the “other” account in financial statements either exceeding 20% of the total amount of the group to which they relate or 5% of the total assets in the balance sheet “Other assets”, “other payables” and “other liabilities” in the financial statements either exceeding 20% of the total amount of the group to which they relate or 5% of the total assets are stated below. Other Payables Payables to suppliers
31 December 2012
31 December 2011
790,936
790,275
790,936
790,275
119
Finans Emeklilik - 2012 Annual Report
Notes to the Financial Statements as of 31 December 2012
Other short term liabilities Unused vacation accrual Bonus accrual
31 December 2012
31 December 2011
361,592
313,164
2,300,666
1,720,000
Other
65,010
59,314
Total
2,727,268
2,092,478
47.2. Total amount of each due to/from employees items classified under “Other Receivables” and “Other Short and Long Term Payables” exceeding one percent of total assets in the balance sheet None (31 December 2011: None). 47.3. Subrogation receivables followed under the off-balance sheet accounts None (31 December 2011: None). 47.4. Amounts and resources of income, expenses, and losses for the prior periods The taxation expense related to the previous period amounting to TRY 21,499 is presented in the corporate tax charge for the current period (31 December 2011: None).
120
Financial Information and Assessment Risk Management
Assessment of the Financial Situation, Profitability and Claims Payment Efficiency Assessment of the Financial Situation and Profitability Our Company’s total assets rose by 61% to TRY 417.9 million in 2012. Looking at the Company’s assets in terms of volume, the item entitled “Receivables from Main Operations” increased by 88% to reach TRY 241.2 million, in parallel with the Company’s rapid growth. The share of the Receivables from Main Operations in the total assets is 57.7%. The volume of Current Assets rose by 61% to reach TRY 413.9 million. Of the Company’s liabilities in its balance sheet, 30.9% consisted of Insurance Technical Reserves and 66.9% is Payables from Main Operations. Our Company's total Shareholders' Equity rose by 35.8% to reach TRY 76.5 million. According to the principles determined by the Undersecretariat of Treasury (Prime Ministry of the Republic of Turkey), the minimum required equity capital was calculated as TRY 30.1 million for our Company, while our Shareholders’ Equity including the Equalization Reserves amounted to TRY 80.7 million Some ratios that are related to our Company’s financial situation as of 31.12.2012 are given in the following table. Current Period
Previous Period
210.65%
221.39%
1. Written Premium (Gross)/Shareholders’ Equity 2. Receivables from Premiums/ Shareholders’ Equity 3. Technical Provisions (Net)/ Shareholders’ Equity
32.97%
25.37%
137.78%
139.31%
4. Profit Before Tax/Written Premium (Gross)
22.65%
10.38%
5. Profit Before Tax / Shareholders’ Equity
47.72%
22.98%
6. Technical Profit - Life/Written Premium (Gross) - Life
16.69%
8.90%
Assessment of the Claims Payment Efficiency The Company’s main claim principle consists of Company Risk Assessment of the claims and payment of the claim amounts to beneficiaries within the shortest possible time following the realization of vital risks that are insured by the Company. The total number of in-force life insurance certificates reached 1,671,515 by the end of 2012. The results concerning total claims payments made in 2012 are as follows; Paid Claims (01.01.2012-31.12.2012) Type of Claim
Number of Files
Amount (TRY)
1,802
16,461,225
Death–Personal Accident
1
400,000
Disability
7
29,853
Medical Treatment Following Accident
2
1,720
18
38,055
901
3,480,723
Death–Life
Hospital Daily Involuntary Unemployment Temporary Disability
3
6,578
Surrender
194,202
4,959,311
Total
196,936
25,377,466
121
Finans Emeklilik - 2012 Annual Report
Outstanding Claims, as of 31.12.2012 Type of Claim
Number of Files
Amount (TRY)
819
6,872,062
8
14,438
509
936,092
2
2,757
Death Disability Involuntary Unemployment Hospital Daily Temporary Disability Total
1
4,121
1,339
7,829,469
The Company’s average claim payment periods at the end of 2012 were as follows. Average Claim Payment Periods in Accordance with File Closing Dates (days) Type of Claim
Bank
Legal Beneficiary/Beneficiary
Average
Death
3,57
2,28
2,92
2
2
Involuntary Unemployment
In 2011, the Company entered a research service contract with Compu Group Medical Bilgi Sistemleri A.Ş. for claims files. As per this contract, claims researches were conducted by our Company’s Technical and Actuary Department and the respective company in 2012. The Company’s Losses/Premiums ratios in 2012 calculated by taking the one-year term life insurances into account are shown in the following table; Losses/Premiums Ratio Life
2012 Ç1
2012 Ç2
2012 Ç3
2012 Ç4
18%
17%
16%
15%
Unemployment claims received by the Company in relation to life insurance policies with unemployment cover have been processed swiftly in 2012 and payments started accordingly. In the year 2012, the total claims paid totaled TRY 3,525,356, and the provisions for outstanding claims amounted to TRY 942,969, in relation to additional covers of Involuntary Unemployment/ Temporary Disability/Hospital Daily. During this period, the total amount of paid death benefits related to life insurance policies reached TRY 16,461,225, while the paid death benefits and disability indemnities following an accident related to personal accident insurances reached TRY 400,000 and TRY 29,853, respectively.
122
Financial Information and Assessment Risk Management
Information on Risk Management Policies Applied per Risk Types Financial Risks The purpose of the capital management of the Company is to increase the profitability of the company and the shareholders’ value, and to decrease the cost of capital for the continuity of efficient capital structure. The Company is subject to market risk (exchange rate risk, interest rate risk, and price risk), liquidity risk and credit risk due to its financial assets and liabilities. The Company’s risk management program focuses on minimizing the negative effects of the ambiguities in financial markets on the Company’s financial statements. The Company is mostly exposed to interest risk and price risk in relation with financial investments, to credit risk in relation with insurance receivables and exchange rate risk due to policies and assets in foreign currencies. Presented below are the potential risks related to the operating activities of the Company, and the precautions taken to manage those risks. Market Risk Market risk is the possibility that the value of an investment will fall due to a change in the interest rate, the security’s value or the foreign exchange currency. As of the balance sheet date, the majority of the Company’s financial assets involves government bonds and mutual funds, and according to the “Turkish Accounting Standards 39 Financial Instruments: Recognition and Measurement” standard; the Company’s financial assets are classified as held for trading, held to maturity and available for sale financial assets. Credit Risk Credit risk is a risk that a borrower may default on its obligations on due date. Issuers of the funds which are in the portfolio of the company may default. Credit risk is highly related to economic conditions and expectations in Turkey. Liquidity Risk Liquidity risk is the risk of being unable to meet current and future payment obligations due to a lack of the necessary funds to cover the Company’s obligations. During the time of high fluctuations in interest rates stemming from economic and political ambiguities, it is observed that government bonds turnover decrease sharply. This implies that the firm may be exposed to the liquidity risk. Asset/ Liability Management Committee has been established in order to pay claims on time, to determine required liquidity level, to manage liquidity risk, to make risk analysis, and to determine the opportunities for investment. General Manager of the Company presides to the meetings of this committee, which is responsible for the following tasks: -To make an analysis of both the liabilities which arise from the Company’s current portfolio and the characteristics of the valuation of the assets, and to determine the best investment opportunities and product design strategies in accordance with the mentioned analyses, -To make risk analysis related to Asset / Liability Management and to report to the Board of Directors. 123
Finans Emeklilik - 2012 Annual Report
Legal Risks New arrangements or modifications in legislation and court judgments pose the risk of having a detrimental impact upon the company’s operations, and in turn, its overall performance. During 2012, monitoring the legal arrangements regulating the company’s field of activity, reviewing any modifications pertaining to, and ensuring timely provision of information to the relevant company employees on obligations arising thereof, continued to be among the most critical tasks for the Legal Affairs and Compliance Department. Our Company's Legal Affairs and Compliance Department reviewed the new legislation, provided the necessary information, and played an active role in minimizing the legislation risk by supporting the Company's adaptation to the legislative amendments by training the employees when necessary. Together with the Compliance Officer, the Legal Affairs and Compliance takes necessary measures and undertakes the required disclosures within the frame of national and international regulations governing the prevention of laundering of proceeds from crime and financing of terrorism. Information on the legal cases filed against the company, which may affect the financial situation and operations of the company, as well as the possible results of such cases; As of balance sheet date, total legal cases against the Company amount to TRY 3,216,895 for insurance claims (31st December 2011: TRY 2,024,706) and TRY 43,653 (31st December 2011: TRY 52,922) for others. As of 31st December 2012, provisions amounting to TRY 3,212,666 and TRY 43,653 (31st December 2011: TRY 2,024,706 and TRY 52,922) have been provided for the aforementioned claims respectively. There is no administrative or judiciary sanctions applied to the company and the board members due to practices against the legislation. Strategic Risk Strategic Risk is the risk in which the firm fails to apply the appropriate work plans and strategies in order to accommodate to the changes in the partaken job environment. The major risk factors which can be described as strategic risks for the firm are as below. • • • • • •
The difference in the changes between the customers’ desires and company’s targets, The threats caused by the competition in the sector, Economic and political changes, Impacts of the new technologies, New distribution methods, Legislative changes.
The developments in above mentioned points may cause deviations in the determined and planned targets of the Company. In order to avoid the negative impacts of the abovementioned risks, mainly the Governance Committee and the related committees of the Company follow up the developments and take the necessary action. 124
Financial Information and Assessment Risk Management
Profit Distribution Policy The principles of Finans Emeklilik ve Hayat A.Ş.’s profit distribution policy are set forth in Article 26 of the new articles of association of the company, which have been registered under the registration number of 631745. The capital of the company is TRY 45,000,000 (Forty Five Million Turkish Liras) that has been paid fully. The capital is divided into 45,000,000 (forty-five million shares) shares each with a nominal value of TRY 1 (One Turkish Lira) . The capital of the company is composed of (i) 22,949,999 Group (A) shares that amount to TRY 22,949,999, (ii) 22,049,999 Group (B) shares that amount to TRY 22.049.999, (iii) 1 Group (A1) share that amounts to TRY 1; and (iv) 1 Group (B1) share that amounts to TRY 1. The Company will preserve its Shareholders' Equity at the minimum capital level stipulated by the relevant legislation. The Company may increase the equity level above the minimum capital level, or a capital level it determined at a previous date, or decrease the equity level to the minimum capital level with the affirmative votes of at least one (1) of the Board members representing the Group A1 shareholders and at least one (1) of the Board members representing the Group B1 shareholders. In the event that the Board of Directors decides to increase or decrease the shareholders' equity level, the said increase is provided by the shareholders on pro-rata basis and from a source other than adding the profit into the capital. In case of decrease, on the other hand, the difference in question is paid to the shareholders as a special dividend on pro-rata basis.The company’s net profit is the sum remaining after the deduction of all operating expenses, as well as other amounts that must be paid and set aside, such as depreciation, provisions, remunerations and taxes, from the company’s annual operating revenue, which is calculated at the end of the operating year. The amount remaining after the reserve funds required to be reserved under article 519 of TCC from the Company's earnings after taxes calculated according to the Turkish Accounting Standards have been reserved, and the target capital level decided jointly by the Group A1 and Group B1 shareholders in the annual business plan, as revised from time to time, has been achieved is the distributable profit (“Distributable Profit”). Each year, 100% of the Distributable Profit is distributed. A decision to the otherwise can only be taken with the consent of 100% of the shareholders. Hundred percent of the Distributable Profit for the years 2012-2027 may be distributed to the Group A1 and Group B1 shareholders only, in accordance with a resolution adopted by the general assembly, and in the amounts determined in the specified resolution. In the abovementioned profit distribution resolution, the General Assembly may resolve to distribute profit to the Group A1 and Group B1 shareholders in different ratios. The profit distribution proposals presented by the Board of Directors to the General Assembly are prepared with an approach that preserves the balance between the expectations of shareholders and the company’s investment needs, growth targets and financial structure, while also taking its profitability into account.
Technical Risks Insurance Risk and Management Process of Insurance Risk Insurance risk is defined as coverage for exposures that exhibit a possibility of financial loss due to applying inappropriate and insufficient insurance reserves. In line with the nature of an insurance contract, as the risk is coincidental, the risk amount cannot be predictable; underwriting is an important process in insurance operations. The company has
125
Finans Emeklilik - 2012 Annual Report
prepared an underwriting guideline and conducted its insurance risk assessment activities within this framework with the aim of constituting an efficient risk management policy. Underwriting regulation and procedures are revised every year according to the company needs and changing life insurance portfolio of the company. Furthermore, the Underwriting Committee continued to assess the company’s insurance risks effectively. During 2012, all medical risk assessment procedures with regard to insurance applications and claims were conducted by Compu Group Medical Bilgi Sistemleri A.Ş. in accordance with the agreement made with them in order to give an effective and professional service. Our company uses the internationally recognized and generally accepted underwriting tools in its underwriting operations. In risk assessment procedures of life insurance proposals (such as medical, financial, residential, occupations, past- times), MIRA (Munich Re Internet Risk Assessor), an internet based underwriting tool, is used by our company that was developed by our leader treaty reinsurer Munich Re. Every year, Underwriting Rules and Policies are set and revised by the underwriting committee according to varying life insurance portfolio and customer and distribution channel needs in order to maintain a profitable and effective underwriting process in the company. The medical risk assessment operations of the company are made by the afore-mentioned contractual medical risk assessment company in order to give an effective and professional service. Other technical risk assessment procedures (such as financial, residential, occupations, pastimes) are conducted by our company’s Technical & Actuarial Group. Medical Risk Assessment In the assessment of insurance applications received by the company, applicants demanding coverage above the amounts set out in the Underwriting Guideline according to the life insurance coverage amounts are requested to undergo specific medical check-up sets at contractual medical institutions, whereby medical situation and history of the applicants are obtained. These medical results are evaluated by the contractual medical risk assessment company, which prepares and provides a medical opinion to our company. Life insurance applications are declined for those applicants who are established to pose medical risks and whose mortality risk increased by 150% and above as per the underwriting risk assessment which is conducted based on numerical risk rating. Personal Risk Assessment (Living Conditions, Residential, Pastimes, Occupation and Moral) At the second phase of the underwriting risk assessment process, underwriting risk assessment tools are used to measure and evaluate the information collected from life proposers including gender, lifestyle, geographical residence, and occupation, and risks are re-evaluated as and when necessary, upon requesting additional information and documents from prospective insured customers. Financial Risk Assessment The third step explores the alignment of the applicant’s requested life insurance coverage and his/ her annual income and/or amount of the provided loan. Due to our company’s life insurance portfolio composition that weighs more heavily on life insurance products providing cover for bank exposure, the alignment of the amount of requested insurance coverage and the amount of personal loan extended by the relevant bank is controlled at this step. The fact that the initial financial analysis is conducted by the bank in credit life insurance, upon which the loan is extended, serves as a key indicator for our company’s financial risk assessment. At this stage, the applicant is required to provide financial questionnaire a copy of the credit agreement and income statement and other documents and information showing his/her income as specified in the Underwriting Guideline. In addition, within one month following the provision of guarantee by the Company for the risks (the amount of which exceeds 5% of the Company’s shareholders’ equity) which are retained (or
126
Financial Information and Assessment Risk Management
assumed) by the Company within the scope of an agreement, the Company shall submit a chart to the Undersecretariat of Treasury (Prime Ministry of the Republic of Turkey), the content of which will be determined by the Undersecretariat, and which will incorporate the amount of the cover provided, the amount ceded, net risk amount retained, reinsurers to which the premiums are ceded, and the international ratings of these reinsurers. In the event that the risks exceed 10% of the shareholders’ equity, the company will provide the reasons for assuming such a risk to the Undersecretariat of Treasury in addition to the information mentioned above. The objective of insurance risk audit is to ensure consistency of all company activities to the legal regulations, determined strategies and policies within the company’s actuarial principles. The auditing process of insuring risks includes informing the top management and the Board of Directors about the following issues and making proposals for necessary precautions and rearrangement of applications: -Efficiency of risk management process, -Consistence with written determined process, -Consistence with determined limits, -The reflection degree of data and reports for real situation. In life insurance, the company takes reinsurance only with respect to death risk and risks that are provided with assurance in terms of additional benefit (accidental death, disability due to sickness, disability due to accident, critical illness, involuntary unemployment benefit etc.) The company retains a portion that is equal to an amount that does not exceed the maximum retention ratio determined for death and additional benefits based on actuarial computations made yearly in life insurance tariffs; treaties amount above this portion is ceded to reinsurance companies with which we cooperate on the basis of proportional reinsurance contracts (surplus and quota share reinsurance treaties). However, the company has limited the retention amounts on indemnities, which have been recently offered and whose results are uncertain, such as indemnities for Critical illness. Every year, the company makes a non-proportional catastrophe excess of loss (CAT XL) reinsurance agreement that best fits its portfolio composition to maintain its retention, as a result of major natural disasters such as earthquake and flood or incidents such as traffic accidents involving mass transport vehicles or terrorist attacks. Care is paid to ensure that the limits set out in the “Regulation on the Measurement and Assessment of Capital Adequacy of Insurance, Reinsurance and Pension Companies” are observed in nonproportional Catastrophe Excess of Loss (CAT XL) Reinsurance Agreement and that insurance risks are carved up among reinsurance companies at the most favorable reinsurance prices for the company. In life and accident branches, the company, in agreement with the contracted reinsurers, carries out reinsurance transactions with appropriate risk assessment conditions and reinsurance capacity. Results from the company’s reinsurance activities in life and accident branches as at end-December 2012 are presented below;
127
Finans Emeklilik - 2012 Annual Report
Management of Risks related to Reinsurance Companies
Reinsurance Results for Life
1 January-31 December2012
Premium Ceded
6,428,860
Commission Received
3,423,183
UW Expense Share
52,573
Reinsurers’ Share in Paid Claims
3,120,035
Total
Reinsurance Results for Accident
-166,931
1 January-31 December2012
Premium Ceded
24,300
Commission Received Reinsurers’ Share in Paid Claims Total
9,720 280,000 -265,420
To obtain reliable and high-standard service and to guarantee that reinsurers fulfill their obligations, the selection criteria listed below are employed in the company’s business dealings with the reinsurers and in the selection of the reinsurers included in the reinsurance program. 1. Companies with which reinsurance contracts will be made should be resident in politically and economically safe geographies, in a location away from war, civil commotion, uprising, rebellion and similar events 2. Financial strength and credit ratings assigned by international rating institutions 3. A long-term approach to business relationships, 4. Competitive reinsurance premium rates, 5. Capacity provided in facultative business and in non-proportional (excess of loss) reinsurance agreements, 6. Facilities provided to the company in various aspects including risk assessment, information on new developments in the industry, product development, training etc. Our reinsurance management policy is based on constructing business relationship with stable and financially trustworthy reinsurance companies. Reinsurance contracts with reinsurers are concluded, taking into consideration the company’s financial status, depending on sectoral developments and market conditions. As a result of stable and consistent pricing and risk assessment policy, the risk assessment conditions and procedures which are agreed with treaty reinsurers, are enable us to insure high amount of insurance coverage amounts which are over the market averages automatically. The distribution of in-force life insurance certificates / policies according to death benefit amounts and reinsurance types are as follows; 128
Financial Information and Assessment Risk Management
Breakdown of Policies/Certificates and Reinsurance by Death Benefit Amount (31.12.2012)
Total Amount (TRY)
0-25.000
Number of Benefit as at 31.12.2012
Total Benefit as at 31.12.2012
Retention
Surplus
Quota Share
Facultative
Other
1,555,917
8,790,176,048
8,617,730,024
172,446,024
0
0
0
25.001-50.000
66,066
2,532,659,315
2,405,944,392
126,714,923
0
0
0
50.001-100.000
0
43,835
2,948,875,945
2,767,597,904
181,278,041
0
0
100.001-250.000
5,089
747,959,014
537,693,633
210,265,381
0
0
250.001-500.000
536
167,907,960
59,856,751
108,051,209
0
0
0
500.001-1.000.000
42
31,395,099
3,413,376
27,981,723
0
0
0
1.000.001-5.000.000
29
52,343,406
2,839,688
46,843,719
0
2,660,000
0
5.000.001 + Total
1
5,165,296
120,000
2,400,000
0
2,645,296
0
1,671,515
15,276,482,083
14,395,195,768
875,981,020
0
5,305,296
0
Our leader reinsurer in our reinsurance agreements, Munich-based Munich Reinsurance Company is one of the world’s largest reinsurance companies. Our second treaty reinsurance company according to the treaty share in reinsurance agreements is Milli Reinsurance T.A.Ş. which is located in Istanbul. The other treaty reinsurance company is Mapfre Re which is located in Madrid. The below mentioned reinsurance companies’ ratings which were given by the credit rating agents, as S&P and A.M. Best, are as follows; S&P
A.M. Best
Reinsurer
Rating
Outlook
Date
Rating
Munich Re
AA- (very strong)
Stable
27 September 2012
A+(Superior)
trAA
-
31 July 2012
B+ (Good)
Negative
10 October 2012
BBB+
Negative
25 October 2012
A (Excellent)
Negative
26 June 2012
Milli Re Mapfre Re
Outlook
Date
Stable 30 November 2012
The existing reinsurers and their credit ratings are in conformity with the agencies deemed fit for engaging in rating activities by the Undersecretariat of Treasury and the minimum ratings granted by such agencies and accepted by the Undersecretariat, respectively, under Article 8/3 of the Regulation on the Measurement and Assessment of Capital Adequacy of Insurance, Reinsurance and Pension Companies”. In the selection of reinsurers, our company takes into consideration the financial strength, reports of rating agencies and financial statements that show the reinsurer is audited by legal authorities and independent firms. Besides, the Board of Directors reserves the right of selection of the reinsurers in the company’s reinsurance program. Besides, the Board of Directors reserves the right of selection of the reinsurers in the company’s reinsurance program. In addition, within one month following the provision of guarantee by the Company for the risks (the amount of which exceeds 5% of the Company’s shareholders’ equity) which are retained (or assumed) by the Company within the scope of an agreement, the Company shall submit a chart to the Undersecretariat of Treasury (Prime Ministry of the Republic of Turkey), the content of which will be determined by the Undersecretariat, and which will incorporate the amount of the cover provided, the amount ceded, net risk amount retained, reinsurers to which the premiums are ceded, and the international ratings of these reinsurers. In the event that the risks exceed 10% of the shareholders’ equity, the company will provide the reasons for assuming such a risk to the Undersecretariat of Treasury in addition to the information mentioned above. 129
Finans Emeklilik - 2012 Annual Report
Information on Research & Development Practices concerning New Services and Activities In 2012, our Company offered an array of new products and services and undertook projects that generate added value both for policyholders and shareholders. Some of the major products and services are as follows; • I n order to deliver the Death Benefit, insurance-agency details in the Finance Ministry XML format monthly and quarterly, the Company has installed a system infrastructure, and ensured that all data are taken from Fehaş IT system and uploaded to the IT Trans system of the Finance Ministry. • T he Company entered a contract with Compu Group Medical Bilgi Sistemleri for the evaluation of medical risks and the examination of suspicious Death Benefit files and continued to effectively use the experience and efforts of this company in insurance risk and Death Benefit evaluation processes. • I n order to accelerate the risk assessment processes, the Company began to use the infrastructure of Compu Group Medical Bilgi Sistemleri in the relevant issues. • T he Company has made improvements to allow its customers to conduct İşkur queries concerning unemployment indemnities through Fehaş IT system. • T he company has started the system infrastructure works for the Long-Term Individual Life Insurances paid-up processes, Tariff & Commission Loading Change. • The system infrastructural works for the Core Integration project between Finansbank A.Ş. and Finans Emeklilik ve Hayat A.Ş. have been completed, and the Company began to issue the insurance policies on the CORE screens. • T he Company has completed the system infrastructure works so that the Life and Personal Accident insurance policies productions can also be made at the weekends and holidays. • The Company began to sell Long-Term Life Insurance for Financier Loans. • T he Company began to sell Cancer Protection One-Year Term Life Insurance through branches and telesales channel. • T wo pension plans were defined in the e-plan system through the PMC (Pension Monitoring Center) system in 2012. After the approval by the system, Finans Emeklilik began to sell these products. • T he Company has completed its IT system works within the scope of the Regulation on Private Pension Systems dated 01.01.2013 and numbered 28462. • The Company bought the Financial Modeling Instrument for the calculation of product profitability and budgetary works and began to adapt it to its infrastructure. 130
Financial Information and Assessment Risk Management
5-Year Summary Financial Information Including the Reporting Period Balance Sheet ACCOUNT NAME
DIFFERENCE DIFFERENCE (%) (TRY)
31.12.2012
31.12.2011
133,722,404
86,360,135
47,362,269
54.84%
21,370,879
28,293,398
(6,922,519)
(24.47%) 87.72%
A-
CASH AND CASH EQUIVALENTS
B-
FINANCIAL ASSETS AND FINANCIAL INVESTMENTS AT POLICYHOLDER’S RISK
C-
RECEIVABLES FROM MAIN OPERATIONS
241,204,526
128,493,815
112,710,711
D-
DUE FROM RELATED PARTIES
-
-
-
-
E-
OTHER RECEIVABLES
-
41,587
(41,587)
(100.00%)
F-
PREPAID EXPENSES AND INCOME ACCRUALS
17,561,365
14,038,814
3,522,551
25.09%
G-
OTHER CURRENT ASSETS
-
-
I-
TOTAL CURRENT ASSETS
413,859,174
257,227,749
156,631,425
60.89%
A-
RECEIVABLES FROM MAIN OPERATIONS
-
-
-
-
B-
DUE FROM RELATED PARTIES
-
-
-
-
C-
OTHER RECEIVABLES
27,465
27,890
(425)
(1.52%)
D-
FINANCIAL ASSETS
-
-
-
-
E-
TANGIBLE ASSETS
1,153,925
1,200,494
(46,569)
(3.88%)
F-
INTANGIBLE ASSETS
1,381,891
856,241
525,649
61.39%
G-
PREPAID EXPENSES AND INCOME ACCRUALS
2,029
6,086
(4,057)
(66.67%)
H-
OTHER NON- CURRENT ASSETS
1,444,691
907,221
537,470
59.24%
II-
TOTAL LONG TERM ASSETS
4,010,001
2,997,932
1,012,068
33.76%
417,869,175
260,225,681
157,643,494
60.58%
TOTAL ASSETS (I+II)
A-
BORROWINGS
B-
PAYABLES FROM MAIN OPERATIONS
C-
DUE TO RELATED PARTIES
D-
OTHER PAYABLES
E-
INSURANCE TECHNICAL RESERVES
F-
TAXES AND OTHER LIABILITIES AND PROVISIONS
G-
PROVISIONS FOR OTHER RISKS
H-
DEFERRED INCOME AND EXPENSE ACCRUALS
I-
OTHER SHORT TERM LIABILITIES
2,727,268
III-
TOTAL SHORT TERM LIABILITIES
292,606,684
A-
BORROWINGS
-
B-
PAYABLES FROM MAIN OPERATIONS
-
C-
DUE TO RELATED PARTIES
D-
OTHER PAYABLES
E-
INSURANCE TECHNICAL RESERVES
F-
OTHER LIABILITIES AND PROVISIONS
G-
PROVISIONS FOR OTHER RISKS
HIIV-
-
-
-
-
228,383,038
119,747,000
108,636,038
90.72%
236,219
73,496
162,723
221.41%
790,936
790,275
661
.08%
56,877,246
42,669,293
14,207,953
33.30%
3,401,052
2,169,817
1,231,236
56.74%
-
-
-
-
190,925
428,065
(237,140)
(55.40%)
2,092,478
634,790
30.34%
167,970,424
124,636,260
74.20%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,504,829
35,790,536
12,714,293
35.52%
-
-
-
-
270,655
145,455
125,200
86.07%
DEFERRED INCOME AND EXPENSE ACCRUALS
-
-
-
-
OTHER LONG TERM LIABILITIES
-
-
-
-
TOTAL LONG TERM LIABILITIES
48,775,484
35,935,991
12,839,493
35.73%
45,000,000
45,000,000
-
-
45,000,000
45,000,000
-
-
UNPAID CAPITAL(-)
-
-
-
-
B-
CAPITAL RESERVES
-
-
-
-
C-
PROFIT RESERVES
2,719,266
1,518,346
1,200,921
79.09%
D-
RETAINED EARNINGS
-
-
-
-
E-
ACCUMULATED DEFICIT(- )
-
-
-
-
F-
NET PROFIT (LOSS) FOR THE PERIOD
28,767,741
9,800,920
18,966,821
193.52%
V.
TOTAL SHAREHOLDERS' EQUITY
A-
PAID IN CAPITAL CAPITAL
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (III+ IV+V)
76,487,007
56,319,266
20,167,741
35.81%
417,869,175
260,225,681
157,643,494
60.58%
131
Finans Emeklilik - 2012 Annual Report
Balance Sheet (5-year) ACCOUNT NAME A-
CASH AND CASH EQUIVALENTS
B-
FINANCIAL ASSETS AND FINANCIAL INVESTMENTS AT POLICYHOLDER’S RISK
C-
RECEIVABLES FROM MAIN OPERATIONS
D-
31.12.2012
31.12.2011
31.12.2010
31.12.2009
31.12.2008
133,722,404
86,360,135
38,791,983
33,849,720
32,870,248
21,370,879
28,293,398
45,934,221
25,622,935
2,548,503
241,204,526
128,493,815
63,520,544
24,461,548
6,451,703
DUE FROM RELATED PARTIES
-
-
-
-
-
E-
OTHER RECEIVABLES
-
41,587
32,426
-
-
F-
PREPAID EXPENSES AND INCOME ACCRUALS
17,561,365
14,038,814
7,613,881
6,845,561
6,640,916
G-
OTHER CURRENT ASSETS
-
-
-
92,173
181,231
I-
TOTAL CURRENT ASSETS
413,859,174
257,227,749
155,893,055
90,871,937
48,692,601
A-
RECEIVABLES FROM MAIN OPERATIONS
-
-
-
-
-
B-
DUE FROM RELATED PARTIES
-
-
-
-
-
C-
OTHER RECEIVABLES
27,465
27,890
11,852
3,453
-
D-
FINANCIAL ASSETS
-
-
-
-
-
E-
TANGIBLE ASSETS
1,153,925
1,200,494
1,396,508
775,172
695,469
F-
INTANGIBLE ASSETS
1,381,891
856,241
694,668
1,381,336
1,943,669
G-
PREPAID EXPENSES AND INCOME ACCRUALS
2,029
6,086
-
-
-
H-
OTHER NON- CURRENT ASSETS
1,444,691
907,221
539,043
69,164
-
II-
TOTAL LONG TERM ASSETS
4,010,001
2,997,932
2,642,071
2,229,125
2,639,138
417,869,175
260,225,681
158,535,126
93,101,062
51,331,739
31.12.2012
31.12.2011
31.12.2010
31.12.2009
31.12.2008
-
-
-
-
188,109
228,383,038
119,747,000
59,244,777
22,651,622
2,317,717
TOTAL ASSETS (I+II)
A-
BORROWINGS
B-
PAYABLES FROM MAIN OPERATIONS
C-
DUE TO RELATED PARTIES
236,219
73,496
342,113
29,876
35,156
D-
OTHER PAYABLES
790,936
790,275
329,134
365,386
988,657
E-
INSURANCE TECHNICAL RESERVES
56,877,246
42,669,293
25,974,514
26,066,283
24,542,921
F-
TAXES AND OTHER LIABILITIES AND PROVISIONS
3,401,052
2,169,817
1,301,701
457,471
349,240
G-
PROVISIONS FOR OTHER RISKS
-
-
-
-
-
H-
DEFERRED INCOME AND EXPENSE ACCRUALS
190,925
428,065
63,730
85,470
84,295
I-
OTHER SHORT TERM LIABILITIES
2,727,268
2,092,478
2,010,251
1,315,319
81,071
III-
TOTAL SHORT TERM LIABILITIES
292,606,684
167,970,424
89,266,220
50,971,427
28,587,166
A-
BORROWINGS
-
-
-
-
-
B-
PAYABLES FROM MAIN OPERATIONS
-
-
-
-
-
C-
DUE TO RELATED PARTIES
-
-
-
-
-
D-
OTHER PAYABLES
-
-
-
-
-
E-
INSURANCE TECHNICAL RESERVES
48,504,829
35,790,536
22,634,654
5,916,978
1,299,612
F-
OTHER LIABILITIES AND PROVISIONS
G-
PROVISIONS FOR OTHER RISKS
HI-
-
-
-
-
-
270,655
145,455
103,406
67,051
42,569
DEFERRED INCOME AND EXPENSE ACCRUALS
-
-
-
-
-
OTHER LONG TERM LIABILITIES
-
-
-
-
98,195
IV- TOTAL LONG TERM LIABILITIES
48,775,484
35,935,991
22,738,060
5,984,029
1,440,376
A-
45,000,000
45,000,000
36,812,500
30,000,000
20,000,000
45,000,000
45,000,000
40,000,000
30,000,000
20,000,000
UNPAID CAPITAL(-)
-
-
(3,187,500)
-
-
B-
CAPITAL RESERVES
-
-
-
-
-
C-
PROFIT RESERVES
2,719,266
1,518,346
395,606
1,304,197
-
D-
RETAINED EARNINGS
-
-
-
-
-
E-
ACCUMULATED DEFICIT(- )
-
-
-
-
(1,486,924)
F-
NET PROFIT (LOSS) FOR THE PERIOD
28,767,741
9,800,920
9,322,740
4,841,409
2,791,121
V,
TOTAL SHAREHOLDERS' EQUITY
76,487,007
56,319,266
46,530,846
36,145,606
21,304,197
417,869,175
260,225,681
158,535,126
93,101,062
51,331,739
PAID IN CAPITAL CAPITAL
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (III+ IV+V)
132
Financial Information and Assessment Risk Management
Income Statement ACCOUNT NAME Non-Life Technical Income Non-Life Technical Expense (-) NON-LIFE TECHNICAL RESULTS Life Technical Income Life Technical Expense (-) LIFE TECHNICAL RESULTS Pension Technical Income
31.12.2012
31.12.2011 DIFFERENCE (TRY)
DIFFERENCE (%)
1,299
81,970
(80,671)
(98.42%)
(177,029)
(75,714)
(101,315)
133.81%
(175,730)
6,256
(181,985)
(2.909.12%)
143,458,114
103,789,972
39,668,142
38.22%
(116,587,411)
(92,703,634)
(23,883,777)
25.76%
26,870,703
11,086,338
15,784,365
142.38%
10,362,297
8,997,860
1,364,437
15.16%
(13,296,752)
(10,589,265)
(2,707,487)
25.57%
PENSION TECHNICAL RESULTS
(2,934,455)
(1,591,405)
(1,343,050)
84.39%
TECHNICAL RESULTS
23,760,518
9,501,189
14,259,329
150.08%
Pension Technical Expense (-)
Investment Income
18,996,834
7,222,786
11,774,048
163.01%
Investment Expense (-)
(4,968,713)
(1,847,818)
(3,120,895)
168.90%
Income/Expense from Other and Extraordinary Operations (+/-)
(1,291,295)
(1,933,521)
642,226
(33.22%)
Net Profit/(Loss) for the Period
28,767,741
9,800,920
18,966,821
193.52%
Profit/(Loss) for the Period
36,497,343
12,942,636
23,554,707
181.99%
Corporate Tax Charge (-)
(7,729,602)
(3,141,716)
(4,587,886)
146.03%
NET PROFIT/(LOSS) FOR THE PERIOD
28,767,741
9,800,920
18,966,821
193.52%
133
Finans Emeklilik - 2012 Annual Report
Income Statement (5-year) ACCOUNT NAME Non-Life Technical Income Non-Life Technical Expense (-) NON-LIFE TECHNICAL RESULTS Life Technical Income Life Technical Expense (-)
31.12.2012
31.12.2011
31.12.2010
31.12.2009
1,299
81,970
214,268
185,506
31.12.2008 134,185
(177,029)
(75,714)
(170,661)
(86,091)
(83,561)
(175,730)
6,256
43,607
99,415
50,624
143,458,114 103,789,972
81,528,642
45,727,373
22,720,030
(116,587,411) (92,703,634) (74,592,118) (41,275,541) (22,031,088)
LIFE TECHNICAL RESULTS
26,870,703
11,086,338
6,936,524
4,451,832
Pension Technical Income
10,362,297
8,997,860
5,071,563
3,231,975
7,943
(13,296,752) (10,589,265)
(4,734,494)
(5,830,145)
(264,210)
Pension Technical Expense (-)
688,942
PENSION TECHNICAL RESULTS
(2,934,455)
(1,591,405)
337,069
(2,598,170)
(256,267)
TECHNICAL RESULTS
23,760,518
9,501,189
7,317,200
1,953,077
483,299
Investment Income
18,996,834
7,222,786
7,787,726
6,666,177
3,799,650
Investment Expense (-)
(4,968,713)
(1,847,818)
(1,672,174)
(1,254,009)
(853,010)
Income/Expense from Other and Extraordinary Operations (+/-)
(1,291,295)
(1,933,521)
(1,463,217)
(907,797)
(402,247)
Net Profit/(Loss) for the Period
28,767,741
9,800,920
9,322,740
4,841,409
2,791,121
Profit/(Loss) for the Period
36,497,343
12,942,636
11,969,535
6,457,448
3,027,692
Corporate Tax Charge (-)
(7,729,602)
(3,141,716)
(2,646,795)
(1,616,039)
(236,571)
NET PROFIT/(LOSS) FOR THE PERIOD
28,767,741
9,800,920
9,322,740
4,841,409
2,791,121
134
Presentation
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135
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