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Croatia osiguranje d.d.

Interim / Quarterly Report Jul 31, 2020

2087_ir_2020-07-31_41ee77cf-4675-4cf2-bde4-615c47960ad9.pdf

Interim / Quarterly Report

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CROATIA osiguranje d.d. Vatroslava Jagića 33, 10 000 Zagreb www.crosig.hr

CONSOLIDATED UNAUDITED HALF-YEAR REPORT, FOR THE PERIOD 1.1.2020 - 30.6.2020

Zagreb, July 2020

$\frac{1}{2}$

CONTENT

$\sim$

I. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS - indirect method
II. QUARTERLY MANAGEMENT REPORT
III. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
PERIOD I-VI 2020
MANAGEMENT BOARD STATEMENT

$\mathbf{L}$ UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Annex 1
ISSUER'S GENERAL DATA
Reporting period:
1.1.2020
30.6.2020
to
Year:
2020
Quarter:
2
Quarterly financial statements
Issuer's home Member
Registration number (MB):
03276147
HR
State code:
Entity's registration number (MBS):
080051022
Personal identification number (OIB):
26187994862
LEI:
74780000M0GHQ1VXJU20
Institution code:
199
Name of the issuer: CROATIA osiguranje d.d.
Postcode and town:
10 000
ZAGREB
Street and house number: Vatroslava Jagića 33
E-mail address: [email protected]
Web address: www.crosig.hr
Number of employees
3342
(end of the reporting period):
Consolidated report:
KD
(KN-not consolidated/KD-consolidated)
Audited:
RN
(RN-not audited/RD-audited)
Names of subsidiaries (according to IFRS):
Registered office:
MB:
CROATIA PREMIUM d.o.o.
ZAGREB
01885880
HISTRIA CONSTRUCT d.o.o.
ZAGREB
02066378
CORE 1 d.o.o.
ZAGREB
04570243
AUTO MAKSIMIR VOZILA d.o.o.
ZAGREB
01804812
AK POLICA d.o.o.
ZAGREB
02258960
CROATIA OSIGURANJE DD
MOSTAR
20097647
MILENIJUM OSIGURANJE A.D.
BEOGRAD
7810318
CROATIA OSIGURANJE A,D, - ZA ŽIVOTNA OSIG.
SKOPJE
05920922
CROATIA OSIGURANJE A.D. - ZA NEŽIVOTNA OSIG.
SKOPJE
06479570
CROATIA OSIGURANJE MIROVINSKO DRUŠTVO D.O.O.
ZAGREB
01731742
RAZNE USLUGE D.O.O. - U LIKVIDACIJI
ZAGREB 01892037
CROATIA - TEHNIČKI PREGLEDI D.O.O.
ZAGREB 01450930
PBZ CROATIA OSIGURANJE DD
ZAGREB 01583999
CO ZDRAVLJE D.O.O.
ZAGREB 04837550
STRMEC PROJEKT d.o.o.
AGROSERVIS STP d.o.o.
VIROVITICA
ASTORIA d.o.o. ZAGREB 02686649
Bookkeeping firm:
(Yes/No)
No
01233033
(name of the bookkeeping firm) ZAGREB 80339352
Contact person: Jelena Matijević
(only name and surname of the contact person)
Telephone: 01/633 3135
E-mail address: [email protected]
Audit firm:
(name of the audit firm)
Certified auditor:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (STATEMENT OF PROFIT OR LOSS) For the period: 1.1.2020 - 30.6.2020

in HRK
Item ADP
code
Same period of the previous year Current year
Life Non-life Total Life Non-life Total
1 $\overline{2}$ 3 4 $5(3+4)$ 6 $\overline{7}$ $8(6+7)$
Earned premiums (ADP 119 to 123) 118 398.169.766 1.119.505.156 1,517.674.922 276.079.961 1.172.022.439 1.448.102.400
1 Gross written premium 119 398.745.596 1.583.977.685 1.982.723.281 276.034.498 1.592.265.324 1.868.299.822
2 Value adjustment and charged premium value adjustment 120 $\mathbf{o}$ $-9.873.682$ $-9.873.682$ 0 $-2.375.415$ $-2.375.415$
3 Outward reinsurance premiums (-) 121 $-51.235$ -196.827.933 $-196.879.168$ $-85.387$ $-179.885.118$ $-179.970.505$
4 Change of gross provisions for uneamed premiums (+/-) 122 -499.981 -315.392.755 -315.892.736 186.548 -292.973.393 $-292.786.845$
5 Change of provisions for unearned premiums, reinsurers' share (+/-) 123 $-24.614$ 57.621.841 57.597.227 $-55.698$ 54.991.041 54.935.343
Il Income from investments (ADP 125 to 131) 124 74.070.255 158,690.853 232.761.108 110.562.243 184.291.416 294.853.659
1 Income from branches, associates and joint ventures. 125 377.043 27.566.585 27.943.628 363.532 6.200.885 6.564.417
2 Income from investment in land and buildings 126 31.853 49.345.717 49.377.570 36.949 44.404.018 44.440.967
3 Interest income 127 60.307.042 51.934.044 112.241.086 54.165.656 47.191.751 101.357.407
4 Unrealised gains on investments 128 1.599.198 12.438.669 14.037.867 1.080.004 1.121.382 2.201.386
5 Realised gains on investments 129 11.528.325 15.743.322 27.271.647 14.379.916 53.594.677 67.974.593
6 Net positive exchange rate differences 130 $\mathbf 0$ 0 40.301.844 17.099.957 57.401.801
7 Other income from investments 131 226.794 1.662.516 1,889,310 234.342 14.678.746 14.913.088
III Income from commissions and fees 132 1.071.559 22.747.241 23.818.800 1.053,552 24.230.120 25.283.672
IV Other insurance-technical income, net amount from reinsurance 133 128,073 22.477.126 22.605.199 328.609 25.646.712 25.975.321
V Other income 134 29.655 55.957.589 55.987.244 300.973 56.120.594 56,421.567
VI Claims incurred, net (ADP 136 + 139) 135 -199,573,993 -600.385.654 -799.959.647 $-316.563.144$ $-664.748.094$ -981.311.238
1 Claims settled (ADP 137+138) 136 $-211.022.126$ -595,660.923 $-806.683.049$ $-304.171.549$ $-610.601.288$ $-914.772.837$
1.1 Gross amount (-) 137 $-211.022.126$ -649.184.404 -860.206.530 -304.171.549 -634.986.852 $-939.158.401$
1.2 Reinsurers' share (+) 138 $\mathbf{o}$ 53.523.481 53.523.481 $\Omega$ 24.385.564 24.385.564
2 Change in the provision for claims (+/-) (ADP 140+141) 139 11,448.133 $-4.724.731$ 6.723.402 $-12.391.595$ $-54.146.806$ $-66.538.401$
2.1 Gross amount 140 11.448.133 1.333.342 12.781.475 $-12.391.595$ $-141.491.970$ $-153.883.565$
2.3 Reinsurers' share 141 $\Omega$ $-6.058.073$ $-6.058.073$ $\Omega$ 87.345.164 87.345.164
VII Change in mathematical provision and other technical
provisions, net of reinsurance (ADP 143+146)
142 $-184.950.551$ 5,440.188 -179.510.363 10.434.254 16.332.663 26.766.917
1 Change in mathematical provisions (+/-) (ADP 144+145) 143 $-184.950.551$ 6.284.927 $-178.665.624$ 10.434.254 3.689.231 14.123.485
1.1 Gross amount (-) 144 -184.945.199 6.284.927 -178.660.272 10.445.045 3,689.231 14.134.276
1.2 Reinsurers' share (+) 145 $-5.352$ $\mathbf 0$ $-5.352$ $-10.791$ 0 $-10.791$
2 Change in other technical provisions, net of reinsurance (+/-) (ADP
$147+148$
146 Ō $-844.739$ $-844.739$ 0 12.643.432 12.643.432
2.1 Gross amount (-) 147 $\mathbf 0$ $-844.739$ $-844.739$ $\mathbf 0$ 12.643.432 12.643.432
2.2 Reinsurers' share (+) 148 ٥ $\Omega$ $\Omega$ 0
VIII Change of special provision for life assurance where
policyholders bear the investment risk, net of reinsurance (+/-)
(ADP 150+151)
149 6.573.222 $\mathbf 0$ 6.573.222 10.158.961 0 10.158.961
1 Gross amount (-) 150 6.573.222 0 6,573,222 10.158.961 $\mathbf 0$ 10.158.961
3 Reinsurers' share (+) 151 0 $\Omega$ 0 $\mathbf 0$
IX Cash payments for bonuses and rebates, net of reinsurance
(ADP 153+154)
152 O $-3.617.378$ $-3.617.378$ $\mathbf 0$ $-5.398.961$ $-5.398.961$
1 Performance-dependent (bonuses) 153 0 $-2.162.318$ $-2.162.318$ 0 $-3.302.718$ $-3.302.718$
2 Performance-independent (rebates) 154 0 $-1.455.060$ $-1.455.060$ 0 $-2.096.243$ $-2.096.243$

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (STATEMENT OF PROFIT OR LOSS)

For the period: 1.1.2020 - 30.6.2020

Same period of the previous year IN HKK
Item ADP
code
Life Non-life Total Life Current year
Non-life
Total
$\overline{2}$ $\overline{\mathbf{3}}$ $\overline{\mathbf{4}}$ $5(3+4)$ 6 $\overline{7}$ $8(6+7)$
X Operating expenses (business expenditures), net (ADP 155 $-57.964.559$ $-503.175.070$ -561.139.629 -42.563.461 -490.211.004 $-532.774.465$
156+160)
1 Acquisition costs (ADP 157 to 159) 156 $-32.433.807$ $-261.011.018$ $-293.444.825$ $-20.944.669$ $-251.173.413$ $-272.118.082$
1.1 Commission 157 $-17.668.091$ -159.899.794 $-177.567.885$ $-8.178.666$ $-146.877.131$ $-155.055.797$
1.2 Other acquisition costs 158 -14.765.716 $-115.762.018$ $-130.527.734$ $-12.766.003$ $-117.824.182$ $-130.590.185$
1.3 Change in deferred acquisition costs 159 $\mathbf 0$ 14.650.794 14.650.794 0 13.527.900 13.527.900
2 Administration expenses (administrative costs) (ADP 161 to 163) 160 $-25.530.752$ $-242.164.052$ $-267.694.804$ $-21.618.792$ $-239.037.591$ -260.656.383
2.1 Depreciation 161 $-2.409.386$ $-35.915.686$ $-38.325.072$ $-2.245.853$ $-39.120.929$ $-41.366.782$
2.2 Salaries, taxes and contributions from/on salaries 162 $-11.617.362$ -101.032.529 $-112.649.891$ $-8.141.425$ $-76.449.213$ $-84.590.638$
2.3 Other administration expenses 163 $-11.504.004$ $-105.215.837$ $-116.719.841$ $-11.231.514$ $-123.467.449$ $-134.698.963$
XI Investment expenses (ADP 165 to 171) 164 $-10.421.950$ $-29.388.261$ $-39.810.211$ $-18.485.218$ $-68.516.215$ $-87.001.433$
1 Depreciation of land and buildings not occupied by an
undertaking for its own activities
165 o 0 0 0 $\mathbf 0$
2 Interest 166 $-726.864$ $-4.560.635$ $-5.287.499$ $-755.359$ -4.768.213
3 Impairment of investments 167 $\Omega$ $-525.548$ $-525.548$ $-1.013.854$ $-5.523.572$
4 Realised loss on investments 168 -484.817 $-2.655.367$ $-3.346.600$ $-4.360.454$
5 Unrealised loss on investments $-3.140.184$ $-7.240.112$ $-9.317.453$ $-16.557.565$
169 $-11.328$ $-638.452$ $-649.780$ $-7.523.969$ -30.832.330 $-38.356.299$
6 Net negative exchange rate differences 170 $-8.045.751$ $-3.495.430$ $-11.541.181$ O 0
7 Other investment expenses 171 $-1.153.190$ $-17.512.829$ $-18.666.019$ $-1.951.924$ $-20.251.619$ $-22.203.543$
XII Other technical expenses, net of reinsurance (ADP 173+174) 172 $-373.564$ $-26.432.712$ $-26.806.276$ $-706.943$ $-30.798.277$ $-31,505,220$
1 Expenses of preventive activities 173 0 -508.297 $-508.297$ 0 -873.796 $-873.796$
2 Other technical expenses of insurance 174 -373.564 $-25.924.415$ $-26.297.979$ $-706.943$ $-29.924.481$ $-30.631.424$
XIII Other activities, including value adjustments 175 $-7.916$ $-1.946.674$ $-1.954.590$ $-5.377$ $-1.405.388$ $-1,410.765$
XIV Profit or loss for the accounting period before tax (+/-)
(ADP 118+124+132 to 135+142+149+152+155+164+172+175)
176 26.749.997 219.872.404 246.622.401 30.594.410 217.566.005 248.160.415
XV Profit or loss tax (ADP 178+179) 177 $-5.378.995$ $-33.586.638$ -38.965.633 $-4.760.211$ $-39.059.128$ -43.819.339
1 Current tax expense 178 $-5.378.995$ -33.629.644 $-39.008.639$ -4.760.211 $-39.102.134$ $-43.862.345$
2 Deferred tax expense (income) 179 0 43.006 43.006 $\Omega$ 43.006 43.006
XVI Profit or loss for the accounting period after tax (+/-) (ADP
176+177)
180 21.371.002 186.285.766 207.656.768 25.834.199 178,506,877 204.341.076
1 Attributable to owners of the parent 181 21.647.926 186.102.877 207.750.803 25.684.862 178.350.497 204.035.359
2 Attributable to non-controlling interest 182 $-276.924$ 182.889 $-94.035$ 149.337 156,380 305.717
XVII TOTAL INCOME (ADP 118+124+132+133+134+179) 183 473,469,308 1.379.420.971 1.852.890.279 388.325.338 1.462.354.287 1,850.679.625
XVIII TOTAL EXPENSES (ADP
135+142+149+152+155+164+172+175+178)
184 $-452.098.306$ $-1.193.135.205$ $-1,645,233,511$ $-362.491.139$ $-1.283.847.410$ $-1.646.338.549$
IX Other comprehensive income (ADP 186 to 193) 185 67.363.884 96,554,674 163,918,558 $-40.433.049$ $-109.074.225$ $-149.507.274$
1 Gains/losses arising from translation of financial statements
relating to foreign operations
186 -431.619 455.084 $-886.703$ 1.325.170 2.505.602 3.830.772
2 Gains/losses arising from the revaluation of financial assets
available for sale
187 81.725.116 117.919.194 199.644.310 $-51.249.573$ $-135.815.220$ -187.064.793
3 Gains/losses arising from the revaluation of land and buildings
occupied by an undertaking for its own activities
188 o 0 ٥ 0 0 $\mathbf{o}$
4 Gains/losses arising from the revaluation of other tangible (other 189 o 0 o 0 $\mathbf{O}$
than land and property) and intangible assets
5 Effects of cash flow hedging instruments
190 o o n 0 $\mathbf{o}$
6 Actuarial gains/losses on pension plans with defined pensions 191 0 o o $\mathbf{O}$
7 Share in other comprehensive income of associates 192 $\Omega$ o o
0
8 Income tax on other comprehensive income 193 $-13.929.613$ $-20.909.436$ $-34.839.049$ 9.491.354 24.235.393 33.726.747
XX Total comprehensive income (ADP 180 +185) 194 88.734.886 282.840.440 371.575.326 $-14.598.850$ 69.432.652 54.833.802
1 Attributable to owners of the parent 195 89.014.410 282.607.263 371.621.673 $-14.758.258$ 69.218.279 54.460.021
2 Attributable to non-controlling interests 196 $-279.524$ 233.177 $-46.347$ 159.408 214.373 373.781
XXI Reclassification adjustments 197 0 $\mathbf 0$ Ô 0 0 $\circ$

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)

As at: 30.6.2020

in HRK
Item ADP Last day of the preceding business year At the reporting date of the current period
$\mathbf{1}$ code Life
$\overline{3}$
Non-life Total Life Non-life Total
ASSETS $\overline{2}$ 4 $5(3+4)$ 6 $\overline{7}$ $8(6+7)$
A) INTANGIBLE ASSETS (ADP 002 +003) 001 407.778 48.318.959 48.726.737 379.021 63.144.323 63.523.344
1 Goodwill 002 o $\Omega$ $\Omega$
2 Other intangible assets 003 407.778 48.318.959 48.726.737 379.021 63.144.323 63.523.344
B) TANGIBLE ASSETS (ADP 005 to 007) 004 21.127.013 888.164.071 909.291.084 20.821.621 813,583,749 834.405.370
1 Land and buildings occupied by an undertaking for its own activities 005 16.259.682 536.376.413 552.636.095 16.398.265 447.303.952 463.702.217
2 Equipment 006 602.616 55.612.530 56.215.146 415.994 65.548.003 65.963.997
3 Other tangible assets and inventories 007 4.264.715 296.175.128 300.439.843 4.007.362 300.731.794 304.739.156
C) INVESTMENTS (ADP 009+010+014+033) 008 3.566.682.133 6.034.361.455 9.601.043.588 3.549.635.417 5.948.885.973 9.498.521.390
I investments in land and buildings not occupied by an undertaking for its own
activities 009 1.629.143 872.023.596 873.652.739 1.654.587 1.048.383.139 1.050.037.726
Il Investments in branches, associates and joint ventures (ADP 011 to 013) 010 O 77,589,581 77.589.581 0 82.538.114 82.538.114
1 Shares and holdings in branches 011 $\Omega$ $\Omega$ $\circ$ $\Omega$
2 Shares and holdings in associates 012 0 9.628.386 9,628,386 $\Omega$ 10.050.089 10.050.089
3 Shares and holdings in joint ventures 013 $\Omega$ 67.961.195 67.961.195 $\Omega$ 72.488.025 72.488.025
III Financial assets (ADP 015+018+023+029) 014 3.565.052.990 5.084.748.278 8.649.801.268 3.547.980.830 4.817.964.720 8.365.945.550
1 Financial assets held to maturity (ADP 016+017) 015 1.277.694.188 1.037.566.857 2.315.261.045 1.140.864.115 942.829.520 2.083.693.635
1.1 Debt financial instruments 016 1.277.694.188 1.037.566.857 2.315.261.045 1.140.864.115 942.829.520 2.083.693.635
1.2 Other 017 $\Omega$ $\Omega$ $\circ$ 0 $\Omega$
2 Financial assets available for sale (ADP 019 to 022) 018 1.921.629.783 2.990.714.858 4.912.344.641 2.020.759.245 2.832.847.795 4.853.607.040
2.1 Equity financial instruments 019 24.590.609 498.588.974 523.179.583 25.727.427 457.774.430 483.501.857
2.2 Debt financial instruments 020 1.874.911.679 2.427.461.212 4.302.372.891 1.936.266.796 2.264.363.079 4.200.629.875
2.3 Units in investment funds 021 22.127.495 64.664.672 86,792,167 58.765.022 110.710.286 169,475,308
2.4 Other 022 $\mathbf{0}$ $\Omega$ $\Omega$ $\circ$ 0 n
3 Financial assets at fair value through statement of profit or loss (ADP 024 to 028) 023 5.242.699 62.444.827 67.687.526 8,599,026 29.807.560 38.406.586
3.1 Equity financial instruments 024 $\mathbf 0$ 17.070.930 17.070,930 0 15,342,840 15.342.840
3.2 Debt financial instruments 025 $\mathbf 0$ o $\Omega$ $\mathbf o$
3.3 Derivative financial instruments 026 589,945 3.080.534 3.670.479 377.461 1.012.977 1,390,438
3.4 Units in investment funds 027 4.652.754 42.293.363 46.946.117 8.221.565 13.451.743 21.673.308
3.5 Other 028 $\Omega$ $\Omega$ $\Omega$ $\Omega$
4 Loans and receivables (ADP 030 to 032) 029 360.486.320 994.021.736 1.354.508.056 377.758.444 1.012.479.845 1.390.238.289
4.1 Deposits with credit institutions 030 299.097.268 782.258.687 1.081.355.955 308.311.498 775.844.985 1.084.156.483
4.2 Loans 031 61.389.052 55.788.485 117.177.537 64.212.654 54.086.839 118.299.493
4.3 Other 032 O 155.974.564 155,974,564 5.234.292 182.548.021 187.782.313
IV Deposits with cedants 033 $\circ$ $\Omega$ $\Omega$ $\Omega$ 0
DINVESTMENTS FOR THE ACCOUNT OF LIFE ASSURANCE FOLIC INOLDERS
WHO BEAD THE INVESTMENT DISK
034 450.937.458 $\Omega$ 450.937.458 440.915.250 $\Omega$ 440.915.250
E) REINSURANCE AMOUNT IN TECHNICAL PROVISIONS (ADP 036 to 042) 035 79.965 226.299.397 226.379.362 14.014 368,949.128 368.963.142
1 Provisions for unearned premiums, reinsurance amount 036 57.935 48.326.106 48.384.041 2.775 103.391.824 103.394.599
2 Mathematical provision, reinsurance amount 037 22.030 $\Omega$ 22.030 11.239 $\overline{0}$ 11.239
3 Claims outstanding, reinsurance amount 038 $\Omega$ 177,973,291 177.973.291 $\Omega$ 265.557.304 265.557.304
4 Provisions for bonuses and rebates, reinsurance amount 039 $\Omega$ $\Omega$ 0 $\Omega$ $\mathbf{o}$ $\Omega$
5 Equalization provision, reinsurance amount 040 $\Omega$ 0 o 0 $\Omega$ $\overline{0}$
6 Other technical provisions, reinsurance amount 041 $\Omega$ o $\mathbf{0}$ $\bf{0}$ o 0
7 Special provisions for life assurance where policyholders bear the investment risk,
reinsurance amount
042 o 0 $\Omega$ o $\Omega$
F) DEFERRED AND CURRENT TAX ASSETS (ADP 044 +045) 043 2.028.656 75.768.736 77.797.392 2.028.656 93,581,458 95,610.114
1 Deferred tax assets 044 2.028.656 68.047.649 70.076.305 2.028.656 69.124.228 71.152.884
2 Current tax assets 045 $\mathbf{o}$ 7.721.087 7.721.087 $\Omega$ 24.457.230 24.457.230
G) RECEIVABLES (ADP 047+050+051) 046 22.010.878 979,166.004 1.001.176.882 21.944.508 1.139.280.859 1.161.225.367
1 Receivables arising from insurance business (ADP 048+049) 047 235.763 503.377.921 503.613.684 233.778 786.474.133 786.707.911
1.1 From policyholders 048 O 502.590.925 502.590.925 $\mathbf{0}$ 785.423.601 785.423.601
1.2 From insurance agents or insurance brokers 049 235.763 786.996 1.022.759 233.778 1.050.532 1.284.310
2 Receivables arising from reinsurance business 050 879 47.249.357 47.250.236 1.079 30.896.270 30.897.349
3 Other receivables (ADP 052 to 054) 051 21.774.236 428.538.726 450.312.962 21.709.651 321.910.456 343.620.107
3.1 Receivables arising from other insurance operations 052 o 202.997.642 202.997.642 $\circ$ 192.028.233 192.028.233
3.2 Receivables for investment income 053 268.543 578.032 846.575 629.801 692.799 1.322.600
3.3 Other receivables 054 21.505.693 224.963.052 246.468.745 21.079.850 129.189.424 150.269.274
H) OTHER ASSETS (ADP 056+060+061) 055 39.381.104 180.970.286 220.351.390 103.708.180 534.523.476 638.231.656
1 Cash at bank and in hand (ADP 057 to 059) 056 39.381.104 175,637,699 215.018.803 103.708.180 524.967.654 628.675.834
1.1 Funds in the business account 057 13.915.217 175.060.566 188.975.783 10.403.316 523.861.111 534.264.427
1.2 Funds in the account of assets covering mathematical provisions 058 25.462.256 $\circ$ 25.462.256 93.302.176 $\Omega$ 93.302.176
1.3 Cash in hand 059 3.631 577.133 580.764 2.688 1.106.543 1.109.231
2 Fixed assets held for sale and termination of business operations 060 $\circ$ 1.963.217 1.963.217 0 1.905.149 1.905.149
3 Other 061 $\mathbf 0$ 3.369.370 3.369.370 0 7.650.673 7.650.673
I) PREPAYMENTS AND ACCRUED INCOME (ADP 063 to 065) 062 1.425.135 286.222.521 287.647.656 1.611.823 309,077,846 310,689,669
$\circ$ $\Omega$
1 Deferred interest and rent 063 $\circ$ 1.454.551 1.454.551 1.093.594 1.093.594
2 Deferred acquisition costs 064 268.986.430 268,986,430 ol 283.155.845 283.155.845
3 Other prepayments and accrued income 065 1.425.135 15.781.540 17.206.675 1.611.823 24.828.407 26.440.230
J) TOTAL ASSETS (ADP 001+004+008+034+035+043+046+055+062) 066 4.104.080.120 8,719.271.429 12.823.351.549 4.141.058.490 9.271.026.812 13.412.085.302
K) OFF-BALANCE SHEET ITEMS 067 269.163.441 2.573.102.420 2.842.265.861 335.237.631 2.745.922.079 3.081.159.710

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) As at: 30.6.2020

in HRK
Item ADP Last day of the preceding business year At the reporting date of the current period
code Life Non-life Total Life Non-life Total
$\overline{1}$ $\overline{2}$ $\mathbf{3}$ 4 $5(3+4)$ 6 $\overline{7}$ $8(6+7)$
LIABILITIES
A) CAPITAL AND RESERVES (ADP 069+072+073+077+081+084) 068 508.083.314 3.311.557.118 3.819.640.432 493.293.511 3.379.268.113 3.872.561.624
1 Subscribed capital (ADP 070 to 071) 069 44.288.720 545.037.080 589,325.800 44.288.720 545.037.080 589.325.800
1.1 Paid in capital - ordinary shares 070 44.288.720 545.037.080 589.325.800 44.288.720 545.037.080 589.325.800
1.2 Paid in capital - preference shares 071 $\mathbf 0$ $\mathbf{0}$ O $\circ$ $\mathbf 0$ ٥
2 Premium on shares issued (capital reserves) 072 $\mathbf{0}$ 681.482.525 681.482.525 $\mathbf{0}$ 681.482.525 681.482.525
3 Revaluation reserves (ADP 074 to 076) 073 176.625.491 432.713.780 609.339.271 136.182.373 322.543.076 458.725.449
3.1 Land and buildings 074 $\Omega$ 119.622.869 119.622,869 0 118.579.007 118.579.007
3.2 Financial assets available for sale 075 176.625.491 312.925.487 489.550.978 136.182.373 203.798.645 339.981.018
3.3 Other revaluation reserves 076 $\mathbf{o}$ 165.424 165,424 $\Omega$ 165.424 165.424
4 Reserves (ADP 078 to 080) 077 85.295.937 316.742.638 402.038.575 85.295.937 316.742.638 402.038.575
4.1 Legal reserves 078 2.214.436 27.864.354 30.078.790 2.214.436 27.864.354 30.078.790
4.2 Statutory reserve 079 7.581.501 139.638.995 147.220.496 7.581.501 139.638.995 147.220.496
4.3 Other reserves 080 75.500.000 149.239.289 224.739.289 75.500.000 149.239.289 224.739.289
5 Retained profit or loss brought forward (ADP 082 + 083) 081 164,008,543 1.034.053.589 1.198.062.132 201.841.619 1.335.112.297 1.536.953.916
5.1 Retained profit 082 164.008.543 1.034.053.589 1.198.062.132 201.841.619 1.335.112.297 1.536.953.916
5.2 Loss brought forward (-) 083 $\Omega$ o $\circ$ $\Omega$ $\Omega$ $\mathbf 0$
6 Profit or loss for the current accounting period (ADP 085+086) 084 37.864.623 301.527.506 339.392.129 25,684,862 178.350.497 204.035.359
6.1 Profit for the current accounting period 085 37.864.623 301.527.506 339.392.129 25.684.862 178.350.497 204.035.359
6.2 Loss for the current accounting period(-) 086 $\Omega$ 0 $\circ$ $\circ$ $\Omega$ 0
B) SUBORDINATE LIABILITIES 087 $\overline{0}$ ol $\Omega$ $\Omega$ 0 O
C) MINORITY INTEREST 088 630.567 11.922.791 12,553,358 789.976 11.941.317 12.731.293
D) TECHNICAL PROVISIONS (ADP 090 to 095) 089 3.009.126.063 4.233.604.886 7.242.730.949 3.016.611.150 4.660.818.192 7.677.429.342
1 Provisions for uneamed premiums, gross amount 090 5.909.255 1.429.409.694 1.435.318.949 5.735.129 1.726.942.710 1.732.677.839
2 Mathematical provisions, gross amount 091 2.937.212.325 17.908.413 2.955.120.738 2.932.416.267 14.219.182 2.946.635.449
3 Claims outstanding, gross amount 092 66.004.483 2.743.831.653 2.809.836.136 78.459.754 2.889.673.692 2,968,133,446
4 Provisions for bonuses and rebates, gross amount 093 0 8.770.594 8,770,594 $\overline{0}$ 7.875.126 7.875.126
5 Equalization provision, gross amount 094 $\circ$ 7.055.533 7.055,533 $\Omega$ 7.055.533 7.055.533
6 Other technical provisions, gross amount 095 $\mathbf{0}$ 26.628.999 26.628.999 $\circ$ 15.051.949 15.051.949
E) SPECIAL PROVISIONS FOR LIFE ASSURANCE WHERE POLICYHOLDERS BEAR
THE INVESTMENT RISK, gross amount
096 450.937.458 $\circ$ 450.937.458 440.915.250 0 440.915.250
F) OTHER PROVISIONS (ADP 098 + 099) 097 3.076.787 115.844.923 118.921.710 3.265,794 94.510.162 97.775.956
1 Provisions for pensions and similar obligations 098 2.957.741 111.329.174 114.286.915 1.728.254 90.383.704 92.111.958
2 Other provisions 099 119,046 4.515.749 4.634,795 1.537.540 4.126.458 5.663.998
G) DEFERRED AND CURRENT TAX LIABILITIES (ADP 101 + 102) 100 36.401.392 141.425.157 177.826,549 30.991.439 146.730.990 177.722.429
1 Deferred tax liability 101 35.681.180 113.553.295 149.234.475 26.229.479 101.253.924 127.483.403
2 Current tax liability 102 720.212 27.871.862 28.592.074 4.761.960 45.477.066 50.239.026
H) DEPOSITS HELD UNDER BUSINESS CEDED 103 0 $\mathbf 0$ O $\Omega$ $\Omega$ $\Omega$
I) FINANCIAL LIABILITIES (ADP 105 to 107) 104 4.320.559 297.695.442 302.016.001 70.103.304 338.655.259 408.758.563
1 Loan liabilities 105 $\circ$ $\Omega$ $\circ$ $\mathbf 0$ $\circ$
2 Liabilities for issued financial instruments 106 $\circ$ $\circ$ $\Omega$ 0 $\Omega$ $\Omega$
3 Other financial liabilities 107 4.320.559 297.695.442 302.016.001 70.103.304 338.655.259 408.758.563
J) OTHER LIABILITIES (ADP 109 to 112) 108 68,558,512 284,395,259 352.953.771 60.136.639 317.828.878 377.965.517
1 Liabilities from direct insurance business 109 6.788.834 91.501.162 98.289.996 5.042.372 89.230.717 94.273.089
2 Liabilities from coinsurance and reinsurance business 110 21.961 46.608.944 46.630.905 252.204 98.336.316 98,588,520
3 Liabilities for disposal and discontinued operations 111 $\Omega$ 11.832 11.832 $\Omega$ 11.500 11.500
4 Other liabilities 112 61.747.717 146.273.321 208.021.038 54.842.063 130.250.345 185.092.408
K) ACCRUALS AND DEFERRED INCOME (ADP 114+115) 113 22.945.468 322.825.853 345.771.321 24.951.427 321.273.901 346.225.328
1 Deferred reinsurance commission 114 $\Omega$ 0 $\mathbf 0$ Ωİ $\Omega$
2 Other accruals and deferred income 115 22.945.468 322.825.853 345.771,321 24.951.427 321.273.901 346.225.328
J) TOTAL LIABILITIES (ADP 068+087+088+089+096+097+100+103+104+108+113) 116 4.104.080.120 8.719.271.429 12.823.351.549 4.141.058.490 9.271.026.812 13.412.085.302
M) OFF-BALANCE SHEET ITEMS 117 269.163.441 2.573.102.420 2.842.265.861 335.237.631 2.745.922.079 3.081.159.710

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period: 1.1.2020 - 30.6.2020

in HRK
Item ADP
code
Paid in capital
(ordinary and
preference
shares)
Premium on
shares issued
Revaluation
reserves
Attributable to owners of the parent
Reserves
(legal,
statutory,
other)
Retained profit
or loss
brought
forward
Profit/loss for
the year
Total capital and
reserves
(3 to 8)
Attributable to
non-controlling
interest
Total capital and
reserves
$(9+10)$
и $\overline{\mathbf{2}}$ $\overline{\mathbf{3}}$ $\overline{\bf 4}$ 5 6 $\overline{7}$ 8 9 10 11
Balance on the first day of the
previous business year
$\ddot{\phantom{1}}$ 589.325.800 681.482.525 340.283.451 402.038.575 858.901.275 337.079.883 3.209.111.509 12.213.767 3.221.325.276
Change in accounting policies $\overline{\mathbf{2}}$ ٥ $\circ$ o $\mathbf 0$ $\mathbf{0}$ 0 O O
Correction of errors from prior periods 3 o C $\mathbf 0$ $\circ$ $\Omega$ 0 $\circ$
Il Balance on the first day of the
previous business year (restated)
4 589.325.800 681.482.525 340.283.451 402.038.575 858.901.275 337.079.883 3.209.111.509 12.213.767 3.221.325.276
III Comprehensive income or loss for
the same period of the previous year
(ADP 006 + ADP 007)
5 ٥ $\Omega$ 270.729.624 $\circ$ $\circ$ 339.392.129 610.121.753 449.227 610.570.980
Profit or loss for the period 6 O $\Omega$ $\Omega$ $\Omega$ $\mathbf{o}$ 339.392.129 339.392.129 347.362 339.739.491
2 Other comprehensive income or loss
for the same period of the previous year
(ADP 008 to ADP 11)
$\overline{7}$ 0 $\circ$ 270.729.624 $\Omega$ $\mathbf 0$ 0 270.729.624 101.865 270.831.489
Unrealised gains or losses on tangible
assets (land and buildings)
8 0 $\circ$ 19.583.202 $\circ$ $\mathbf 0$ ٥ 19.583.202 25.970 19.609.172
Unrealised gains or losses on financial
assets available for sale
9 0 $\circ$ 277.011.573 $\circ$ $\mathbf 0$ 0 277.011.573 58.287 277.069.860
Realised gains or losses on financial
assets available for sale
10 0 $\circ$ $-27.005.744$ $\circ$ $\circ$ 0 $-27.005.744$ 0 $-27.005.744$
Other changes in equity unrelated to
owners
11 0 $\circ$ 1.140.593 $\circ$ O 0 1.140.593 17.608 1.158.201
IV Transactions with owners
(previous period)
12 0 $\circ$ $-1.673.804$ O 339.160.857 $-337.079.883$ 407.170 $-109.636$ 297.534
Increase/decrease in subscribed capital 13 0 0 0 $\circ$ O 0 0
Other contributions by owners 14 0 $\Omega$ $\circ$ $\circ$ O 0 O n
Payment of share in profit/dividend 15 0 $\circ$ $\circ$ $\circ$ Ő O $-112.563$ $-112.563$
Other distribution to owners 16 0 $\mathbf{o}$ $-1.673.804$ 0 339.160.857 -337.079.883 407.170 2.927 410.097
V Balance on the last day of the
previous business year reporting
period
17 589.325.800 681.482.525 609.339.271 402.038.575 1.198.062.132 339.392.129 3.819.640.432 12.553.358 3.832.193.790
VI Balance on the first day of the
current business year
18 589.325.800 681.482.525 609.339.271 402.038.575 1.198.062.132 339.392.129 3.819.640.432 12.553.358 3.832.193.790
Change in accounting policies 19 0 $\circ$ $\circ$ $\circ$ O 0 $\mathbf{o}$ $\circ$ $\Omega$
Correction of errors from prior periods 20 0 $\Omega$ ٥ $\Omega$ $\Omega$ $\mathbf{o}$ $\mathbf 0$
VII Balance on the first day of the
current business year (restated)
21 589.325.800 681.482.525 609.339.271 402.038.575 1.198.062.132 339.392.129 3.819.640.432 12.553.358 3.832.193.790
VIII Comprehensive income or loss
for the year
22 0 o $-149.575.338$ $\Omega$ $\circ$ 204.035.359 54.460.021 373.781 54.833.802
Profit or loss for the period 23 ٥ $\circ$ 0 0 O 204.035.359 204.035.359 305.717 204.341.076
Other comprehensive income or loss for
the year
24 0 $\Omega$ $-149.575.338$ $\Omega$ O $\mathbf{o}$ $-149.575.338$ 68.064 $-149.507.274$
Unrealised gains or losses on tangible
assets (land and buildings)
25 O $\circ$ 0 $\circ$ $\circ$ 0 $\mathbf o$ ٥ O
Unrealised gains or losses on financial
assets available for sale
26 $\circ$ ٥ $-110.034.111$ $\Omega$ $\Omega$ $\Omega$ $-110.034.111$ $-13.466$ $-110.047.577$
Realised gains or losses on financial
assets available for sale
27 0 $\circ$ -43.290.469 $\circ$ $\circ$ $\Omega$ $-43.290.469$ 0 $-43.290.469$
Other changes in equity unrelated to
owners
28 o $\circ$ 3.749.242 $\circ$ $\circ$ 0 3.749.242 81.530 3.830.772
Transactions with owners (current
period)
29 0 $\circ$ $-1.038.484$ 0 338.891.784 -339.392.129 $-1.538.829$ $-195.846$ $-1.734.675$
Increase/decrease in subscribed capital 30 0 0 0 0 $\circ$ ٥ $\mathbf{o}$ 0 0
Other contributions by owners 31 O 0 0 0 $\circ$ $\Omega$ $\Omega$ $\Omega$ $\circ$
Payment of share in profit/dividend
Other transactions with owners
32
33
o
o
0
$\Omega$
0
$-1.038.484$
$\mathbf{0}$
$\overline{0}$
$\mathbf{o}$
338.891.784
$\Omega$
$-339.392.129$
0
$-1.538.829$
$-156.751$ $-156.751$
$-39.095$ $-1.577.924$
Balance on the last day of the
current year reporting period
34 589.325.800 681.482.525 458.725.449 402.038.575 1.536.953.916 204.035.359 3.872.561.624 12.731.293 3.885.292.917

CONSOLIDATED STATEMENT OF CASH FLOWS - indirect method

For the period: 1.1.2020 - 30.6.2020

in HRK
Item ADP
code
Same period of
the previous year
Current business
period
1 $\overline{2}$ 3 $\overline{4}$
I Cash flow from operating activities (ADP 002+013+031) 001 $-119.098.352$ 229.103.003
1 Cash flow before changes in operating assets and liabilities (ADP 003+004) 002 146.180.730 227.868.872
1.1 Profit/loss before tax 003 246.622.401 248.160.415
1.2 Adjustments: (ADP 005 to 012) 004 $-100.441.671$ $-20.291.543$
1.2.1 Depreciation of property and equipment 005 28.805.978 30.806.719
1.2.2 Amortization of intangible assets 006 9.519.094 10.560.063
1.2.3 Impairment and gains/losses on fair valuation 007 $-2.849.609$ 35.745.065
1.2.4 Interest expenses 008 5.287.499 5.523.572
1.2.5 Interest income 009 $-112.241.086$ $-101.357.407$
1.2.6 Share in profit of associates 010 $-6.320.042$ $-4.932.224$
1.2.7 Profit/loss from the sale of tangible assets (including land and buildings) 011 $-203.385$ 536.765
1.2.8 Other adjustments 012 $-22.440.120$ 2.825.904
2 Increase/decrease in operating assets and liabilities (ADP 014 to 030) 013 $-237.415.531$ 38.680.917
2.1 Increase/decrease in financial assets available for sale 014 -366.382.486 $-58.643.757$
2.2 Increase/decrease in financial assets at fair value through statement of profit or loss 015 121.964.290 $-7.054.262$
2.3 Increase/decrease in loans and receivables 016 $-127.622.480$ $-24.357.143$
2.4 Increase/decrease in deposits with cedants 017
2.5 Increase/decrease in investments for the account of life assurance policyholders who bear the investment risk 018 $-8.237.722$ 10.022.208
2.6 Increase/decrease in reinsurance amount in technical provisions 019 $-51.732.571$ $-142.583.780$
2.7 Increase/decrease in tax assets 020 $-14.518.823$ $-17.769.717$
2.8 Increase/decrease in receivables 021 $-292.114.926$ -228.934.704
2.9 Increase/decrease in other assets 022 $\Omega$
2.10 Increase/decrease in prepayments and accrued income 023 $-22.503.407$ $-22.994.716$
2.11 Increase/decrease in technical provisions 024 480.110.630 433.913.319
2.12 Increase/decrease in special provisions for life assurance where policyholders bear the investment risk 025 8.237.722 $-10.022.208$
2.13 Increase/decrease in tax liabilities 026 3.674.105 15.915.255
2.14 Increase/decrease in deposits held under reinsurance business ceded 027 0
2.15 Increase/decrease in financial liabilities 028 2.518.444 89.117.483
2.16 Increase/decrease in other liabilities 029 32.755.411 1.670.161
2.17 Increase/decrease in accruals and deferred income 030 $-3.563.718$ 402.778
3 Income tax paid 031 $-27.863.551$ $-37.446.786$
II CASH FLOW FROM INVESTING ACTIVITIES (ADP 033 to 046) 032 $-38.016.543$ 258.044.511
1 Cash receipts from the sale of tangible assets 033 927.010 3.299.651
2 Cash payments for the purchase of tangible assets 034 $-11.902.700$ $-20.079.654$
3 Cash receipts from the sale of intangible assets 035 629.925
4 Cash payments for the purchase of intangible assets 036 $-9.490.550$ $-25.286.703$
5 Cash receipts from the sale of land and buildings not occupied by an undertaking for its own activities 037 7.314.474 80.056.554
6 Cash payments for the purchase of land and buildings not occupied by an undertaking for its own activities 038 $-2.355.181$ $-23.690.605$
7 Increase/decrease of investments in branches, associates and joint ventures. 039 13.500.000 -77.987.290
8 Cash receipts from financial assets held to maturity 040 76.501.735 407.023.898
9 Cash payments for financial assets held to maturity 041 $-141.157.902$ -110.488.319
10 Cash receipts from the sale of financial instruments 042 0 0
11 Cash payments for investments in financial instruments 043
12 Cash receipts from dividends and share in profit 20.728.777
13 Cash receipts from repayments of short-term and long-term loans given 044
045
21.986.134 1.632.192
38.908.661
14 Cash payments for short-term and long-term loans
III CASH FLOW FROM FINANCING ACTIVITIES (ADP 048 to 052) 046 $-14.698.265$ $-15.343.874$
1 Cash receipts resulting from the increase of initial capital 047 $-12.546.383$ $-11.865.455$
2 Cash receipts from short-term and long-term loans received 048
3 Cash payments for the repayment of short-term and long-term loans received 049 0
4 Cash payments for the redemption of treasury shares 050 $-12.433.819$ $-11.708.704$
051
5 Cash payments of share in profit (dividend)
NET CASH FLOW (ADP 001 + 032 + 047)
052 $-112.564$ $-156.751$
053 $-169.661.278$ 475.282.059
IV EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS 054 11.541.181 -57.401.793
V NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (053+054) 055 $-158.120.097$ 417.880.266
Cash and cash equivalents at the beginning of period 056 446.207.971 220.351.390
Cash and cash equivalents at the end of period (ADP 055 + 056) 057 288,087.874 638.231.656

QUARTERLY MANAGEMENT REPORT $\prod$

In the period observed, the CROATIA osiguranje Group, operating in Croatia and the markets of the region (BiH, North Macedonia, Serbia and Slovenia), achieved consolidated profit after tax and noncontrolling interest in the amount of HRK 204m, which represents a decrease of 1.8 percent compared to the comparative period of the previous year.

Gross written premium for the reporting period amounted to HRK 1,868.3m, which represents a decrease of 5.8 percent compared to the comparative period of the previous year. Gross written premium of nonlife insurance amounted to HRK 1,592.3m which represents an increase by 0,5%, while gross written premium of life insurance decreased by 30.8 percent and amounted to HRK 276m.

Earned premium for the reporting period amounted to HRK 1,448.1m, which represents 78.2 percent of total income and a decrease of 4.6 percent compared to the comparative period of the previous year.

In the non-life and life insurance business, the Group has achieved income from investments in the amount of HRK 294.9m, which represents an increase of 26.7 percent compared to the comparative period of the previous year. Income from investments represents 15.9 percent of total income. Investment expenses amounted to HRK 87m and represent 5.4 percent of total expenses.

Net claims incurred for the reporting period represent 61.2 percent of total expenses and amounted to HRK 981.3m, which represents an increase of 22.7 percent compared to the same period of the previous year. An increase of net claims incurred is primary caused by one-time expenses in the amount of HRK 100m, such as claims caused by earthquake and decision of the Supreme Court of the Republic of Croatia on increase of orientation criteria and amounts for immaterial claims.

Acquisition and administration costs amounted to HRK 532.8m, representing 33.2 percent of total expenses of the Group. Acquisition and administration costs decreased by 5.1 percent compared to the comparative period of the previous year.

Total assets of the Group as at 30.6.2020 amounted to HRK 13.4 billion, representing an increase of 4.6 percent compared to 31.12.2019.

Technical reserves amounted to HRK 7.7 billion, representing an increase of 6 percent compared to 31.12.2019.

Unaudited consolidated financial statements for the first half-year period of 2020 will be available on the web sites of CROATIA osiguranje d.d., Zagreb Stock Exchange and Officially appointed mechanism for the central storage of regulated information.

Significant business events in the reporting period

Approvals from the Croatian Financial Services Supervisory Agency to perform the functions of members of the Management Board

The Croatian Financial Services Supervisory Agency (HANFA), at its meeting of the Governing Board held on 5 March 2020, issued a resolution authorising Vančo Balen to act as a member of the Management Board of CROATIA osiguranje d.d. for a term of office until 31 December 2022 beginning on the date of appointment to the function.

Also, at the meeting of the Governing Board held on 12 March 2020, HANFA issued a resolution authorising Robert Vučković to act as a member of the Management Board of CROATIA osiguranie d.d. for a term of office until 31 December 2022, beginning on the date of appointment to the function.

Furthermore, at the meeting of the Governing Board held on 9 April 2020, HANFA issued a resolution authorizing Luka Babić to act as a member of the Management Board of CROATIA osiguranje d.d. for a term of office until 31 December 2022, beginning on the date of appointment to the function.

At its meeting held on April 17, 2020, the Supervisory Board appointed members of the Management Board to the mentioned functions.

Impact of the COVID-19 outbreak on the Group's operations

The existence of the coronavirus (COVID-19) was confirmed in early 2020 and spread to mainland China and beyond, and in late February 2020 to Croatia, causing disruption in business and economic activities. From the information available at the time of preparation of these financial statements and based on numerous publicly available macroeconomic projections, an economic slowdown is likely during 2020, which may result in lower consumption and consequently lower demand for insurance services, since the volume of insurance premiums written is linked to GDP trends.

In addition, the Group has identified the following key areas that could be affected by adverse economic conditions:

  • $\bullet$ volatility of comprehensive income from investments, as a result of developments on the financial markets,
  • increased credit risk and increased impairment provisions for insurance receivables, $\bullet$
  • increased number of life insurance policy surrenders. $\bullet$

As part of its own risk and solvency assessment (ORSA) process, a series of stress tests, sensitivity and scenarios analyses were conducted, and it is estimated that these analyses covered the risks that could have a significant impact on the Group and in the case of COVID-19. Although, based on analyses performed in the ORSA process, a certain decrease in the solvency ratio is expected, the ratio should remain at levels significantly higher than the regulatory prescribed and the solvency of the Group should in no way be called into question. Also, solvency calculation which was performed as at 31.3.2020. showed that despite the negative effects of COVID-19, the Group is still operating with a very high solvency ratio of 235% (as at 31.12.2019. 239%). In regard to liquidity, the Group still has the satisfactory amounts of liquid resources that are sufficient for discharging all obligations that have become due and also has at its disposal instruments available for obtaining additional liquidity if necessary.

The Group will continue to actively monitor the development of the COVID-19 outbreak and if it should be considered to significantly affect the Group's business and financial position in 2020, it will fully comply with the Capital Market Act.

Earthquake in the area of the City of Zagreb

On 22 March 2020, a series of earthquakes were recorded in the area of the City of Zagreb, the strongest being of a magnitude of 5.5 according to the Richter scale. In some insurance contracts, the Group also provides insurance for earthquake insurance risk. The amount of damage from Group's insurance contracts caused by this event (after reinsurance) amount to more than HRK 40m.

Decision of the Supreme Court of the Republic of Croatia on increase of Orientation criteria for determining the amount of fair financial compensation for immaterial damages

As at 15.6.2020 the Supreme Court of the Republic of Croatia has adopted a decision on increase of Orientation criteria for determining the amount of fair financial compensation for immaterial damages, by 50%, and it will be applied to all future compensation proceedings, but also at those that are in progress. This decision led to an increase in technical provisions from insurance that is, it has an effect on profit before tax (after reinsurance) in the reporting period in the amount of over HRK 80m. In addition to the effect on the reporting period, the consequences of the decision are higher future expenses for insurance claims.

HANFA's Decision regarding prohibition of dividend payment

The Governing Board of HANFA, at its session held on 26 March 2020, adopted a decision prohibiting CROATIA osiguranje d.d., Zagreb, payment of dividends until 30 April 2021.

Such a decision was made for insurance companies in the Republic of Croatia due to exceptional market circumstances, with the aim of ensuring stable operations of insurance companies and maintaining the stability of the financial system. Also, the regulator's intention is to strength the liquidity of insurance companies in the context of the coronavirus pandemic, but also in light of the recent earthquake in the capital city of the Republic of Croatia.

Significant events after the end of the reporting date

No events occurring after the reporting date were material to the financial statements for the reporting period.

Expected development in the future

With a focus on digitalization, CROATIA osiguranje will continue to work as a market leader in further developing the overall insurance market in Croatia. This especially relates to the further development of casco, travel, health and property insurance, and step forward in product creation, sales network organization and customer experience.

The Group continues with continuous improvement in all business segments with the aim of strengthening the leading position on the Croatian market. Key business improvement activities include:

  • Introduction of new products and improvement of existing ones according to customer needs
  • Continued sales force strengthening activities with the aim of growth in the profitable retail $\bullet$ segment and the segment of small and medium-sized businesses
  • Further improvement in processes with the aim of providing the best customer service.

In the forthcoming period, the goal is to continue the best practice of transferring operational excellence from the parent to subsidiaries in the region. New sources of growth in the future are combinations of organic and acquisition activities. New acquisitions are aimed at strengthening the insurance business and further development of healthcare offering in addition to using the synergies arising from the insurance offer.

Research and development activities

Customer focus and continuous innovations are the values of the Group that underlie research activities and new product development. The aim is to provide fast and quality service and increasing client satisfaction.

We conduct trends and developments in highly developed insurance markets with a focus on the EU. Also, we conduct market research activities regularly with the goal of better understanding the existing market needs and creating products that will adequately respond to them. In this way, we connect the relevant worldwide insurance products with the needs of clients in Croatia. We also introduce new and innovative products that will ensure long-term growth and retaining the Group's leading market position.

During product development, our focus is on creating products with quality insurance coverage and on the service that we provide. Special emphasis is placed on quality and available service which will adequately cover risks with which our clients are faced. We monitor trends and continuously implement the latest technology solutions as well as numerous innovations to ensure customer satisfaction. Customer satisfaction is continually monitored, and we respond to all challenges we face.

Description of the most significant risks and uncertainties

In relation to the most significant risks and uncertainties which were described in the audited financial statements for the year 2019, in the period observed there were no significant changes in relation to the risks to which the Group is exposed in the course of its business, except as described in the note Significant business events in the reporting period.

Zagreb, 31 July 2020 Member of the Management Board siguranic Rresident of the Management Board $15$ Luka Ba Davor Tomašković

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL $III.$ STATEMENTS FOR THE PERIOD I-VI 2020

1. GENERAL INFORMATION

The Group consolidated the following entities as at 30 June 2020:

30 June 2020
Activity Shares Shares Shares held by
Group directly held by non-
held by the controlling
parent Group interests
$(\%)$ $(*)$ $(*)$
Subsidiaries registered in Croatia which are
consolidated:
Croatia premium d.o.o., Zagreb Real estate business 100.00 100.00
Histria Construct d.o.o., Zagreb Real estate business 100.00 100.00
Core 1 d.o.o., Zagreb Real estate business 100.00 100.00
Razne usluge d.o.o. (u likvidaciji) 100.00 100.00
AUTO MAKSIMIR VOZILA d.o.o. Insurance agency 100.00 100.00
AK POLICA d.o.o. Insurance agency 100.00 100.00
CO Zdravlje d.o.o. Consulting and
services
100.00 100.00
CROATIA Poliklinika, Zagreb Healthcare 100.00
Croatia-Tehnički pregledi d.o.o., Zagreb MOT* 100.00 100.00
Herz d.d., Požega
$\overline{a}$
MOT 100.00
Slavonijatrans-Tehnički pregledi
d.o.o., Sl. Brod
MOT 76.00 24.00
STP Pitomača, Pitomača MOT 100.00
STP Blato MOT 100.00
Autoprijevoz d.d. MOT 79.12 20.88
Crotehna d.o.o., Ljubuški
$\blacksquare$
MOT 100.00
Ponte d.o.o., Mostar Insurance agency 100.00
Croatia osiguranje mirovinsko društvo
d.o.o., Zagreb Fund management 100.00 100.00
ASTORIA d.o.o. Real estate business 100.00 100.00
Subsidiaries registered abroad which are
consolidated
Milenijum osiguranje a.d.o., Beograd Insurance 100.00 100.00
Croatia osiguranje d.d., Mostar Insurance 95.02 95.02 4.98
Croatia remont d.d., Capljina MOT 69.79 30.21
Croauto d.o.o., Mostar MOT 66.79 33.21
Hotel Hum d.o.o., Ljubuški** Hospitality 80.00 20.00
Croatia osiguranje d.d., non-life insurance
company, Skopje Insurance 100.00 100.00
Croatia osiguranje d.d., life insurance
company, Skopje
Insurance 95.00 100.00

*MOT - Motor vehicle examination stations

** Croatia osiguranje d.d. Mostar hold 80%, while CROTEHNA d.o.o. Ljubuški hold 20%

In consolidation, the equity method is used for the valuation of investments in associates Agroservis (37%) and Strmec projekt d.o.o. (49,76%) and joint venture PBZ CROATIA osiguranje d.d. (50.0%).

CROATIA osiguranje d.d. (parent company) is registered in the Court Register of the Commercial Court in Zagreb under the Company's Court Reg. No. ("MBS") 080051022 and PIN ("OIB") 26187994862. The Company's principal activity is non-life and life insurance business and reinsurance business in the nonlife insurance group.

Supervisory Board and Management Board

According to the Company Act, Insurance Act and the Articles of Association of the Company the Company's bodies are the General Assembly, the Supervisory Board and the Management Board.

Members of the Supervisory Board are:

President
Vice President
Member
Member
Member
Member

Members of the Management Board are:

President
Member
Member until 17 April 2020
Member since 18 April 2020
Member since 18 April 2020

Basis for preparation and consolidation

Financial statements are prepared in accordance with the Company's Act (Official Gazette 65/18, 17/20). International Accounting Standard 34 - Interim Financial Reporting, Rules of the Zagreb Stock Exchange and the Ordinance on the structure and content of periodic financial reports for issuers during the year, which is issued by the Croatian Financial Services Supervisory Agency.

Half-year financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2019.

Financial statements are prepared by using the accrual principle which is the underlying accounting assumption. Economic events are recognized when they occurred and are reported in financial statements for the period in which they occurred by using the underlying accounting principle of going concern.

Consolidated financial statements comprise the Company and its subsidiaries (together 'the Group'). All significant intragroup transactions and balances are eliminated.

Financial statements for the first half-year of the 2020 have not been audited.

Presentation currency

The Group's financial statements are prepared in Croatian kuna as presentation currency of the Group.

Use of estimates and judgements

Preparation of financial statements in conformity with IFRS requires the Management Board to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, and information available at the date of preparation of financial statements, the results of which form the basis of making the judgements about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Changes of accounting estimates are recognised from the period in which an estimate is revised.

Accounting policies

Accounting policies and measurement methods which are used in the preparation of financial statements for the reporting period are the same as those which are used for preparation of the audited financial statements for the year 2019.

Related party transactions

Except for usual related party transactions of goods and services in the current reporting period, on 31 March 2020, CROATIA osiguranje d.d. signed a purchase agreement with the Company HUP-ZAGREB d.d. for the acquisition of a 100 percent share in ASTORIA d.o.o., headquartered in Zagreb, 9 Krešimir Cosić Square.

Seasonality of business activities

Group's operations are not seasonal. However, in the first part of the year, gross written premium and receivables for written premiums are higher than in the rest of the year due to dynamics of conclusion of insurance contracts.

Segment reporting

The Group's reporting segments comprise the life insurance segment and the non-life insurance segment. The description of segments as well as allocation of costs between segment of life insurance and non-life insurance, capital and reserves and assets described in the annual financial statements for 2019, have not changed. There were no significant intersegmental revenues and expenses in the period observed.

Earnings per share

1.1.-30.6.2019 1.1.-30.6.2020
in HRK in HRK
Profit for the year attributable to the Company's shareholders 207,750,803 204,035,359
Weighted average of ordinary shares 420,947 420,947
Earnings per share attributable to the Company's shareholders
Basic and diluted earnings per share in HRK 493.5 484.7

Fair value

Fair value is the amount that should be received for an asset sold or paid to settle a liability in an arm's length transaction between market participants at the value measurement date. Fair value is based on quoted market prices, where available. If market prices are not available, fair value is estimated by using discounted cash flow models or other appropriate pricing techniques. Changes in assumptions on which the estimates are based, including discount rates and estimated future cash flows, significantly affect the estimates. Therefore, at this point the estimated fair value cannot be achieved from the sale of a financial instrument. The fair value of investments at amortised cost is presented below:

30.6.2020 31.12.2019
Net book
value
Fair value Difference Net book
value
Fair value Difference
in HRK in HRK in HRK in HRK in HRK in HRK
Debt securities 2,083,693,635 2,310,917,863 227,224,228 2,315,261,045 2,620,028,273 304,767,228
Loans 275,191,729 276,037,396 845,667 271,152,100 271,374,420 222,320
Deposits 1,115,046,560 1,119,632,260 4,585,700 1,083,355,956 1,089,992,711 6,636,755
3,473,931,924 3,706,587,519 232,655,595 3,669,769,101 3,981,395,404 311,626,303

Methods of assessment or assumptions in determining fair value

For measuring the fair value, the Group takes into account the IFRS fair value hierarchy rules that reflect the significance of inputs used in the assessment process. Each instrument is assessed individually and in detail. The levels of the fair value hierarchy are determined on the basis of the lowest level and the input data that are important for determining the fair value of the instrument.

The table below analyses financial instruments carried at fair value using the valuation method. Different levels have been defined as follows:

  • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1), $\bullet$
  • Inputs other than quoted prices included within Level 1 that are observable for the asset or $\bullet$ liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2),
  • Inputs for the asset or liability that are not based on observable market data (unobservable $\bullet$ inputs) (Level 3).
Level 1 Level 2 Level 3 Total
in HRK in HRK in HRK in HRK
Property for own use 463,702,217 463,702,217
Investment property ۰ 1,050,037,726 1,050,037,726
Equity securities 437,677,009 20,462,000 25,362,848 483,501,857
Debt securities 2, 144, 399, 194 2,046,838,016 9,392,665 4,200,629,875
Investment funds 137, 171, 118 27,210,141 5,094,049 169,475,308
Available-for-sale financial assets 2,719,247,321 2,094,510,157 39,849,562 4,853,607,040
Equity securities 15,342,840 15,342,840
Debt securities
Investment funds 459,030,212 3,558,346 462,588,558
Foreign currency forward contracts 1,390,438 1,390,438
Financial assets at fair value through profit
or loss
474,373,052 1,390,438 3,558,346 479,321,836
Total assets at fair value 3,193,620,373 2,095,900,595 1,557,147,851 6,846,668,819

The Group's assets measured at fair value as at 30 June 2020 are presented as follows:

The Group's assets measured at fair value as at 31 December 2019 are presented as follows:

Level 1 Level 2 Level 3 Total
in HRK in HRK in HRK in HRK
Property for own use 552,636,095 552,636,095
Investment property ٠ 873,652,739 873,652,739
Equity securities 497,717,952 25,461,631 523,179,583
Debt securities 2,219,977,701 2,065,656,763 16,738,427 4,302,372,891
Investment funds 59,171,866 20,878,908 6,741,393 86,792,167
Available-for-sale financial assets 2,776,867,519 2,086,535,671 48,941,451 4,912,344,641
Equity securities 17,070,930 17,070,930
Debt securities
Investment funds 497,883,575 ۰ 497,883,575
Foreign currency forward contracts 3,670,479 ٠ 3,670,479
Financial assets at fair value through profit
or loss
514,954,505 3,670,479 518,624,984
Total assets at fair value 3,291,822,024 2,090,206,150 1,475,230,285 6,857,258,459

The Group has adopted IFRS 13, pursuant to which it is required to disclose the fair value hierarchy of financial assets that are not measured at fair value as well as a description of valuation techniques and inputs used.

Financial liabilities are recorded at amortised cost. Although they have been agreed on the basis of a fixed interest rate, the Management Board believes that, due to the repayment of majority of liabilities within few days after the balance sheet date, the carrying value of these instruments is not significantly different from their fair value.

The fair value of loans and financial liabilities are estimated on the basis of inputs that are not commercially available rates and would therefore be classified as Level 2 and Level 3 in the fair value hierarchy. Investments with available market prices that are classified in the portfolio of held-tomaturity investments would be classified as Level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The fair value of financial instruments that are classified as Level 3 is determined by using discontinued cash flow techniques or other valuation techniques by using relevant observable market data, information about current business and estimation of issuer's future business. There was no significant increase or decrease in the value of the parameters that would affect the change in the fair value of financial assets classified in Level 3 fair value.

There have been no significant reclassifications from Level 1 and Level 2 to Level 3 and vice versa of financial assets at fair value through profit or loss in statement of financial position.

The fair value of held-to-maturity investments is based on the available market prices and is classified as Level 1 in accordance with IFRS 13.

Valuation techniques used for determining fair value on Level 3

The fair value of investment property is derived primarily by applying a sales comparison and income approach, and sometimes lacking information on market parameters by applying the cost method, depending on a particular property.

The fair value of the property for own use for was carried out primarily by applying the income method.

The most significant inputs in the valuations were prices or rental income per square meter, generated based on comparable properties in the immediate vicinity and then adjusted by differences in key characteristics.

Information on fair value measurement of investment property which included significant parameters that are not available on the market (Level 3) are disclosed in financial statements for the year 2019.

Investments in land and buildings not occupied by an undertaking for its own activities

In the period observed Group's investments in land and buildings not occupied by an undertaking for its own activities have increased in the amount of HRK 176.4 m which is mostly due to reclassification of assets from the position of Land and buildings occupied by an undertaking for its own activities to the mentioned position due to a change in the purpose of specific property, and due to the acquisition of ASTORIA d.o.o.

Financial assets and financial liabilities

The structure of financial assets as at 30 June 2020 and 31 December 2019 was as follows:

30.6.2020
Held-to-
maturity
investments
Available-
for-sale
financial
assets
Financial
assets at fair
value
through
profit or loss
Loans and
receivables
Total
- for trading
Shares in HRK in HRK in HRK in HRK in HRK
Shares, listed 481,467,158 15,342,840 496,809,998
Shares, not listed 2,034,699 2,034,699
$\blacksquare$ 483,501,857 15,342,840 498,844,697
Debt securities
Government bonds 2,031,998,849 4,125,623,397 6,157,622,246
Domestic corporate bonds 51,694,786 75,006,478 126,701,264
2,083,693,635 4,200,629,875 ٠ 6,284,323,510
Derivative financial instruments
Foreign currency forward contracts 1,390,438 1,390,438
1,390,438 ۰ 1,390,438
Investment funds
Open-ended investment funds 169,475,308 21,673,308 191,148,616
Open-ended investment funds - assets
for coverage of unit-linked products
440,915,250 440,915,250
¥ 169,475,308 462,588,558 ä, 632,063,866
Loans and receivables
Deposits with credit institutions 1,115,046,560 1,115,046,560
Loans 275, 191, 729 275,191,729
1,390,238,289 1,390,238,289
2,083,693,635 4,853,607,040 479,321,836 1,390,238,289 8,806,860,800
31.12.2019
Held-to-
maturity
investments
Available-
for-sale
financial
assets
Financial
assets at fair
value
through
profit or loss
Loans and
receivables
Total
- for trading
in HRK in HRK in HRK in HRK in HRK
Shares
Shares, listed 521,138,611 17,070,930 538,209,541
Shares, not listed 2,040,972 2,040,972
ä, 523,179,583 17,070,930 $\overline{\phantom{a}}$ 540,250,513
Debt securities
Government bonds 2,263,706,006 4,216,636,042 6,480,342,048
Domestic corporate bonds 51,555,039 85,736,849 137,291,888
2,315,261,045 4,302,372,891 i. ۷ 6,617,633,936
Derivative financial instruments
Foreign currency forward contracts
ä, $\blacksquare$ 3,670,479 ۰ 3,670,479
3,670,479 3,670,479
Investment funds
Open-ended investment funds 86,792,167 46,946,117 133,738,284
Open-ended investment funds - assets
for coverage of unit-linked products
450,937,458 450,937,458
86,792,167 497,883,575 ۰ 584,675,742
Loans and receivables
Deposits with credit institutions 1,083,355,956 1,083,355,956
Loans 271,152,100 271,152,100
$\blacksquare$ 1,354,508,056 1,354,508,056
2,315,261,045 4,912,344,641 518,624,984 1,354,508,056 9,100,738,726

The structure of financial liabilities as at 30 June 2020 and 31 December 2019 was as follows:

30.6.2020 31.12.2019
in HRK in HRK
Lease liabilities 298,707,690 282,117,926
Liabilities for repo transactions 60,073,674
Derivative financial instruments 37,346,295 5,624,931
Preference shares 12,250,000 12,250,000
Financial lease liabilities 380,904 2,023,144
408,758,563 302,016,001

Share capital and shares

The Company's share capital with a nominal value of 601,575,800 as at 30 June 2020 is divided among 429.697 shares with a nominal value of HRK 1,400. The shares are marked as follows:

Number of shares Nominal amount:
307.598 ordinary shares I. emission with ticker CROS-R-A/CROS 430,637,200
113.349 ordinary shares II. emission with ticker CROS-R-A/CROS 158,688,600
TOTAL OF ORDINARY SHARES 589,325,800
8.750 preference shares I. emission with ticker CROS-P-A/CROS2 12,250,000
TOTAL OF PREFERENCE SHARES 12,250,000

Each share, ordinary and preference, provides the right to 1 (one) vote at the Company's General Assembly. All shares are paid in full, issued in dematerialized form, are transferable and are managed at the central depository of the Central Depository & Clearing Company. CROATIA osiguranje d.d. has no treasury shares.

Vatroslava Jagića 33, 10 000 Zagreb www.crosig.hr

MANAGEMENT BOARD STATEMENT

Pursuant to article 20 of the Articles of Association of the Company from 26 February 2020 and article 465 of the Capital Market Law (Official Gazette 65/18, 17/20), the Management Board provides this

STATEMENT

That to the best of our knowledge:

  • the set of half-year consolidated unaudited financial statements of the issuer for the period 1.1. - 30.6.2020, prepared by using applicable financial reporting standards, gives a true and fair view of assets and liabilities, the financial position, profit or loss of the issuer and the entities included in consolidation,
  • the management report presents an objective view of the development and business results and position of the issuer and entities included in consolidation, with description of significant risks and uncertainties to which they are exposed.

atrosla

Zagreb, 31 July 2020

Member of the Management Board

TA osiguran President of the Management Board Davor Tomašković

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