Croatia osiguranje d.d.

Quarterly Report • Jul 31, 2020

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

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

Zagreb, July 2020

CONTENT

I. UNAUDITED FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS - indirect method
II. QUARTERLY MANAGEMENT REPORT
III. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD I-VI 202016
MANAGEMENT BOARD STATEMENT

$\mathbf{L}$ UNAUDITED FINANCIAL STATEMENTS

Annex 1
		ISSUER'S GENERAL DATA
Reporting period:		1.1.2020	to	30.6.2020
Year:		2020
Quarter:		$\overline{\mathbf{2}}$
		Quarterly financial statements
Registration number (MB):	03276147		Issuer's home Member State code:	HR
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: info@crosig.hr
	Web address: www.crosig.hr
Number of employees (end of the reporting period):	2196
Consolidated report:	KN	(KN-not consolidated/KD-consolidated)
Audited:	RN	(RN-not audited/RD-audited)
Names of subsidiaries (according to IFRS):			Registered office:		MB:
Bookkeeping firm:	No	(Yes/No)		(name of the bookkeeping firm)
	Contact person: Jelena Matijević
	(only name and sumame of the contact person) Telephone: 01/633 3135
	E-mail address: jelena, matijevic@crosig, hr
Audit firm:
Certified auditor:	(name of the audit firm)
	(name and surname)

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	$\overline{2}$	$\overline{3}$	4	$5(3+4)$	6	$\overline{7}$	$8(6+7)$
Earned premiums (ADP 119 to 123)	118	335.241.130	927.886.370	1.263.127.500	227.946.054	978.235.711	1.206.181.765
1 Gross written premium	119	335,902,620	1.355,103,638	1.691.006.258	227.976.568	1.379.479.927	1,607,456,495
2 Value adjustment and charged premium value adjustment	120	0	$-6.777.534$	$-6.777.534$	$\circ$	1,778,861	1,778,861
3 Outward reinsurance premiums (-)	121	$-51.235$	-181.938.791	$-181,990,026$	$-49.255$	$-164.185.788$	$-164.235.043$
4 Change of gross provisions for uneamed premiums (+/-)	122	$-618.574$	-292.274.543	$-292.893.117$	22,465	-290.697.916	$-290.675.451$
5 Change of provisions for uneamed premiums, reinsurers' share (+/-)	123	8,319	53,773,600	53,781,919	$-3.724$	51.860,627	51,856,903
Il Income from investments (ADP 125 to 131)	124	66.146.102	140.413.924	206,560,026	100,195,331	151.700.890	251.896.221
1 hcome from branches, associates and joint ventures.	125	377.043	40,681,879	41.058.922	363,532	6.180.888	6.544.420
2 hcome from investment in land and buildings	126	0	17.122.113	17.122.113	$\circ$	11,506,634	11,506,634
3 Interest income	127	52.994.987	53.279.935	106.274,922	45,638,596	48.037.231	93,675,827
4 Unrealised gains on investments	128	1.283.615	12.055.590	13,339,205	377,461	1.012.977	1.390.438
5 Realised gains on investments	129	11,486,992	15.735.176	27.222.168	14.361.817	53,594.677	67,956,494
6 Net positive exchange rate differences	130	0	O	O	39,447.199	17.122,589	56,569,788
7 Other income from investments	131	3,465	1,539,231	1,542,696	6.726	14.245.894	14.252.620
III Income from commissions and fees	132	1.071.559	21.935.457	23,007,016	1.053.552	23,394,368	24.447.920
IV Other insurance-technical income, net amount from reinsurance	133	112.122	14,306.273	14,418,395	328,589	16.982.349	17,310,938
V Other income	134	3,358	3,470,692	3.474.050	846	3.240.947	3.241.793
VI Claims incurred, net (ADP 136 + 139)	135	$-175.535.117$	$-510,199,646$	-685,734,763	-289,759,008	-574.789.280	$-864.548.288$
1 Claims settled (ADP 137+138)	136	-187,805,775	-521.129.420	-708,935,195	$-277.263.272$	-527.780.456	-805.043.728
1.1 Gross amount (-)	137	-187.805.775	-571.620.595	-759,426,370	-277.263.272	-550.193.738	-827.457.010
1.2 Reinsurers' share (+)	138	o	50,491.175	50,491,175	o	22.413.282	22,413,282
2 Change in the provision for claims (+/-) (ADP 140+141)	139	12.270,658	10,929,774	23,200,432	$-12,495,736$	-47.008,824	-59,504,560
2.1 Gross amount	140	12,270,658	17,588,164	29,858,822	-12,495,736	$-133.425.194$	$-145.920.930$
2.3 Reinsurers' share	141	0	$-6.658.390$	$-6,658,390$	O	86,416,370	86.416.370
VII Change in mathematical provision and other technical provisions, net of reinsurance (ADP 143+146)	142	$-154.263.678$	2,758,887	$-151.504.791$	19,404,677	16,404,841	35,809,518
1 Change in mathematical provisions (+/-) (ADP 144+145)	143	$-154.263.678$	6,284,927	-147,978,751	19,404,677	3,689,231	23,093,908
1.1 Gross amount (-)	144	$-154.258.326$	6.284.927	$-147,973,399$	19,415,468	3,689,231	23,104,699
1.2 Reinsurers' share (+)	145	$-5.352$	0	$-5,352$	$-10,791$	O	$-10.791$
2 Change in other technical provisions, net of reinsurance (+/-) (ADP 147+148)	146	$\circ$	$-3,526,040$	$-3,526,040$	0	12.715,610	12,715,610
2.1 Gross amount (-) 2.2 Reinsurers' share (+)	147 148	0 $\Omega$	$-3,526,040$ 0	$-3,526,040$	0 0	12.715.610 0	12.715.610 O
VIII Change of special provision for life assurance where policyholders bear the investment risk, net of reinsurance (+/-) (ADP 150+151)	149	7.478.199	O	7.478.199	12.519.624	0	12.519.624
1 Gross amount (-)	150	7.478.199	o	7.478.199	12.519.624	0	12.519.624
3 Reinsurers' share (+)	151	o	0		0	0	0
IX Cash payments for bonuses and rebates, net of reinsurance (ADP 153+154)	152	$\circ$	$-2.125.768$	$-2.125.768$	$\mathbf{o}$	$-3,302,718$	$-3.302.718$
1 Performance-dependent (bonuses)	153	O	$-2.125.768$	$-2.125.768$	0	$-3.302.718$	$-3.302.718$
2 Performance-independent (rebates)	154	0	0		0	0	$\mathbf 0$

STATEMENT OF COMPREHENSIVE INCOME (STATEMENT OF PROFIT OR LOSS)

For the period: 1.1.2020 - 30.6.2020

							in HRK
Item	ADP		Same period of the previous year			Current year
	code	Life	Non-life	Total	Life	Non-life	Total
$\blacktriangleleft$	$\overline{2}$	$\overline{\mathbf{3}}$	4	$5(3+4)$	6	$\overline{7}$	$8(6+7)$
X Operating expenses (business expenditures), net (ADP 156+160)	155	-41,968,917	-379,936,146	-421,905,063	$-32.424.178$	-365,963,718	-398,387,896
1 Acquisition costs (ADP 157 to 159)	156	$-19.903.480$	$-219,570,159$	-239,473,639	$-14.350.059$	$-198.227.353$	$-212.577.412$
1.1 Commission	157	$-7.658.542$	$-144.748.805$	$-152.407.347$	$-3.889.497$	-138,758,465	$-142.647.962$
1.2 Other acquisition costs	158	-12.244.938	-87.101.477	$-99,346,415$	$-10,460,562$	-76.209.756	$-86,670,318$
1.3 Change in deferred acquisition costs	159	$\Omega$	12.280.123	12.280.123	o	16.740.868	16,740,868
2 Administration expenses (administrative costs) (ADP 161 to
163)	160	$-22.065.437$	$-160,365,987$	$-182.431.424$	$-18.074.119$	-167.736.365	$-185.810.484$
2.1 Depreciation	161	$-1.834.701$	$-26.497.807$	$-28.332.508$	$-1.607.998$	-27.705.142	$-29.313.140$
2.2 Salaries, taxes and contributions from/on salaries	162	-10.584.858	-67.321.656	$-77,906,514$	$-7.106.680$	-54.013.571	$-61.120.251$
2.3 Other administration expenses	163	$-9.645.878$	-66.546.524	$-76.192.402$	$-9.359.441$	-86.017.652	$-95,377,093$
XI Investment expenses (ADP 165 to 171)	164	$-10,435.792$	$-25.931.657$	$-36.367.449$	$-17,288,756$	$-64.715.740$	-82.004.496
1 Depreciation of land and buildings not occupied by an undertaking for its own activities	165	o			O	O
2 Interest	166	$-645.943$	$-3,882.884$	$-4.528.827$	$-674.593$	-4.110.119	$-4.784.712$
3 Impairment of investments	167	o	$-525.471$	$-525.471$	$-1.013,854$	$-3.346.586$	$-4.360,440$
4 Realised loss on investments	168	-484.817	$-2.655.367$		$-7.240.112$	$-9.317.453$
5 Unrealised loss on investments	169		-567.630	$-3.140.184$			$-16,557,565$
6 Net negative exchange rate differences	170	$-8.326.489$		$-567,630$	$-6.485.126$	-30.832.330	$-37.317.456$
		$-978.543$	$-3.237.818$	$-11,564,307$	0	0
7 Other investment expenses	171		$-15.062.487$	$-16.041.030$	$-1.875.071$	$-17.109.252$	$-18,984,323$
XII Other technical expenses, net of reinsurance (ADP $173 + 174$	172	$-74.054$	$-15.048.477$	$-15.122.531$	$-329.844$	$-18,934,723$	$-19.264.567$
1 Expenses of preventive activities	173	o
2 Other technical expenses of insurance	174	$-74.054$	$-15.048.477$	$-15.122.531$	-329,844	-18.934.723	$-19,264,567$
XIII Other activities, including value adjustments	175	$-7.916$	$-1.200.117$	$-1.208.033$	$-5.377$	$-1.037.212$	$-1.042.589$
XIV Profit or loss for the accounting period before tax (+/-) (ADP 118+124+132 to 135+142+149+152+155+164+172+175)	176	27,766,996	176,329,792	204,096,788	21,641,510	161.215.715	182.857.225
XV Profit or loss tax (ADP 178+179)	177	$-4.930.192$	$-24.511.210$	$-29.441.402$	$-4.012,530$	$-28,508,654$	$-32.521.184$
1 Current tax expense	178	-4.930.192	$-24.511.210$	$-29.441.402$	-4.012.530	-28.508.654	$-32.521.184$
2 Deferred tax expense (income)	179	0	$\mathbf 0$		0	O	$\mathbf 0$
XVI Profit or loss for the accounting period after tax (+/-)
(ADP 176+177)	180	22,836,804	151.818,582	174,655,386	17,628,980	132.707.061	150.336.041
1 Attributable to owners of the parent	181	0	0		0	o	O
2 Attributable to non-controlling interest	182	$\Omega$	$\Omega$		$\Omega$		O
XVII TOTAL INCOME (ADP 118+124+132+133+134+179)	183	402.574.271	1.108.012.716	1,510,586,987	329.524,372	1.173.554.265	1,503,078,637
XVIII TOTAL EXPENSES (ADP	184	-379.737.467	$-956.194.134$	$-1,335,931,601$	$-311.895.392$	$-1,040,847,204$	$-1.352.742.596$
135+142+149+152+155+164+172+175+178)
IX Other comprehensive income (ADP 186 to 193)	185	59,010.292	94.928.815	153,939,107	$-44.755.563$	$-110.230.858$	$-154.986.421$
1 Gains/losses arising from translation of financial statements relating to foreign operations	186	0	14.007	14,007	o	$-137.215$	$-137.215$
2 Gains/losses arising from the revaluation of financial assets available for sale	187	71.963.771	115.745.088	187.708,859	$-54.579.955$	-134.260.540	$-188,840,495$
3 Gains/losses arising from the revaluation of land and buildings occupied by an undertaking for its own activities	188	0	0		0	o	$\circ$
4 Gains/losses arising from the revaluation of other tangible (other than land and property) and intangible assets	189	0	0		$\circ$	$\circ$	0
5 Effects of cash flow hedging instruments	190	0	0		o
6 Actuarial gains/losses on pension plans with defined						0	O
pensions	191	0	O		$\mathbf 0$	$\Omega$	$\mathbf 0$
7 Share in other comprehensive income of associates	192	$\Omega$	0		o		$\overline{0}$
8 hcome tax on other comprehensive income	193	-12.953.479	$-20.830.280$	$-33.783.759$	9.824.392	24.166.897	33.991.289
XX Total comprehensive income (ADP 180 +185)	194	81.847.096	246.747.397	328,594,493	$-27.126.583$	22.476.203	$-4,650,380$
1 Attributable to owners of the parent	195	0	0		0	$\circ$	$\circ$
2 Attributable to non-controlling interests	196	0	0	0	0	o	$\bullet$
XXI Reclassification adjustments	197	0	0		0	o	$\circ$

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 6	Non-life $\overline{7}$	Total $8(6+7)$
$\mathbf{1}$	$\overline{2}$	3	$\overline{\bf{4}}$	$5(3+4)$
ASSETS A) INTANGIBLE ASSETS (ADP 002 +003)	001	0	36.992.651	36.992.651		52.445.892	52.445.892
1 Goodwill	002	$\mathbf{0}$	$\Omega$		$\mathbf 0$	$\circ$
2 Other intangible assets	003	$\bf{0}$	36.992.651	36.992.651	$\mathbf{o}$	52.445.892	52.445.892
B) TANGIBLE ASSETS (ADP 005 to 007)	004	9.973	641.779.864	641.789.837	10.676	549.290.689	549.301.365
1 Land and buildings occupied by an undertaking for its own activities	005	$\Omega$	355.254.200	355.254.200	$\Omega$	266.852.671	266.852.671
	006	9.973	18.585.898	18.595.871	10.676	18.282.446	18.293.122
2 Equipment 3 Other tangible assets and inventories	007	O	267.939.766	267.939.766		264.155.572	264.155.572
C) INVESTMENTS (ADP 009+010+014+033)	008	3.054.031.686	5,465,347,334	8.519.379.020	3.003.228.989	5.401.521.389	8.404.750.378
I Investments in land and buildings not occupied by an undertaking for its own
activities	009	0	367.521.081	367.521.081		473,440.193	473.440.193
Il Investments in branches, associates and joint ventures (ADP 011 to 013)	010	0	279.110.925	279.110.925		376,140,353	376.140.353
1 Shares and holdings in branches	011	0	245.422.632	245.422.632	O $\Omega$	342.452.060 5.688.293	342.452.060 5,688.293
2 Shares and holdings in associates	012	0 $\Omega$	5.688.293	5.688.293	$\Omega$	28.000.000	28.000.000
3 Shares and holdings in joint ventures	013		28,000,000	28.000.000
III Financial assets (ADP 015+018+023+029)	014	3.054.031.686	4.818.715.328	7.872.747.014	3.003.228.989	4.551.940.843	7,555,169,832
1 Financial assets held to maturity (ADP 016+017)	015	1.228.357.915	944.029.371	2.172.387.286	1.087.477.059	909.940.146 909.940.146	1.997.417.205
1.1 Debt financial instruments	016	1.228.357.915	944.029.371	2.172.387.286	1.087.477.059		1.997.417.205
1.2 Other	017	o	$\Omega$	$\circ$	$\mathbf 0$		4.305.062.471
2 Financial assets available for sale (ADP 019 to 022)	018	1.628.859.849	2.817.918.674	4.446.778.523	1.709.227.395	2.595.835.076
2.1 Equity financial instruments	019	24.551.993	498.028.031	522.580.024	25.688.207	457.327.383	483.015.590
2.2 Debt financial instruments	020	1,582,180,361	2.255.225.971	3.837.406.332	1.624.774.166	2.027.797.407	3,652,571,573
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	O	$\Omega$		$\mathbf 0$	$\mathbf{o}$
3 Financial assets at fair value through statement of profit or loss (ADP 024 to 028)	023	589.945	47.661.095	48.251.040	377.461	16.355.817	16.733.278
					$\Omega$	15.342.840	15,342,840
3.1 Equity financial instruments	024	$\Omega$	17.070.930	17.070.930	$\Omega$	$\Omega$
3.2 Debt financial instruments	025	$\overline{0}$
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	$\mathbf 0$	27.509.631	27.509.631	$\Omega$	0
3.5 Other	028	$\Omega$	0		$\Omega$	٥l
4 Loans and receivables (ADP 030 to 032)	029	196.223.977	1.009,106.188	1.205.330.165	206.147.074	1.029.809.804	1.235.956.878
4.1 Deposits with credit institutions	030	144.001.733	540.294.540	684.296.273	146.150.946	525.893.396	672.044.342
4.2 Loans	031	52.222.244	312.837.084	365.059.328	54.761.836	321.368.387	376.130.223
4.3 Other	032	$\Omega$	155.974.564	155,974,564	5.234.292	182.548.021	187.782.313
N Deposits with cedants	033	$\Omega$	O
DI INVESTMENTS FOR THE ACCOUNT OF LIFE ASSURANCE FULICITIOLDERS	034	445.325.559	$\mathbf 0$	445.325.559	434.285.919		434.285.919
WHO BEAD THE INVESTMENT DISK E) REINSURANCE AMOUNT IN TECHNICAL PROVISIONS (ADP 036 to 042)	035	25.754	213.507.427	213.533.181	11.239	351.784.424	351.795,663
1 Provisions for unearned premiums, reinsurance amount	036	3.724	42.185.167	42.188.891	$\mathbf 0$	94.045.794	94.045.794
2 Mathematical provision, reinsurance amount	037	22.030	$\Omega$	22.030	11.239	$\Omega$	11.239
3 Claims outstanding, reinsurance amount	038	$\Omega$	171.322.260	171.322.260	0	257.738.630	257.738,630
4 Provisions for bonuses and rebates, reinsurance amount	039	$\mathbf{o}$	$\mathbf{o}$	o	$\mathbf{o}$	οl
	040	$\circ$	$\mathbf{0}$	$\bf{0}$	O	ol
5 Equalization provision, reinsurance amount	041	$\Omega$	$\mathbf{0}$	$\mathbf 0$	0	ol
6 Other technical provisions, reinsurance amount
7 Special provisions for life assurance where policyholders bear the investment risk, reinsurance amount	042	n	O		0	$\Omega$
F) DEFERRED AND CURRENT TAX ASSETS (ADP 044 +045)	043	2.028.656	66.492.988	68.521.644	2.028.656	87.542.438	89.571.094
1 Deferred tax assets	044	2.028.656	66.492.988	68,521,644	2.028.656	67.520.746	69.549.402
2 Current tax assets	045	$\mathbf{o}$	0		0	20.021.692	20.021.692
G) RECEIVABLES (ADP 047+050+051)	046	503.662	854.729.992	855.233.654	881.882	996,508.278	997.390.160
1 Receivables arising from insurance business (ADP 048+049)	047	235.763	465.705.701	465.941.464	233.778	731.827.152	732.060.930
1.1 From policyholders	048	$\circ$	464.918.705	464.918.705	O	730.776.620	730.776.620
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	46.715.736	46.716.615	1.079	29.870.562	29.871.641
	051	267.020	342.308.555	342.575.575	647.025	234.810.564	235.457.589
3 Other receivables (ADP 052 to 054)		$\overline{0}$			0	189.615.597	189.615.597
3.1 Receivables arising from other insurance operations	052 053	262.624	199.851.589 997.458	199.851.589 1.260.082	624.716	962.757	1.587.473
3.2 Receivables for investment income
3.3 Other receivables	054	4.396	141.459.508	141.463.904	22.309	44.232.210	44.254.519
H) OTHER ASSETS (ADP 056+060+061)	055	25.003.071	100.317.264	125.320.335	93.177.016	387.078.416	480.255.432
1 Cash at bank and in hand (ADP 057 to 059)	056	25.003.071	100.316.752	125.319.823	93.177.016	387.077.904	480.254.920
1.1 Funds in the business account	057	$\circ$	100.316.752	100.316.752		387.077.904	387.077.904
1.2 Funds in the account of assets covering mathematical provisions	058	25.003.071	0	25.003.071	93.177.016	0	93.177.016
1.3 Cash in hand	059	0	0	0	$\circ$	0
2 Fixed assets held for sale and termination of business operations	060	$\mathbf{o}$	$\circ$	$\circ$	$\mathbf{0}$	$\Omega$
3 Other	061	$\circ$	512	512	$\mathbf 0$	512	512
I) PREPAYMENTS AND ACCRUED INCOME (ADP 063 to 065)	062	0	239.306.560	239.306.560	$\circ$	257.486.985	257,486.985
1 Deferred interest and rent	063	$\circ$	$\overline{0}$		$\mathbf 0$
2 Deferred acquisition costs	064	$\circ$	226.109.778	226.109.778	$\mathbf 0$	242.850.645	242.850.645
3 Other prepayments and accrued income	065	O	13.196.782	13.196.782	$\Omega$	14.636.340	14.636.340
J) TOTAL ASSETS (ADP 001+004+008+034+035+043+046+055+062)	066	3.526.928.361		7.618.474.080 11.145.402.441	3.533.624.377	8.083.658.511 11.617.282.888
K) OFF-BALANCE SHEET ITEMS	067	265.956.261	2.518.024.767	2.783.981.028	331.980.362	2.689.492.864	3.021.473.226

STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)

As at: 30.6.2020

	ADP	in HRK
Item		Last day of the preceding business year			At the reporting date of the current period
	code	Life	Non-life	Total	Life	Non-life	Total
$\mathbf{1}$	$\overline{2}$	$\overline{3}$	$\overline{4}$	$5(3+4)$	6	$7\phantom{.0}$	$8(6+7)$
LIABILITIES
A) CAPITAL AND RESERVES (ADP 069+072+073+077+081+084)	068	434.798.823	2.913.664.885	3.348.463.708	407.672.240	2.936.235.067	3.343.907.307
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	0	$\Omega$	$\Omega$	$\Omega$	$\Omega$	Ò
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	147.994.829	368.660.865	516.655.694	103.239.266	258.001.887	361.241.153
3.1 Land and buildings	074	$\Omega$	50.470.925	50,470,925		50.042.804	50.042.804
3.2 Financial assets available for sale	075	147.994.829	318.189.940	466.184.769	103.239.266	207.959.083	311.198,349
3.3 Other revaluation reserves	076	$\Omega$	$\mathbf 0$	$\mathbf 0$	n	$\mathbf{o}$	o
4 Reserves (ADP 078 to 080)	077	85.295.937	316.742.639	402.038.576	85.295.937	316.742.639	402.038.576
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	149.239.290	224.739.290	75.500.000	149.239.290	224.739.290
5 Retained profit or loss brought forward (ADP 082 + 083)	081	117.543.395	748.287.005	865.830.400	157.219.337	1.002.263.875	1.159.483.212
5.1 Retained profit	082	117.543.395	748.287.005	865,830,400	157.219.337	1.002.263.875	1.159.483.212
5.2 Loss brought forward (-)	083	$\Omega$	$\Omega$	$\circ$	$\Omega$	0	0
6 Profit or loss for the current accounting period (ADP 085+086)	084	39.675.942	253,454.771	293.130.713	17,628,980	132.707.061	150.336.041
6.1 Profit for the current accounting period	085	39.675.942	253.454.771	293.130.713	17.628.980	132.707.061	150.336.041
6.2 Loss for the current accounting period(-)	086	$\mathbf 0$	$\mathbf 0$	٥	$\circ$	0	$\mathbf 0$
B) SUBORDINATE LIABILITIES	087	$\mathbf{o}$	$\mathbf 0$	$\circ$	0	$\Omega$	Ō
C) MINORITY INTEREST	088	o	$\mathbf 0$	$\circ$	$\mathbf 0$	$\Omega$	O
D) TECHNICAL PROVISIONS (ADP 090 to 095)	089	2.572.182.413	3,712,920,109	6.285.102.522	2.565.240.216	4.120.638.378	6.685.878.594
1 Provisions for unearned premiums, gross amount	090	4.869.308	1.130.567.020	1.135.436.328	4.846.844	1.421.264.936	1.426.111.780
2 Mathematical provisions, gross amount	091	2.505.680.869	17.908.413	2.523.589.282	2.486.265.401	14.219.182	2.500.484.583
3 Claims outstanding, gross amount	092	61.632.236	2,532.867.656	2.594.499.892	74.127.971	2.666.292.850	2.740.420.821
4 Provisions for bonuses and rebates, gross amount	093	O	7.653.600	7,653,600	o	6.417.600	6.417.600
5 Equalization provision, gross amount	094	$\mathbf{0}$	7.055.533	7,055,533	$\circ$	7.055,533	7.055,533
6 Other technical provisions, gross amount	095	O	16.867.887	16,867.887	O	5.388.277	5.388.277
E) SPECIAL PROVISIONS FOR LIFE ASSURANCE WHERE POLICYHOLDERS BEAR THE INVESTMENT RISK, gross amount	096	445.325.559	o	445.325.559	434.285.919	$\Omega$	434.285.919
F) OTHER PROVISIONS (ADP 098 + 099)	097	2.930.875	104.301.522	107.232.397	1.701.062	84.406.586	86.107.648
1 Provisions for pensions and similar obligations	098	2.930.875	99.785.773	102.716.648	1.701.062	80.280.128	81.981.190
2 Other provisions	099	$\mathbf{0}$	4.515.749	4.515.749	o	4.126.458	4.126.458
G) DEFERRED AND CURRENT TAX LIABILITIES (ADP 101 + 102)	100	32.486.670	94.182.105	126.668.775	26.674.808	89.064.148	115.738.956
1 Deferred tax liability	101	32.486.670	81.151.686	113.638.356	22.662.278	56.890.811	79.553.089
2 Current tax liability	102	0	13.030.419	13.030.419	4.012.530	32.173.337	36.185.867
H) DEPOSITS HELD UNDER BUSINESS CEDED	103	$\overline{0}$	o	$\circ$	$\mathbf 0$	$\Omega$	Ö
I) FINANCIAL LIABILITIES (ADP 105 to 107)	104	300,004	271.366.763	271.666.767	66.268.858	305.157.336	371.426.194
1 Loan liabilities	105	$\overline{0}$	o	0	o	0	٥
2 Liabilities for issued financial instruments	106	O	$\mathbf 0$	$\overline{0}$	$\Omega$	o	Ö
3 Other financial liabilities	107	300.004	271.366.763	271.666.767	66.268.858	305.157.336	371.426.194
J) OTHER LIABILITIES (ADP 109 to 112)	108	16.312.651	209.728.027	226.040.678	7.115.528	240.681.903	247.797.431
1 Liabilities from direct insurance business	109	4.067.620	78.960.077	83.027.697	2.693.943	79.344.427	82.038.370
2 Liabilities from coinsurance and reinsurance business	110	21.961	43.692.666	43.714.627	24.309	91.494.703	91.519.012
3 Liabilities for disposal and discontinued operations	111	O			o	$\Omega$	$\mathbf 0$
4 Other liabilities	112	12.223.070	87.075.284	99.298.354	4.397.276	69.842.773	74.240.049
K) ACCRUALS AND DEFERRED INCOME (ADP 114+115)	113	22.591.366	312.310.669	334.902.035	24.665.746	307.475.093	332.140.839
1 Deferred reinsurance commission	114	$\mathbf 0$	$\mathbf 0$	$\circ$	$\mathbf 0$	$\Omega$	$\circ$
2 Other accruals and deferred income	115	22.591.366	312.310.669	334.902.035	24.665.746	307.475.093	332.140.839
J) TOTAL LIABILITIES (ADP 068+087+088+089+096+097+100+103+104+108+113)	116	3,526.928.361		7.618.474.080 11.145.402.441	3.533.624.377		8.083.658.511 11.617.282.888
M) OFF-BALANCE SHEET ITEMS	117	265.956.261		2.518.024.767 2.783.981.028	331.980.362	2,689,492,864	3.021.473.226

STATEMENT OF CHANGES IN EQUITY

For the period: 1.1.2020 - 30.6.2020

										in HRK
					Attributable to owners of the parent				Attributable to	Total capital and
Item	ADP code	Paid in capital (ordinary and preference shares)	Premium on shares issued	Revaluation reserves	Reserves (legal, statutory, other)	Retained profit or loss brought forward	Profit/loss for the year	Total capital and reserves (3 to 8)	non-controlling interest	reserves $(9+10)$
$\blacksquare$	$\overline{\mathbf{2}}$	$\mathbf{3}$	$\overline{4}$	5	6	7 1	8	$\overline{9}$	10	11
Balance on the first day of the previous business year	1	589.325.800	681.482.525	273.428.913	402.038.576	594.530.662	270.417.757	2.811.224.233	O	2.811.224.233
Change in accounting policies	2	0	0	0	$\Omega$	o	0	0	0
Correction of errors from prior periods	3	$\circ$	$\mathbf 0$	$\circ$	0	0	0	o	$\mathbf 0$
Il Balance on the first day of the previous business year (restated)	4	589.325.800	681.482.525	273.428.913	402.038.576	594.530.662	270.417.757	2.811.224.233	οl	2.811.224.233
III Comprehensive income or loss for the same period of the previous year (ADP 006 + ADP 007)	5	$\Omega$	0	243.950.004	$\Omega$	o	293.130.713	537.080.717	$\Omega$	537.080.717
Profit or loss for the period	6	$\overline{0}$	$\Omega$	$\overline{0}$	$\overline{0}$	O	293.130.713	293.130.713	$\mathbf 0$	293.130.713
2 Other comprehensive income or loss for the same period of the previous year (ADP 008 to ADP 11)	$\overline{7}$	$\Omega$	$\circ$	243.950.004	$\Omega$	o	0	243.950.004	0	243.950.004
Unrealised gains or losses on tangible assets (land and buildings)	8	O	0	544.208	o	O	0	544.208	0	544.208
Unrealised gains or losses on financial assets available for sale	9	$\circ$	$\Omega$	270.441.738	$\Omega$	O	0	270.441.738	0	270.441.738
Realised gains or losses on financial assets available for sale	10	$\circ$	$\Omega$	$-27.005.744$	$\Omega$	O	0	$-27.005.744$	$\circ$	$-27.005.744$
Other changes in equity unrelated to owners	11	0	$\mathbf 0$	$-30.198$	$\circ$		$\mathbf{o}$	$-30.198$	o	$-30.198$
IV Transactions with owners (previous period)	12	0	$\circ$	$-723.223$	O	271.299.738	-270.417.757	158.758	0	158.758
Increase/decrease in subscribed capital	13	0	$\mathbf 0$	$\circ$	$\Omega$	0	0	0	o
Other contributions by owners	14	o	ol	$\mathbf 0$	$\Omega$	$\mathbf 0$	0	o	0
Payment of share in profit/dividend	15	o	$\Omega$	O	$\Omega$		O	$\Omega$	O
Other distribution to owners	16	o	$\Omega$	$-723.223$	$\overline{0}$	271.299.738	$-270.417.757$	158,758	O	158,758
V Balance on the last day of the previous business year reporting period	17	589.325.800	681.482.525	516,655,694	402.038.576	865.830.400	293.130.713	3.348.463.708	O	3.348.463.708
VI Balance on the first day of the current business year	18	589.325.800	681.482.525	516.655.694	402.038.576	865.830.400	293.130.713	3.348.463.708		3.348.463.708
Change in accounting policies	19	O	o	ol	0	O	$\circ$	$\mathbf 0$	0	$\circ$
Correction of errors from prior periods	20	0	$\circ$	O	$\Omega$	$\Omega$	٥	o		$\mathbf{o}$
VII Balance on the first day of the	21	589.325.800	681.482.525	516.655.694	402.038.576	865.830.400	293.130.713	3.348.463.708		3.348.463.708
current business year (restated) VIII Comprehensive income or loss for the year	22	$\mathbf 0$	$\Omega$	$-154.986.421$	$\circ$	$\circ$	150.336.041	$-4.650.380$	$\overline{0}$	$-4.650.380$
Profit or loss for the period	23	0	$\mathbf{o}$	o	$\mathbf 0$	o	150.336.041	150.336.041	$\mathbf 0$	150.336.041
Other comprehensive income or loss for the year	24	0	$\Omega$	$-154.986.421$	$\Omega$	O	0	$-154.986.421$	$\mathbf{o}$	$-154.986.421$
Unrealised gains or losses on tangible assets (land and buildings)	25	o	$\Omega$	0	0	O	0	$\mathbf 0$	$\Omega$	O
Unrealised gains or losses on financial assets available for sale	26	o	$\Omega$	$-111.556.324$	$\Omega$	$\mathbf 0$	$\Omega$	$-111.556.324$	$\Omega$	$-111.556.324$
Realised gains or losses on financial assets available for sale	27	O	$\Omega$	-43.292.882	$\mathbf 0$	$\mathbf 0$	$\mathbf{0}$	-43.292.882	$\Omega$	-43.292.882
Other changes in equity unrelated to	28	O	0	$-137.215$	$\mathbf{O}$	$\Omega$	$\Omega$	$-137.215$	O	$-137.215$
owners Transactions with owners (current period)	29	O	$\Omega$	$-428.120$	$\Omega$	293.652.812	$-293.130.713$	93.979	O	93.979
Increase/decrease in subscribed capital	30	0	0	$\Omega$	$\mathbf{0}$	$\Omega$	o	$\circ$	0	$\circ$
Other contributions by owners	31	0	o	$\circ$	0	$\circ$	$\circ$	$\circ$	$\bf{0}$	0
Payment of share in profit/dividend	32	$\Omega$	$\Omega$	O	$\Omega$	$\Omega$	$\Omega$	$\mathbf 0$	$\mathbf 0$	$\mathbf 0$
Other transactions with owners	33	$\Omega$	$\Omega$	$-428.120$	0	293.652.812	-293.130.713	93.979	0	93.979
Balance on the last day of the current year reporting period	34	589.325.800	681.482.525	361.241.153		402.038.576 1.159.483.212	150.336.041	3.343.907.307		3.343.907.307 ٥l

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
	$\overline{2}$ 3 001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019 020 021 022 023 024 025 026 027 028 029 030 031 032 033 034 035 036 037 038 039 040 041 042 043 044 045 046 047 048 049 050 051 052 053 054 055		$\overline{\mathbf{4}}$
I Cash flow from operating activities (ADP 002+013+031)		$-126.771.634$	250.513.420
1 Cash flow before changes in operating assets and liabilities (ADP 003+004)		87.336.551	159,315,046
1.1 Profit/loss before tax		204.096.788	182.857.225
1.2 Adjustments: (ADP 005 to 012)		$-116.760.237$	$-23.542.179$
1.2.1 Depreciation of property and equipment		20.257.330	19.953.759
1.2.2 Amortization of intangible assets		8.075.178	9.359.381
1.2.3 Impairment and gains/losses on fair valuation		$-2.837.809$	35.803.023
1.2.4 Interest expenses		4.528.827	4.784.712
1.2.5 Interest income		-106.274.922	-93.675.827
1.2.6 Share in profit of associates
1.2.7 Profit/loss from the sale of tangible assets (including land and buildings)		$-303.398$	513.806
1.2.8 Other adjustments		-40.205.443	$-281.033$
2 Increase/decrease in operating assets and liabilities (ADP 014 to 030)		$-182.122.023$	120.585.802
2.1 Increase/decrease in financial assets available for sale		-298.234.999	14.299.979
2.2 Increase/decrease in financial assets at fair value through statement of profit or loss		117.096.134	-4.587.648
2.3 Increase/decrease in loans and receivables		-104.969.145	$-9.304.683$
2.4 Increase/decrease in deposits with cedants
2.5 Increase/decrease in investments for the account of life assurance policyholders who bear the investment risk		$-7.415.033$	11.039.640
2.6 Increase/decrease in reinsurance amount in technical provisions		-47.118.176	$-138.262.483$
2.7 Increase/decrease in tax assets		$-15.080.371$	$-21.049.450$
2.8 Increase/decrease in receivables		$-262.531.172$	$-215.908.745$
2.9 Increase/decrease in other assets			$\Omega$
2.10 Increase/decrease in prepayments and accrued income		$-18.226.017$	$-18.180.426$
2.11 Increase/decrease in technical provisions		414.533.734	400.776.072
2.12 Increase/decrease in special provisions for life assurance where policyholders bear the investment risk		7.415.033	-11.039.640
2.13 Increase/decrease in tax liabilities		15.080.371	20.021.692
2.14 Increase/decrease in deposits held under reinsurance business ceded			$\Omega$
2.15 Increase/decrease in financial liabilities		648.916	94.910.684
2.16 Increase/decrease in other liabilities		19.450.276	632.004
2.17 Increase/decrease in accruals and deferred income		$-2.771.574$	$-2.761.194$
3 Income tax paid		-31.986.162	-29.387.428
II CASH FLOW FROM INVESTING ACTIVITIES (ADP 033 to 046)		-30.820.447	170.645.466
1 Cash receipts from the sale of tangible assets		917.169	58.715
2 Cash payments for the purchase of tangible assets		$-9.294.472$	$-1.669.042$
3 Cash receipts from the sale of intangible assets		629.925	$\Omega$
4 Cash payments for the purchase of intangible assets		$-8.450.701$	$-24.812.622$
5 Cash receipts from the sale of land and buildings not occupied by an undertaking for its own activities		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		$-525.394$	$-23.330.012$
7 Increase/decrease of investments in branches, associates and joint ventures.		o	-97.029.427
8 Cash receipts from financial assets held to maturity		50.277.907	338.535.966
9 Cash payments for financial assets held to maturity		-140.910.320	-102.751.198
10 Cash receipts from the sale of financial instruments			٥
11 Cash payments for investments in financial instruments			0
12 Cash receipts from dividends and share in profit		40.164.113	1.517.980
13 Cash receipts from repayments of short-term and long-term loans given		40.064.395	36.298.540
14 Cash payments for short-term and long-term loans		$-11.007.543$	-36.229.988
III CASH FLOW FROM FINANCING ACTIVITIES (ADP 048 to 052)		$-9.054.581$	$-9.654.001$
1 Cash receipts resulting from the increase of initial capital
2 Cash receipts from short-term and long-term loans received			$\mathbf 0$
3 Cash payments for the repayment of short-term and long-term loans received		$-9.054.581$	$-9.654.001$
4 Cash payments for the redemption of treasury shares		o	o
5 Cash payments of share in profit (dividend)			0
NET CASH FLOW (ADP 001 + 032 + 047)		$-166.646.662$	411.504.885
IV EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH AND CASH EQUIVALENTS		11.564.307	-56.569.788
V NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (053+054)		$-155.082.355$	354.935.097
Cash and cash equivalents at the beginning of period	056	355.640.455	125.320.335
Cash and cash equivalents at the end of period (ADP 055 + 056)	057	200.558.100	480.255.432

QUARTERLY MANAGEMENT REPORT $\Pi$ .

CROATIA osiguranje d.d. is still the leading company on the market of the Republic of CROATIA with a total market share of 28.6 percent.

In the period observed, CROATIA osiguranje d.d. reported profit before tax in the amount of HRK 182.9m and profit after tax in the amount of HRK 150.3m which represents a decrease of 10.4 percent and 13.9 percent, respectively, compared to the same period of the previous year.

Earned premium, which represents 80.2 percent of total revenues, amounted to HRK 1,206.2m and decreased by 4.5 percent compared to the same period of the previous year. Total gross written premium decreased by 4.9 percent and amounted to HRK 1,607.5m. Gross written premium of non-life insurance amounted to HRK 1,379.5m and increased by 1.8 percent compared to the same period of the previous year. Gross written premium of the life insurance amounted to HRK 228m representing a decrease of 32.1 percent.

Investments recorded income in the amount of HRK 251.9m, representing an increase of 21.9 percent compared to the same period of the previous year. Income from investments represents 16.8 percent of total revenues. Expenses from investments amounted to HRK 82m and represent 6.2 percent of total expenses.

Net claims incurred represent 65.5 percent of total expenses and amounted to HRK 864.5m, representing an increase of 26.1 percent compared to the same period of the year 2019. 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 expenses amounted to HRK 398.4m, decreasing by 5.6 percent compared to the same period of the previous year.

Total assets of the Company as at 30.6.2020 amounted to HRK 11.6 billion, which represents an increase of 4.2 percent compared to 31.12.2019.

Technical reserves as at 30.6.2020 amounted to HRK 6.7 billion, representing an increase of 6.4 percent compared to 31.12.2019.

The following is a summary of key indicators for the period observed:

Key performance indicators	30.6.2019	30.6.2020	Change in percentage points (p.p.)
Claims ratio (non-life) *	52.6%	55.2%	2.6%
Cost ratio (non-life) **	40.9%	37.4%	$-3.5%$
Combined ratio (non-life)	93.5%	92.6%	$-0.9%$

* Claims ratio = (Income from commissions and fees + Other insurance-technical income + Net Claims incurred + Change in mathematical provisions and other technical provisions, net of reinsurance + Change in technical life insurance provisions where the policy holder bears the investment risk, net of reinsurance + Cost for premium returns (bonuses and rebates), net of reinsurance + Other technical expenses, net of reinsurance) / Net Earned premiums

** Cost ratio = Operating expenses (business expenditures) / Net Earned premiums

The combined ratio, as the most important performance indicator for non-life insurance, amounted to 92.6 percent for the observed period, which is an improvement of 0.9 percentage points compared to the same period of 2019.

Unaudited unconsolidated financial statements for the first half-year of the 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 osiguranje 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 Company'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 Company has identified the following key areas that could be affected by adverse economic conditions:

• volatility of comprehensive income from investments, as a result of developments on the $\bullet$ 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 scenario analyses were conducted, and it is estimated that these analyses covered the risks that could have a significant impact on the Company 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 Company 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 Company is still operating with a very high solvency ratio of 274% (as at 31.12.2019. 277%). In regard to liquidity, the Company 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 Company will continue to actively monitor the development of the COVID-19 outbreak and if it should be considered to significantly affect the Company'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 Company also provides insurance for earthquake insurance risk. The amount of damage from Company'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.

Company branch

As at 30 June 2020 the Company has one registered branch (Branch Ljubljana). In its legal transactions, the branch operates as CROATIA osiguranje d.d. branch Ljubljana, in the Croatian language, and as CROATIA ZAVAROVANJE d.d. branch Ljubljana, in the Slovenian language.

Purchase of treasury shares

The Company does not own treasury shares, and the General Assembly did not authorise the Company to acquire treasury shares.

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 Company 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. $\bullet$
• 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 Company 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 Company'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 Company 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

A osigura Member of the Management Board President of the Management Board $\overline{z}$ Davor Tomašković Vatrosla

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

1. GENERAL INFORMATION ON THE COMPANY

CROATIA osiguranje d.d., Zagreb, Vatroslava Jagića 33 (the '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 non-life insurance group.

The Company also performs the following activities, which are directly or indirectly related to insurance business, as follows:

• Mediation in the sale or sale of items belonging to the Company based on performing insurance $\bullet$ business.
• Taking measures to prevent and eliminate hazards that endanger the insured property and $\bullet$ persons,
• Assessment of the degree of the risk exposure of insured facility and claim assessment,
• Performing other intellectual and technical services relating to insurance business, $\bullet$
• Credit intermediation operations in accordance with the regulations governing credit $\bullet$ intermediaries.

Since 2004, the Company's shares have been listed at Official Market of the Zagreb Stock Exchange, Zagreb.

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:

Roberto Škopac	President
Dr.sc. Željko Lovrinčević	Vice President
Vitomir Palinec	Member
Damir Vanđelić	Member
Hrvoje Patajac	Member
Vlasta Pavličević	Member

Members of the Management Board are:

Davor Tomašković	President
Robert Vučković	Member
Miroslav Klepač	Member until 17 April 2020
Luka Babić	Member since 18 April 2020
Vančo Balen	Member since 18 April 2020

Basis of preparation of financial statements

Financial statements are prepared in accordance with the Company's Act (Official Gazette 65/18, 17/20), International Accounting Standard 34 - Interim Financial Reporting, the Rules of 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 Company'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.

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

Presentation currency

Company's financial statements are prepared in the Croatian kuna as the functional and presentation currency.

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, the Company 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 Ćosić Square.

Seasonality of business activities

Company'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 Company'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.

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 Loans Deposits	1,997,417,205 533,022,459 702,934,419	2,224,641,431 549,992,740 707,520,119	227,224,227 16,970,281 4,585,700	2,172,387,286 519,033,891 686,296,274	2,476,604,759 530,851,709	304, 217, 473 11,817,818
	3,233,374,083	3,482,154,290	248,780,208	3,377,717,451	692,933,030 3,700,389,499	6,636,756 322,672,048

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 inputs) (Level 3),

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

	Level 1	Level 2	Level 3	Total
	in HRK	in HRK	in HRK	in HRK
Property for own use		$\blacksquare$	266,852,671	266,852,671
Investment property			473,440,193	473,440,193
Equity securities	437,249,097	20,462,000	25,304,493	483,015,590
Debt securities	1,915,228,196	1,735,345,387	1,997,990	3,652,571,573
Investment funds	137, 171, 118	27,210,141	5,094,049	169,475,308
Available-for-sale financial assets	2,489,648,411	1,783,017,528	32,396,532	4,305,062,471
Equity securities	15,342,840		$\overline{a}$	15,342,840
Debt securities
Investment funds	434,285,919			434,285,919
Foreign currency forward contracts		1,390,438	۳	1,390,438
Financial assets at fair value through profit or loss	449,628,759	1,390,438		451,019,197
Total assets at fair value	2,939,277,170	1,784,407,966	772,689,396	5,496,374,532

The Company'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		$\overline{\phantom{a}}$	355,254,200	355,254,200
Investment property		٠	367,521,081	367,521,081
Equity securities	497,175,473	$\qquad \qquad \bullet$	25,404,551	522,580,024
Debt securities	2,048,644,745	1,772,023,159	16,738,428	3,837,406,332
Investment funds	59,171,866	20,878,908	6,741,393	86,792,167
Available-for-sale financial assets	2,604,992,084	1,792,902,067	48,884,372	4,446,778,523
Equity securities	17,070,930		$\overline{ }$	17,070,930
Debt securities			۰
Investment funds	472,835,190		$\qquad \qquad \blacksquare$	472,835,190
Foreign currency forward contracts		3,670,479	٠	3,670,479
Financial assets at fair value through profit or loss	489,906,120	3,670,479		493,576,599
Total assets at fair value	3,094,898,204	1,796,572,546	771,659,653	5,663,130,403

The Company 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.

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 Company's investments in land and buildings not occupied by an undertaking for its own activities have increased in the amount of HRK 105.9 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.

Financial assets and financial liabilities

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

					30.6.2020
	Held-to-	Available- for-sale	Financial assets at fair value	Loans and
	maturity investments	financial assets	through profit or loss	receivables	Total
	in HRK	in HRK	- for trading in HRK	in HRK
Shares					in HRK
Shares, listed		481,038,863	15,342,840		496,381,703
Shares, not listed		1,976,727			1,976,727
		483,015,590	15,342,840	ä,	498,358,430
Debt securities
Government bonds	1,953,502,307	3,577,565,093			5,531,067,400
Domestic corporate bonds	43,914,898	75,006,480			118,921,378
	1,997,417,205	3,652,571,573	$\blacksquare$		5,649,988,778
Derivative financial instruments
Foreign currency forward contracts			1,390,438		1,390,438
			1,390,438	ä	1,390,438
Investment funds
Open-ended investment funds		169,475,308			169,475,308
Open-ended investment funds - assets for coverage of unit-linked products			434,285,919		434,285,919
	۰	169,475,308	434,285,919		603,761,227
Loans and receivables
Deposits with credit institutions				702,934,419	702,934,419
Loans				533,022,459	533,022,459
				1,235,956,878	1,235,956,878
	1,997,417,205	4,305,062,471	451,019,197	1,235,956,878	7,989,455,751

					31.12.2019
			Financial
		Available-	assets at fair
	Held-to-	for-sale	value	Loans and	Total
	maturity	financial	through	receivables
	investments	assets	profit or loss
			- for trading
	in HRK	in HRK	in HRK	in HRK	in HRK
Shares
Shares, listed		520,596,133	17,070,930		537,667,063
Shares, not listed	$\overline{\phantom{a}}$	1,983,891			1,983,891
		522,580,024	17,070,930	¥,	539,650,954
Debt securities
Government bonds	2,128,550,522	3,756,780,529			5,885,331,051
Domestic corporate bonds	43,836,764	80,625,803			124,462,567
	2,172,387,286	3,837,406,332	۰		6,009,793,618
Derivative financial instruments
Foreign currency forward contracts			3,670,479		3,670,479
	a.	u,	3,670,479	۰	3,670,479
Investment funds
Open-ended investment funds		86,792,167	27,509,631		114,301,798
Open-ended investment funds - assets for coverage of unit-linked products			445,325,559	$\blacksquare$	445,325,559
	ű,	86,792,167	472,835,190		559,627,357
Loans and receivables
Deposits with credit institutions				686,296,274	686,296,274
Loans				519,033,891	519,033,891
	×			1,205,330,165	1,205,330,165
	2,172,387,286	4,446,778,523	493,576,599	1,205,330,165	8,318,072,573

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	261,756,224	253,791,836
Liabilities for repo transactions	60,073,674
Derivative financial instruments	37,346,296	5,624,931
Preference shares	12,250,000	12,250,000
	371,426,194	271,666,767

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.

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 unaudited unconsolidated 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 and profit or loss of the issuer,
• the management report presents an objective view of the development and business results and position of the issuer with description of significant risks and uncertainties to which the issuer is exposed.

Zagreb, 31 July 2020

osigura, President of the Management Board Member of the Management Board Davor Tomašković Cb, Vatrosli