The Group KD Group and KD Group dd

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The Group KD Group Annual Report 2009 Notes to Consolidated Financial Statements as at and for the year ended 31 December 2009 Concentration of reinsurance for 2008 Contract year 2008 Own share/ priority in EUR Reinsurance premium Structure of the reinsurance premium Reinsurance commission Accrued reins. losses (in EUR thousand) Reserved reins. losses Effect of the reins. outcome on the profit Type of reinsurance Surplus reinsurance of fires 1,000,000 1,183 11.89% 260 809 467 353 Quota share reinsurance of fires 900,000 763 7.67% 259 700 152 349 Surplus reinsurance of technical reserves 400,000 418 4.20% 88 196 119 (15) Quota share reinsurance of technical reserves 360,000 646 6.49% 161 204 188 (92) Quota share reinsurance of earthquakes 10% 1,278 12.84% 320 - 5 (954) Risk XL reinsurance of fires 600,000 98 0.98% - - - (98) Risk XL technical reinsurance 120,000 117 1.18% - - - (117) Cat XL property reinsurance excl. vehicle insurance 600,000 1,098 11.04% - 4,619 2,057 5,579 Total fire and technical insurance 5,601 56.29% 1,088 6,528 2,988 5,004 XL reinsurance of auto liability and green card 300,000 1,104 11.10% - - 678 (426) XL reinsurance of comprehensive auto insurance 150,000 50 0.50% - - - (50) Cat XL property reinsurance - vehicle insurance 600,000 1,156 11.62% - 2,141 3,717 (4,702) Total auto insurance 2,309 23.21% - 2,141 4,395 4,227 Other property insurance 1,426 14.33% 25 - 881 (520) Health insurance policies - 0.0% - - - - Life insurance 614 6.17% 129 185 5 (295) TOTAL CONTRACT YEAR 2008 9,950 100.00% 1,242 8,854 8,269 8,416 122
The Group KD Group Annual Report 2009 Notes to Consolidated Financial Statements as at and for the year ended 31 December 2009 Quantitative analysis of sensitivity test results In order to assess the consequences of lowering the reinsurance protection, two sensitivity tests were carried out, measuring the quantitative impact on the net profit or loss. In the sensitivity tests we used the most important reinsurance contracts covering groups of insurance categories which may potentially have the greatest impact on the Group’s profit or loss due to the portfolio size or potential for large-scale or mass losses. Test of sensitivity of the profit or loss to a decrease in reinsurance protection for 2009 Change Change Change Effect of (in EUR thousand) Initial own share Increased own share in net premium in net losses in net reserves change to profit Total proportional reinsurance unchanged - - - - Risk XL reinsurance of fires 600 900 77 - - 600 Risk XL technical reinsurance 120 200 - - - 120 Cat XL property reinsurance excl. vehicle insurance 1,000 1,500 29 415 - 1,000 Total fire and technical insurance 106 415 - 1,720 XL reinsurance of auto liability and green card 300 400 112 - 154 300 XL reinsurance of comprehensive auto insurance 150 150 - - - 150 Cat XL property reinsurance - vehicle insurance 600 1000 86 585 - 600 Total auto insurance 198 585 154 1,050 TOTAL 304 1,000 154 2,770 Test of sensitivity of the profit or loss to a decrease in reinsurance protection for 2008 Change in net premium Change in net losses Change in net reserves Effect of change to profit (in EUR thousand) Initial own share Increased own share Total proportional reinsurance unchanged - - - - Risk XL reinsurance of fires 600 900 68 - - 68 Risk XL technical reinsurance 120 120 - - - - Cat XL property reinsurance excl. vehicle insurance 600 1000 105 461 129 (485) Total fire and technical insurance 173 461 129 (417) XL reinsurance of auto liability and green card 300 400 301 - 200 101 XL reinsurance of comprehensive auto insurance 150 150 - - - - Cat XL property reinsurance - vehicle insurance 600 1000 377 339 271 (233) Total auto insurance 678 339 471 (132) TOTAL 851 800 600 (549) We have illustrated in the tables the effect of the increase of the own share (own funding) on profit of the company when loss events remained largely unchanged in the contract years 2008 and 2009. The lower volume of the reinsurance protection was accompanied by the lower written reinsurance premium, as well as the lower volume of the written shares of the reinsurers in claims, which in turn is reflected on the positive change in the net premium and the negative change in the net claim. Despite the fact that the initial own shares in the contract year 2009 were slightly higher than those in the contract year 2008, the impact of the lowering of the reinsurance protection on the change in claims and in outstanding claims provisions in both years does not differ much. The profit generated by the Group in both years was influenced by the change in net written premium. The base reinsurance premium was in the contract year 2008 slightly higher as a consequence of lower own shares in comparison with 2009; hence in the case of a decrease in the reinsurance protection in 2008, there would also be an increase in net written premium higher than the increase in net written premium in the contract year 2009. As a consequence of the developments described above, a comparable increase in the company’s own shares in both years would result in a decrease in the company’s profit in the amount of 851 thousand euros in the contract year 2008 and 850 thousand euros in the contract year 2009. 123
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