NOTES TO BOSNA RE Co. Ltd. ANNUAL REPORT FOR 2007

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NOTES TO BOSNA RE Co. Ltd. ANNUAL REPORT FOR 2007

ANNUAL REPORT 2007INCOME AND EXPENSESBalance Sheet and Profit and Loss Account for 2007 business year are made in accordance to the InsuranceLaw, Accounting Law and Code of Accounting Principles and Accounting Standards. Independent Auditors,Deloitte d.o.o. Sarajevo, audited financial statements and issued its independent auditors report that is incorporatedin balance statements. Although the law does not prescribe engagement of an international auditor,due to pronounced international character of reinsurance industry, Bosna RE Management established it asits business standard.Basic principles, rules and methods of valuation of balance items applied in business operation for the lastyear were:Tangible and non-tangible assets are recorded at their purchase valueDepreciation is calculated per linear method, applying the Decision by Government of Federation ofBH and decision of the Management of the Company.Revaluation of permanent assets, receivables and liabilities has not been done as price index of manufacturersof industrial product was lower than 10%.Receivables and liabilities from abroad are converted under the average rate of exchange as at 31December 2006The correction of the value of receivables is made for the receivables older than one year in accordancewith international accounting standardIt is necessary to mention again, as we have explained at the beginning of this report, that accountingmethod was changed in 2007. In other to enable comparison, the table of the report is adjusted as follows:A year 2006, was converted from the old chart of account to the new one and balanced according to netprinciple.For 2007, a plan made according to the old gross balancing method was converted to net methodRealization in 2007, shown in net system, i.e. new balancing scheme as a year 2007 that consists of IVQuarter from 2006 and I, II and III Quarter from 2007. At the same time the result for 2007 is shownwith IV Quarter.Total income realized in 2007 amounts KM 37,92 million that is for 64,48% more than it is realized in 2006i.e. 89,23% more than it is planned for 2007. The results that include IV Quarter are almost identical. 1The gross reinsurance premium amounts KM 38,72 million, i.e. KM 48,37 million including IV Quarter estimation.The net premium income is KM 18,17 million, i.e. KM 23,96 million, that is 47,92% of total income or64,04% including IV Quarter.The retrocession premium amounts KM 20,55 million that is 53,06% of total realized premium. With additionof IV Quarter estimate, the ratio of retrocession and total realized reinsurance premium is 50,46% : 49,54%.The retrocession commission amounts KM 4,32 million, i.e. KM 4,54 million. It must be noted that balancesheet shows deferred amount that means the total amount of this commission should be increased for KM1,20 million to get the amount for 2007.The gross reinsurance claims amounts KM 15,77 million, i.e. including effect of IV Quarter, KM 20,16 million.1The difference in realization that does not include IV Quarter of 2007 and realization that includes it, shall be discussedonly if it is significant and essentially influence the result.52

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