Annual Report 2010 - · PDF filetoo peculiar that 2010 brought Maxima pojišovna ... as...

ANNUAL REPORT

2010

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Introductory words from the President of the Board of Directors Dear shareholders, dear business friends, In 2009 we had grown like mushrooms after a rainfall, so to speak, to reach excellent economic results in and very dynamic development, and we kept pace with it. Thus, it is not too peculiar that 2010 brought Maxima pojiš�ovna the much needed and formerly somewhat neglected stabilization of internal processes and implementation of internal control mechanisms, plus solid economic results, as a bonus, as well as unprecedented double-digit growth beyond the expectations outlined in the business plan. In the course of the year, Maxima pojiš�ovna underwent a drill in the effort to acquire the ISO 9001 Quality Management Certificate from the certification authority, Bureau Veritas. During routine activities, the internal auditor applies rules that simultaneously constitute part of the standard and exact internal control system with quick feedback. In the personnel area we have built up a stable team comprising of an adequate number of qualified professionals able to cover the company’s current needs, including reinforcement of our actuary section. Our financial backing reports that Maxima pojiš�ovna’s collaboration in this fiscal period on its base of a high-quality reinsurance program has meaningfully contributed to stability and controlled development, stating that we have been enjoying adequate capacity for the individual types of insurance cover we offer. In the light of the company’s business plan, we have attained excellent results thanks to enormous growth in the segment of urgent medical care for foreigners. However, the next period will very likely bring an objective picture of the attained result’s reality in this segment, thus presumably opening natural room for growth in other segments of the insurance market. In terms of absolute economic assessment, I state with confidence that the year we have just close was a successful one. There is no doubt about it. Yet, I do look out towards the year 2011 with a sense of impatience, in anticipation of a new phenomenon to emerge in the near future. Therefore, let’s keep looking out, checking out, and verifying facts – and if you happen to share my gut feeling, go ahead investing with us.

Ing. Rudolf Bubla President of the Board of Directors

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Table of Contents Introductory Word 2 Basic Data on the Company 4 Licence 5 The Insurance Market and Business Results 6 The Company Directorate’s Business Activity Report 7 The Reinsurance Program 7 Summary of Products 8 Financial Statements 9 Annex to Annual Report 17 Statement to Report on Intercompany Relations 48 Report of the Supervisory Board of Maxima pojiš�ovna, a.s. on Results in 2010 49 The Auditor’s Report 50

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Basic Data on the Company Company name MAXIMA pojiš�ovna, a. s. Domicile Na Dlouhém Lánu 508/41, Prague 6 I� 61328464 Date of incorporation 1 July 1994 Companies Register Municipal Court in Prague, Volume B, File 3314 Telephone + 420 224 305 403 Fax + 420 224 305 412 e-mail [email protected] website www.maximapojistovna.cz

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License 1) insurance activities to the extent of

Part A

� Life Insurance Sector I.a), Annex No.1 to ZPoj

Part B

� Non-life Insurance Sector I.a), b), c), d); 2.a), b), c), d); 3.a); 8.a), b), c), d), e), f); 9; 13.a), b), c), d); 16.a), b), c), d), e), f); 9; 13. a), b), c), d); 16. a), b), c), d), e), f), g), h), i), j) Annex No.1 to ZPoj (Insurance Code)

2) reinsurance activities to the extent of

� facultative reinsurance activities under the provisions of Sec. 9(5) to the Insurance Code (ZPoj), Act No. 363/1999 Coll., to the extent of non-life insurance delimited in Part B – 8; 9; 13; 16; Annex No. 1 to ZPoj, Act No. 363/1999 Coll. 7

3) contingent activities

� broker activities as per Insurance Code � insurance-related consultancy � loss claim investigation � brokerage in the area of construction insurance and supplementary pension insurance

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The Insurance Market and Business Results According to the results of the Czech Insurance Association (�AP), the Czech insurance market generated premium written in the amount of CZK 151,135 mil in 2010. In life insurance, the premium written amounted to CZK 70,541 mil and in non-life insurance CZK 80,594 mil. The increase in the premium written, as per �AP, amounted to 8 %. Compared to the growth of the premium written for the whole market, Maxima pojiš�ovna’s growth was more progressive but, unfortunately, not in all lines of insurance business. The company’s overall business, compared to the year prior (2009), grew by 78.3 %. This can be assessed as positive. From the perspective of accomplishment, the 2010 plan was superseded by 36.4 %. The company was able to adjust all its activities to its clients’ individual needs, in terms of product structure, risk coverage, as well as price setting. Thanks to its size, the company is also able to draw up made-to-measure policies with optimized content and price.

Development of the share of individual classes of cover in the overall insurance business in recent years is shown in the table below: Premium written in selected insurance classes (CZK’000)

Type of cover 2006 2007 2008 2009 2010 Property 29,987 38,086 53,861 43,261 51,156 Liability 24,345 31,587 26,201 30,553 28,590 Financial loss 30,520 50,957 46,620 75,002 84,955 Comprehensive (collision) 29 63 4,322 11,924 6,954 Accident & sickness 1 2, 483 44,560 47,729 199,981 Life 66 463 968 927 781 Total CZK’000 84,948 124,339 176,532 209,396 372,417 In graphic version, the total volume of premium written developed as follows:

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The Company Directorate’s Business Activity Report Last year, our sales services were particularly successful in the area of urgent medical care – foreigners. Important role in it played the legislative update on foreigners’ residence visa in the CR, in effect since 1.1.2010. With its client-oriented approach, the company managed to supersede its business plan by far, mitigating thereby the decline in other products.

In the area of financial loss insurance – Maxigep, and extended warranty insurance – Maxgarant, the bottom-line figure planned was superseded as well. The great share in this result can be ascribed to the Maxgarant insurance plan of extended warranty. Tying onto the strategy set out already in 2008 and 2009, sale of products was assigned to more brokers. Moreover, the negative trend that had been hampering these products in recent years was averted, whereupon the company adopted countermeasures by increasing its rates and adjusting its General and Special Insurance Conditions.

As for comprehensive/collision insurance – Maxauto – our business plan could not be met. Due to inadequate profitability of this product, we resolved to withdraw from the frame policy we had signed with an important partner, when development of loss history began to reflect the negative effect of the previous years. We have therefore stopped offering general policies in this line of business in favor of contracting this type of cover individually through individual brokers. Cooperation with current and new acquisition agents has remained our priority, both in contracting policies with corporate and retail clientele.

In the area of property and liability insurance – Maxdomov – the company failed to meet its business plan. The results of our analysis of the causes called for complete reworking of the product due to competition in the market. The company has therefore set out more intensive cooperation with strategic partners as one of this year’s objectives. Another aim related to this product is making the policy contracting process simpler by providing it online.

In the area of life insurance – Maxlife and Maxjistota – the company was unfortunately unable to reach the targets planned. Market analysis indicated that the products should be modified, so that new alternatives of these products were prepared for the upcoming period.

Industrial and commercial insurance depends, in most cases, on collaboration with large insurance brokers and partly also on development of the situation in the group. Moreover, retention and increase of the volume in this line of business always requires a well prepared reinsurance program. Last year we managed to enter into cooperation with a strategic partner in the area of standard insurance of industries and entrepreneurs.

The Reinsurance Program Like in the years prior, existence of a good reinsurance program was prerequisite to protecting the company’s results. Maxima’s maximum liability was kept to a standard limit of CZK 5 mil., in certain individual cases with good loss history to CZK 10 mil. Since 2008, the company has been collaborating with AON/Benfield, a reinsurance broker that handles a share of about 70% of the Czech reinsurance market. Our leading reinsurer is Partner Re (S&P rating: AA-).

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Summary of Products Industrial and Business Insurance Business insurance – elementary risks Business insurance – theft Business insurance – glass Business insurance – machinery Business insurance – electronics Business insurance – interruption of operation Business insurance – construction & erection Business insurance – third-party liability Management’s liability Councilor’s liability Professional liability – lawyers, notaries, patent representatives, court-certified experts Professional liability – auditors, tax advisors, independent accountants (CFA & CPA) Business insurance – product liability Professional liability – underwriter’s liability Personal insurance – MAXHOME Homeowner’s insurance – home Household insurance – contents Third-party liability insurance Collision insurance (MAXAUTO) Collision insurance – individual Collision insurance – fleet Financial guarantee insurance – motor vehicle Vehicle acquisition value insurance - Maxigep – CR Vehicle acquisition value insurance – Maxigep – SR Extended warranty motor insurance – new vehicles ( CR & SR ) Extended warranty motor insurance – used vehicles ( CR & SR ) Extended warranty motor insurance – used vehicles – N2, N3 Extended warranty motor insurance – new vehicles – N2, N4 LIFE & ACCIDENT INSURANCE Endowment assurance – MAXLIFE Term life assurance – MAXJISTOTA Accident and medical costs – physical persons – foreigners Group policies Individual accident insurance per event COMBINED TRAVEL INSURANCE – MAXCESTA Medical costs abroad insurance

- death and injury - permanent consequences - accidental bodily injury

Travel insurance - luggage - trip cancellation - trip interruption|

Third-party liability insurance - health - other injury - chattels

Personal escort insurance Delayed flight insurance Legal assistance insurance Kidnapped vehicle insurance Substitute worker insurance Pet insurance (dog, cats, other pets)

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MAXIMA pojiš�ovna, a.s.

Balance sheet as at 31 December 2010(In thousands of Czech crowns TCZK)Registered office of the Company:

I�O: 613 28 464

2 010 2 010 2 010 2 009

Gross Adjustment Net Net

A. Receivabless for subscribed registered capital

B. Intangible fixed assets, thereof 14 617 12 931 1 686 1 232

a) Incorporation expenses

b) Goodwill

C. Financial placements (investments) 414 766 414 766 370 102

I. Land and buildings (real estate), thereof

a) z�izovací výdajeLand and buildings - self-occupied

II. 12 245 12 245 155 417

1. Participating interests with controlling influence 8 949 8 949 11 505

2.

3. 3 296 3 296 143 912

4.

III. Other financial placements 402 521 402 521 214 685

1. 177 932 177 932 31 195

2. Bonds and other fixed-income securities 124 288 124 288 138 473

3.

4.

5. 100 301 100 301 45 017

6. Other financial placements

IV. Deposits with ceding undertakings

D.

I. ASSETS

Investments in affiliated undertakings and participating interests

a) bonds and other fixed-income securities valued at fair value through profit and loss

b) "OECD" bonds held to maturity

c) other bonds and other fixed-income securities held to maturity

Description

Debt securities issued by, and loans to, undertakings - controlling influence

Participating interests with significant influence

Debt securities issued by, and loans to, undertakings - significant influence

Financial placements for the benefit of life assurance policyholders who bear the investment risk

Shares and other variable-yield securities, other participating interests

Financial placements in investment associations

Other loans

Deposits with financial institutions

10

2 010 2 010 2 010 2 009

Gross Adjustment Net Net

E. Debtors 62 163 6 495 55 668 34 384

I. Receivables arising from direct insurance operations 25 582 5 989 19 593 10 177

1. Receivables due from the policyholders, thereof 25 309 5 989 19 320 8 481

85

2. Receivables due from intermediaries, thereof 273 273 1 696

79 79

II. Receivables arising from reinsurance operations, thereof 25 959 25 959 15 687

III. Other receivables, thereof 10 622 506 10 116 8 520

F. Other assets 15 227 434 14 793 927

I. 736 434 302 191

II. Cash on accounts in financial institutions and cash in hand 14 491 14 491 736

IV. Other assets

G. Temporary asset accounts 7 526 7 526 5 830

I. Accrued interest and rent 88 88

II. Deferred acquisition costs 10 10 26

a) in life-assurance business 10 10 26

b) in non-life insurance

III. Other temporary asset accounts, thereof 7 428 7 428 5 804

a) Estimated receivables 6 518 6 518 2 247

514 299 19 860 494 439 412 475

a) Receivables due from entities in which the Company has a controlling influence

b) Receivables due from entities in which the Company has a significant influence


Description





TOTAL ASSETS


Tangible fixed assets other than land and buildings (real estate), and inventories

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A. Equity 255 131 257 411

I. Registered capital, thereof 250 000 250 000

a) Changes in registered capital

II. Share premium

III. Revaluation fund

IV. Other capital funds 13 419 17 835

V. Statutory reserve fund and other funds from profit 3 936 3 936

VI. -14 360 -20 781

VII. 2 136 6 421

B. Subordinated liabilities

C. Technical provisions 171 314 100 228

1. Provision for unearned premiums

a) gross amount 200 346 112 916

b) reinsurance share (-) 61 805 138 541 37 448 75 468

2. Life assurance provision

a) gross amount 1 019 668

b) reinsurance share (-) 1 019 668

3. Provision for outstanding claims

a) gross amount 58 652 46 452

b) reinsurance share (-) 26 898 31 754 22 360 24 092

4. Provision for bonuses and rebates

a) gross amount

b) reinsurance share (-)

5. Equalization provision

a) gross amount


6. Other technical provisions

a) gross amount


7. Provision for liabilities from the technical interest rate applied

a) gross amount


8. Non-life insurance provision

a) gross amount


9. Provisions for liabilities of the Bureau

a) gross amount


2 010 2009Description

II. LIABILITIES

Profit or loss for the financial year

Profit or loss brought forward

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D.

a) gross amount


E. Provisions 1 550 1 016

1. Provisions for pensions and similar obligations

2. Provisions for taxation 1 200 666

3. Other provisions 350 350

Life assurance technical provision where the investment risk is borne by the policyholders

F. Deposits received from reinsurers

G. Creditors 41 633 42 821

I. Payables arising from direct insurance operations, thereof 18 746 14 457

a) 2 178 428

b)

II. Payables arising from reinsurance operations, thereof 19 608 23 261

a)

b)

III. Debenture loans

a)

b)

IV. Amounts owed to credit institutions, thereof

a)

b)

V. Other payables, thereof 3 279 5 103

a) 664 514

b) 174

c) 188

VI. Guarantee Fund of the Bureau

H. Temporary liability accounts 24 811 10 999

I. Accrued expenses and deferred revenues 21 220 8 148

II. Other temporary liability accounts, thereof 3 591 2 851

a) Estimated payables 3 591 2 851

494 439 412 475

Description 2 010 2009

TOTAL LIABILITIES

Payables to entities in which the Company has a significant influence


Payables to entities in which the Company has a controlling influence, thereof

Payables to entities in which the Company has a controlling influence



Tax liabilities and payables due to social security and health insurance institutions

ba) Convertible loans


aa) Convertible loans


Payables to entities in which the Company has a significant influence, thereof


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Profit and loss account for the year 2010(In thousands of Czech crowns TCZK)Registered office of the Company:

I�O: 613 28 464

2 010 2 010 2 010 2 009

Base Subtotal Result Result

I. TECHNICAL ACCOUNT FOR NON-LIFE INSURANCE x x x x

1. Earned premiums, net of reinsurance: x x x x

a) gross premiums written 371 636 x x x

b) outward reinsurance premiums (-) 132 265 239 371 x x

c) change in the gross provision for unearned premiums (+/-) 87 552 x x x

d) change in the provision for unearned premiums, reinsurers' share (+/-) 24 358 63 194 176 177 133 548

2. Allocated investment return transferred from the non-technical account x x 12 597 10 700

3. Other technical income, net of reinsurance x x 7 641 12 902

4. Claims incurred, net of reinsurance: x x x x

a) claims paid: x x x x

aa) gross amount 147 565 x x x

bb) reinsurers' share (-) 95 581 51 984 x x

b) change in the provision for outstanding claims: x x x x

aa) gross amount 12 199 x x

bb) reinsurers' share (-) 4 538 7 661 59 645 38 781

7. Net operating expenses: x x x x

a) acquisition costs x 130 858 x x

b) change in deferred acquisition costs (+/-) x x x

c) administrative expenses x 28 358 x x

d) reinsurance commissions and profit participation (-) x 28 762 130 454 110 570

8. Other technical expenses, net of reinsurance x x 3 186 5 348

x x 3 130 2 451

Description

10. Sub-total on the technical account for non-life insurance

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2 010 2 010 2 010 2 009


II. TECHNICAL ACCOUNT FOR LIFE ASSURANCE x x x x

1. Earned premiums, net of reinsurance: x x x x

a) gross premiums written x 781 x x

b) outward reinsurance premiums (-) x x x

c) change in the provision for unearned premiums, net of reinsurance (+/-) x -121 902 1 018

2. Income from financial placements (investments): x x x x

x x x

x x x x

aa) income from land and buildings (real estate) x x x

bb) income from other financial placements (investments) 49 49 x x

c) value adjustments on financial placements x 126 x x

d) income from disposal of financial placements x 175 7

3. Unrealised gains on financial placements x x

4. Other technical income, net of reinsurance x x

5. Claims incurred, net of reinsurance: x x x x

a) claims paid: x x x x

aa) gross amount 262 x x x

bb) reinsurers' share (-) 262 x x

b) change in the provision for outstanding claims: x x x x


bb) reinsurers' share (-) 1 263 70

6. Changes in other technical provisions, net of reinsurance (+/-): x x x x

a) life assurance provisions: x x x x


bb) reinsurers' share (-) 351 x x

b) other technical provisions, net of reinsurance x 351 30

7. Bonuses and rebates, net of reinsurance x x

8. Net operating expenses: x x x x

a) acquisition costs x 37 x x

b) change in deferred acquisition costs (+/-) x 16 x x

c) administrative expenses x 650 x x

d) reinsurance commissions and profit participation (-) x 703 969

9. Expenses connected with financial placements (investments): x x x x

a) investment management charges, including interest x 162 x x

b) value adjustments on financial placements x x x

c) book value of disposed financial placements x 162 4

10. Unrealised losses on financial placements (investments) x x

11. Other technical expenses, net of reinsurance x x 28

12. Allocated investment return transferred to the non-technical account (-) x x

13. Sub-total on the technical account for life assurance x x -430 -48

b) income from other investments, with a separate indication of that derived from controlling influence

Description

a) income from participating interests, with a separate indication of that derived from controlling influence

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2 010 2 010 2 010 2 009


III. NON-TECHNICAL ACCOUNT x x x x

1. Result of the technical account for non-life insurance x x 3 130 2 451

2. Result of the technical account for life assurance x x -430 -48

3. Income from financial placements: x x x x

x x x

x x x x

aa) income from land and buildings x x x

bb) income from other financial placements (investments) 8 213 8 213 x x

c) value adjustments on financial placements x 8 214 x x

d) income from disposal of financial placements x 71 672 88 099 77 501

x x

5. Expenses connected with financial placements: x x x x

a) investment management charges, including interest x 3 049 x x

b) value adjustments on financial placements x 2 969 x x

c) book value of disposed financial placements x 62 148 68 166 63 763

x x 12 597 10 700

7. Other income x x 885 2 170

8. Other expenses x x 3 810 149

9. Income tax on ordinary activities x x 870 1 032

10. Profit or loss on ordinary activities after tax x x 6 241 6 430

11. Extraordinary income x x 4 019

12. Extraordinary expenses x x

13. Extraordinary profit or loss x x -4 019

14. Income tax on extraordinary activities x x

15. Other taxes not shown under the preceding items x x 86 9

16. Profit or loss for the financial year x x 2 136 6 421

a) income from participating interests, with a separate indication of that derived from controlling influence

4. Allocated investment return transferred from the technical account for life-assurance

6. Allocated investment return transferred to the technical account for non-life-insurance

b) income from other investments, with a separate indication of that derived from controlling influence

Description

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Statement of changes in equity for the year 2010(In thousands of Czech crowns TCZK)Registered office of the Company:

I�O: 613 28 464

Registered capital

Own shares

Share premium

Reserve funds

Capital funds

Changes in valuation

Profit (loss) Total

Balance at 1.1.2009 250 000 3 936 282 59 480 -20 781 292 917

Correction of fundamental errors

FX gains (losses) and changes in valuation not included in the profit and loss statement -41 927 -41 927

Net profit/loss for accounting period*) 6 421 6 421

Dividends

Transfers to funds

Reduction of funds

Shares issued

Reduction in registered capital

Own shares purchased

Other changes

Balance at 31.12. 2009 250 000 3 936 282 17 553 -14 360 257 411

Balance at 1.1. 2010 250 000 3 936 282 17 553 -14 360 257 411

Correction of significant errors

FX gains (losses) and changes in valuation not included in the profit and loss statement -4 416 -4 416

Net profit/loss for accounting period*) 2 136 2 136

Dividends

Addition to funds

Reduction of funds

Shares issued

Reduction in registered capital

Own shares purchased

Other changes

Balance at 31.12. 2010 250 000 3 936 282 13 137 -12 224 255 131

*) Net profit/loss shall comprise profit or loss from financial placement (investments) operations stated in items C.III.1 and C. III.2 of assets.

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Annex to Annual Report as of 31 December 2010

Contents:

I.� GENERAL CONTENTS 19 �

I. 1.� Characteristics and main activities ....................................................................... 19�

I. 2.� Legal Relations.................................................................................................... 21�

I. 3.� Sources for Preparation of the Annual Financial Statement ....................................21�

I. 4.� Important Accounting Methods .............................................................................21�

I. 5.� Changes and digressions from fiscal methods and procedures................................27�

I. 6.� Risk Management..................................................................................................28�II.� SUPPLEMENTARY BALANCE SHEET DATA ..............................................32�II. 1.� Long-term intangible assets ...................................................................................32�

II. 2.� Financial Placements (Investments) .......................................................................32�

II. 3.� Currency structura of financial investments ...........................................................35�

II. 4.� Receivables ...........................................................................................................35�

II. 5.� Other assets ...........................................................................................................36�

II. 6.� Temporary assets accounts.....................................................................................36�

II. 7.� Equity Capital........................................................................................................37�

II. 8.� Technical Reserves ................................................................................................38�

II. 9.� Reserves ................................................................................................................39�

II. 10.�Liabilities ..............................................................................................................39�

II. 11.�Temporary liabilities..............................................................................................40�

II. 12.�Receivables and Payables to Entities in the Group .................................................40�

II. 13.�Payable Secured by a Lien and Guarantee..............................................................40�III.� SUPPLEMENTARY DATA TO PROFIT AND LOSS STATEMENT.............41�III. 1.�Non-life insurance .................................................................................................41�

III. 2.�Life insurance........................................................................................................41�

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III. 3.�Total Gross Premium Written by Country..............................................................42�

III. 4.�Commissions and Other Policy Acquisition Costs..................................................42�

III. 5.�Administration Costs .............................................................................................42�

III. 6.�Other Technical Expenses and Yields ....................................................................43�

III. 7.�Other Costs and Revenues .....................................................................................43�

III. 8.�Employees and Managing Staff .............................................................................44�

III. 9.�Transfer of Expenses Between Technical and Non-technical Accounts ..................45�

III. 10.The Result of Non-technical Account....................................................................45�

III. 11.Profit Before Tax ..................................................................................................45�

III. 12.Taxes ....................................................................................................................45�IV.� OTHER DATA ....................................................................................................47�IV. 1.�Factual Concern.....................................................................................................47�

IV. 2.�Possible Future Liabilities......................................................................................47�

IV. 3.�Consequential Events.............................................................................................47�

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I. GENERAL CONTENTS

I. 1. Characteristics and Main Activities

(a) Registered name: MAXIMA pojiš�ovna, a.s.

(b) Registered address: Na dlouhém lánu �.p.508, Prague 6, Postal Code 160 00 (c) Company ID No. (I�): 613 28 464 (d) Legal status: Joint-stock company

(e) Companies Register: Municipal Court in Prague, Volume B, File 3314 (f) Incorporation date: July 1, 1994 (g) Registered activities: - 1) insurance activities as per Section 7(3) of Act No. 363/1999 Coll., o insurance

industry, to the extent of:

Life insurance

- insurance class 1, life insurance, specified in Part A of Annex to the Insurance Code,

Non-life insurance

- insurance class 1a), b), c); 3a); 8; 9; 13; 16; non-life insurance specified in Part B of Annex to the Insurance Code, active reinsurance (relicensing in progress)

- 2) activities related to insurance activities as per Sec. 3(4)

of the Insurance Code - broker activities conducted in contingency to insurance activities as per Insurance Code - consulting activities related to insurance protection provided to physical and legal entities, as per Insurance Code - investigation of loss events conducted on the basis of a contract with the insurer, as per Insurance Code - mediatory activities in the field of home savings plans and supplementary pension insurance

(h) Statutory bodies – Board of Directors as of December 31, 2010 President: Ing. Rudolf Bubla, Birth Index No. 591102/0511

St�ímelická 2499, Prague 4, Postal Code 141 00 Member: Ing. Siarhei Khimaroda, D.o.B. 29.06.1972

Zelene�, Nad Lávkou 847, Postal Code 250 91

Member: Jaroslav Jenerál, Birth Index No. 440914/450 Toru�ská 329/4, Prague 8, Postal Code 181 00

20

Mr. Ing. Siarhei Khimaroda replaced Mr. Ing. Miroslav Babej-Kmec in the Board of Directors (whose membership expired on Oct. 21, 2009, and was deleted from the Companies Register on 19.2. 2010).

Acting on behalf of the Company may the President, independently, or members of the Board of Directors jointly.

(i) Supervisory Board

Chairman: Ing. Jaromír Florián, Birth Index No. 750616/2664, Prague 3, Žižkov, Sudom��ská 1092/30, Postal Code 130 00

Member: Prof. Ing. Miroslav Kavka, DrSc., Birth Index No. 440925/118, U 5. baterie 780/2, Prague 6

Member: Ing. Miroslav Kimminich, Birth Index No. 671123/0548 Jílovská 1153, Prague 4, Postal Code 140 00

Mr. Ing. Jaromír Florián replaced Mr. Ing. Siarhei Khimaroda in the Supervisory Board (whose membership expired on Oct. 21, 2009, and was deleted from the Companies Register on 19.02.2010).

(j) Shareholders with business interest greater than 20 %

At the present, the company has a sole shareholder with business interest greater than 20 % – it is ZEVETA Bojkovice, a.s., with direct interest of 19.99 % and indirect share of 2.63 %.

The Company’s Organizational Structure MAXIMA pojiš�ovna a.s. has 26 full-time employees and comprises of the following divisions: management (4 employees), sales (5 employees), operations and claim adjustment (8 employees), economics (3 employees), and other (6 employees). Maxima pojiš�ovna has no organization unit abroad.

21

I. 2. Legal Relations Of the date of the Annual Financial Statement’s compilation, all of the company’s legal relations complied with the provisions of Act No. 277/2009 Coll., on the insurance industry, as amended (henceforth only the “Insurance Code”), Act No. 37/2004 Coll., on insurance policies, as amended, Act No. 38/2004 Coll., on insurance brokers and independent loss claim adjusters, as amended, including decrees on the relevant rules of procedure and other legal regulations in effect.

I. 3. Sources for Preparation of the Annual Financial Statement In the process of keeping its accounts and compiling its annual financial statement, the company proceeded in accordance with Act No. 563/1991 Coll., the Accounting Code, as amended, Decree No. 502/2002 Coll., which regulates certain provisions of Act No. 563/1991 Coll., the Accounting Code, as amended, applicable to fiscal units active in the insurance industry, as amended (henceforth only “Decree No. 502/2002 Coll.”), Czech accounting standards applicable to fiscal units that keep their books in accordance with Decree No. 502/2002 Coll., and other contingent regulations.

The company keeps its books so that its annual financial statements deriving from these records reflect a truthful and honest state of the company’s accounts and overall financial situation.

I. 4. Important Accounting Methods

(a) Long-term tangible and intangible assets

Long-term tangible and intangible assets are recorded at acquisition value.

Long-term tangible assets having acquisition value of up to CZK 40,000 and long-term intangible assets having acquisition value of up to CZK 60,000 are accounted for under expenses in the period of their acquisition. The annual depreciation rate of fiscal write-offs is based on presumed time of utilization of the tangible and intangible assets.

The company has set out the following depreciation schedules by group of assets:

Long-term assets Method Depreciation rate in % Software Even 33.33 Automobiles Even 20 Inventory Even 33.33

(articulation by substantial sub-class with the same depreciation rate)

(b) Financial Allocations (Investments)

Security bonds

Security bonds are recorded at acquisition value and at acquisition time.

Acquisition value is the price of the security bond at acquisition time, including aliquot yield from purchased interest and direct expenses related to the acquisition.

22

The company amortizes the premiums and discounts on all its security bonds. The premiums and discounts are amortized in the loss and profit statement using the linear method from acquisition time until due date.

On closing date, the amortized security bonds are revaluated to real value.

Real value is understood as the market value quoted in the home or foreign stock market or another public (organized) market. The company uses the market value declared no later than the closing (balance) date, and is most proximate to that date. If the market value is not available or does not correspond to the real value adequately, the real value may be assessed by qualified estimation.

Accrued (amortized) value is understood as the value entered initially in the books (acquisition value), plus accrued accessories and adjusted by amortized discount/ premium and reduced by adjusting items.

Variances in the real value of security bonds recorded under expense and revenue accounts and under realized securities are accounted for in the P & L statement. The company’s security bonds are classified as realizable (tradable). The value of security bonds in a foreign currency is converted into the Czech currency at the current exchange rate announced by �NB (Czech National Bank), whereby the exchange rate is part of the revaluation to real value.

Shares and other securities with variable yield

Shares and other securities with variable yield are recorded at acquisition value in effect at acquisition time.

Acquisition value is understood to be the price of shares and other securities at acquisition time, including direct expenses related to their acquisition.

Shares and other securities with variable yield are revaluated to real value as of closing day.

Real value is understood as the market value announced in the home or foreign stock market or another public (organized) market. The company uses the market value declared no later than the closing (balance) date, and is most proximate to that date. If the market value is not available or does not correspond to the real value adequately, the real value may be assessed by expert’s assessment or qualified estimation based on all information available the day of the annual financial statement’s compilation.

Variances in the real value of shares and other securities with variable yield are recorded in the P & L statement.

The value of shares and other securities with variable yield quoted in a foreign currency is converted in the Czech currency at the current exchange rate announced by �NB (Czech National Bank), whereby the exchange rate is part of the revaluation to real value.

Financial allocations to corporate entities (equity shares)

Equity shares in controlled entities are understood to mean participation in third parties, in which the company has controlling interest, including cases where the company is the controlling party.

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Equity shares with substantial interest are understood to mean participation in third parties, in which the company has substantial interest. Unless proved otherwise, substantial influence means at least 20 % voting rights.

Equity shares are recorded at acquisition value and acquisition time. Acquisition value means the price of equity shares, including direct expenses related to their acquisition.

The real value of financial investments is defined by expert assessment.

Equity shares are revaluated to real value on closing (balance) day. Changes in the real value of equity shares are recorded in the balance sheet.

Deposits with financial institutions

Deposits with financial institutions are accounted for at nominal value at acquisition time. At the end of the fiscal period, these assets are revaluated to real value. For short-term deposits with financial institutions, real value means nominal value, including accrued interest.

As for deposits in a foreign currency, their value is converted into the Czech currency at the current exchange rate announced by �NB (Czech National Bank), whereby the exchange rate is part of the revaluation to real value. Changes in the real value are recorded in the P & L statement.

(c) Adjusting Items

Adjusting items are created to receivables and other assets, financial placements excepting, are recorded at real value. Adjusting items reflect temporary decline in the value of individual assets. The amount thereof is based on an expert assessment of the relevant risks by the company’s management.

Adjusting items to receivables from policyholders are determined by the company on the basis of a returnability analysis. Adjusting items are created (a) on a flat-rate basis according to the age structure of the receivables and (b) according to the risk of non-recoverability for certain cases.

(d) Permanent or Long-term Decline in Assets Value

The company conducts a test of permanent or long-term decline, as of closing day, of the value of assets that are not revaluated to real value, and of assets that are revaluated but the change in real value is accounted for in the balance sheet. Any permanent or long-term decline in the value of the given assets would be accounted for in the P & L statement.

(e) Accrued Policy Acquisition Costs

Accrued policy acquisition costs include the part of the expenses related to insurance policy contracting during the current fiscal period that applies to revenues of future fiscal periods.

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Non-life insurance

Accrued policy acquisition costs v non-life insurance, i.e., parts of expenses arising from policy contracting during the current fiscal period, have been since 2009 accounted for indirectly by reducing the relevant commissions from the base for calculation of reserves for unearned premium. This method is being used with the permission of the Czech National Bank (�NB), Ref.No. 2009/570/560 of 7 May 2009.

Life insurance

The amount of accrued policy acquisition costs in life insurance is defined on the basis of the zillmerization method for calculating premium reserves in life insurance, see I.4.(i).

(f) Revenue Tax

The revenue (income) tax for the fiscal period comprises of the tax payable and the variance in deferred tax. The payable tax is includes tax calculated from the tax base using the tax rate effective in the current fiscal year.

Deferred tax is derived from the accrued accounting and tax value of assets and liabilities using estimated tax rate for the period, in which the tax liability or tax receivable is claimed.

Deferred tax receivables should only be claimed, if there is no doubt about their legitimacy in subsequent periods.

(g) Reserve for unearned premium

Reserve for unearned premium in non-life insurance is created from the written premium base reduced by the relevant commissions applicable in subsequent accounting periods. The amount of this reserve is the total of reserves calculated by individual policy using the "pro rata temporis" method.

(h) Premium reserve in life insurance

The amount of reserve for premium in life insurance is the total of reserves calculated by individual life insurance policy. The reserve for premium in life insurance reflects the estimated value of the insurance company’s future obligations, using actuarial methods, including already acknowledged and allotted shares of profit and reserves for policy administration, after deducting future premiums.

The company calculates zillmerized reserve in accordance with individual tariffs approved by the Czech Finance Ministry. The zillmerization method is used for time differentiation of policy acquisition costs in life insurance. These costs are thereupon integrated, using actuarial methods, into the premium reserve of life insurance products. The reserve is adjusted by activating temporary negative residues and claiming them as deferred expenses. In the activation process, the principles of caution and the risk of premature policy termination are taken into account.

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(i) Reserve for claims settlement

Reserves for claims settlement in life as well as non-life insurance are created up to the amount of estimated costs of claims:

a) reported – but not settled – by the end of the current fiscal period (RBNS), b) incurred – but not reported – before the end of the current fiscal period (IBNR).

The amount of reserve for settlement of claims arising from loss claims reported by the end of the current fiscal period is determined as the total of reserves calculated per individual loss event.

As for the amount of reserve for loss events incurred but not reported before the end of the current fiscal period, it is determined using the method of development triangles, called “chain ladder”.

The claim settlement reserve also includes estimation of all contingent external and internal claim settlement costs.

When creating reserves for settling claims where the company figures as the leading co-insurer, the company proceeds in accordance with the relevant provisions of the Act on Insurance Policies.

Although the company’s board of directors considers the amount of claim settlement reserves accurate information on the company’s financial statements as of the closing date, the final amount of liabilities might differ due to subsequent events or newly discovered circumstance that could be consequential in terms of significant variances in the final figures. The variances in the amount of the reserves are accounted for in the financial statement of the period in which they are discovered. The procedures and methods of estimation are audited regularly.

(j) Other technical reserves

The company does not create any other technical reserves, such as: • reserve for bonuses and discounts; • reserve for premiums in non-life insurance; • reserve for life insurance, where the policyholder bears the investment risk; • reserve for settling obligations arising from the technical interest rate used; • other technical reserves,

because the company does not offer products requiring such reserves to be created, as no inadequacy of interest appreciation or need for other technical reserves is indicated.

(k) Reinsurers’ share of mathematical technical reserves

The company records the net amount of mathematical reserves in its liabilities, i.e., after accounting for the reinsurers’ share. The amount of this share is determined on the basis of the provisions set forth in the relevant reinsurance policies and modes of settling with reinsurers, with consideration given to the principles of caution.

The company records the reinsurers’ participation in the reserve for unearned premium and reserve for claim settlement. Reinsurers do not participate in any other mathematical technical reserves.

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(l) Reserves

The purpose of reserves is to cover risks, losses, and other incidental obligations that are clearly defined and their occurrence is likely or certain, unlike the amount or time of their occurrence which are uncertain.

Reserve for taxes

The reserve for taxes is created as of the closing date and amounts to the estimated tax liability arising from the tax payable by corporate entities. The reserve is allocated the day of the company’s income tax declaration filing.

(m) Premium written

The premium written includes all the premiums due under policies contracted during the current fiscal period, irrespective of the fact whether they apply to future fiscal periods in full or in part only.

(n) Future claim settlement costs

Claim settlement costs correspond to the amounts acknowledged as payable under settled loss claims and also include the company’s external and internal claim settlement expenses. Claim settlement expenses are reduced by the company’s recourses, collections, and other similar entitlements.

Claim settlement costs are entered at the time of loss claim adjustment and determination of the amount of claim settlement.

(o) Policy acquisition costs

Policy acquisition costs include all direct and indirect expenses arising from contracting insurance policies.

(p) The costs of and revenues from financial investment

The mode of accounting for the costs of and revenues from financial investment and the distribution thereof between life and non-life insurance

The costs of and revenues from financial investments in the category of life insurance are accounted for under the mathematical technical account of life insurance.

Other costs of and revenues from financial investment that are not related to life insurance are initially recorded n the non-technical account, whereupon a proportionate part is subsequently transferred to the technical account of non-life insurance. Reallocation of the costs and revenues from financial investment is based on the ratio between the technical reserves as the key criterion.

Mode of recording realized financial investments

When recording its realized financial investment, the company uses so-called “brutto” (gross) method, according to which all revenues from realized financial investments are accounted for separately at the purchase value of the relevant financial instruments and separately as book value expenses.

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(q) Diversification of common items between life and non-life insurance

The company records common items in life and non-life insurance pursuant to the method set forth in Decree 502/2002 Coll. This method is based on diversification of individual items by relevant insurance class. Items that cannot be classified directly are diversified using the following key: the ratio of gross premium written.

The costs of and revenues from financial investment

The costs of and revenues from financial investment are diversified as life or non-life insurance using the method specified in Par. I.4.(p).

Other costs of and revenues

During the fiscal period, clearly classifiable costs and revenues are recorded directly in the technical account of life and non-life insurance or non-technical account. Costs and revenues that cannot be clearly classified are recorded primarily in the non-technical account and subsequently transferred to the technical account of life or non-life insurance. Diversification of these costs and revenues is based on the ratio of gross premium written as the key criterion.

Taxes and fees are not transferred in this manner.

(r) Conversion of foreign currencies

Transactions executed in the course of the year are converted at the exchange rate announced by the Czech National Bank (�NB) in effect the day of the transaction, or the rate applied at the time of the transaction’s realization.

Foreign currency assets and liabilities are converted as of closing day using the official �NB exchange rate in effect that day. Currency profits and losses are accounted for in the P & L statement.

(s) Consolidation

This financial statement of the company has been compiled as non-consolidated statement.

I. 5. Changes and digressions from fiscal methods and procedures In 2010, the company did not make any significant changes in its fiscal methods or procedures, nor did the company digress from these methods or procedures.

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I. 6. Risk Management

Pursuant to Decree No. 434/2009 Coll., which regulates implementation of certain provisions of the Insurance Code, the company has set up its management and control system so that all of the company’s activities are covered.

The company’s management and control system is set up so as to facilitate continuous and systematic risk management.

The company is exposed to insurance risks naturally arising from existing insurance policies as well as other risks, especially market, credit, operational, liquidity, and concentration risks.

The principles and procedures applied in risk management have been unified and integrated with the principles and procedures applied in ensuring the capital for covering these risks.

(a) Insurance risk in non-life insurance

The company is exposed to insurance risks and risks related to contracting insurance policies in connection with providing non-life insurance products.

Insurance risks arise from the uncertainties related to cover periods, frequency, and amount of losses covered under insurance policies.

The most significant part of insurance risks is the adequacy of the amount of technical reserves, as well as risks arising from the premium amount. The premium amount is set on the basis of history-based estimation, which may differ from reality. Correct estimation of the amount of reserves can significantly impact on risk trends, risk estimation, change of prerequisites (preconditions), etc. In order to eliminate risks when determining adequate amount of reserves, the company uses tests of proportionality.

For insurance risk management, the company follows internal directives for product development, determination of the amount of technical reserves, reinsurance strategies, and underwriting rules.

Insurance risks concentration

Insurance risks concentration exists in the event that a certain event or series of events can significantly impact on the company’s obligations. Insurance risks concentration is determined by the scope and impact of insured events on the amount of the company’s obligations arising above all from the amount of premiums written, as per Par. III.1 (p. 34). Risk concentration may arise from a single insurance policy or a few contingent policies, and be linked to circumstances that were consequential for the existence of the company’s significant obligations. The greatest insurance risks concentration is in accident and sickness insurance, fire insurance, and other material/property insurance and financial loss insurance.

Territorial Concentration

Most of the subscribed risks are located in the Czech Republic. Very concentrated risks that subscriber groups are exposed to regardless of geographical position apply to social, professional, or age criteria.

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(b) Insurance risks in life insurance

The company is exposed to risks arising from unfavorable development of prerequisites compared to the time of product valuation. For instance, the risk of unfavorable development of mortality or life expectancy, the risk of unanticipated development of investment revenues, or risks arising from unexpected development of cost inflation or clients’’ conduct in the event of policy cancellation. In these cases, there exists the risk of loss due to imbalance between collected premiums and paid-out claim settlement, i.e., investment revenues and expenses.

Other risks are, e.g., objective and subjective subscriber risks. Objective risks are determined by objective factors, such as age, sex, health condition, and profession. Subjective risks are determined by subjective factors, such as effort of the insured (subscriber) to preserve his life or health, or his/her poor financial situation.

Other risks that the company is exposed are:

- risks with low frequency of occurrence and significant impact of an insured event that affects several insured entities at the same time and place (e.g., elementary disaster);

- risk concentration in the form of high sums insured that might not form a significant portion of the client portfolio, yet might meaningfully impact on the amount of claim settlements and therefore also on the company’s economic results.

The aim of risk management is identification, quantification and elimination of risks, so that no changes would take place that affect the company’s economic result and own equity.

For identification, quantification, and elimination of risks, the company uses a test of reserve adequacy and calculation of product profitability. Product profitability calculation is used for determining proportionate insurance premium rates and financial guarantees on individual products.

By conducting reserve adequacy tests, the company verifies the adequacy of technical reserves in non-life insurance compared to updated expectations. These procedures are also applied for determining product profitability.

Risks that the company is exposed to are not significantly concentrated in any subscriber group.

In the area of insurance risk management, the company applies primarily a reasonable reinsurance and cautious underwriting policy.

Reinsurance strategy

The company secures some of the risks arising from insurance policies by cooperation with reinsurers with the aim of reducing the risk of loss and protecting own equity resources. The company’s reinsurance program is based on a combination of reinsurance contracts with external reinsurers.

In order to minimize its rate of risk engagement, the company contracts both proportionate and disproportionate reinsurance contracts. The maximum limits net risk engagement (own obligations) in individual insurance classes are revaluated every year. For assurance of additional protection, the company contracts facultative reinsurance treaties for certain insurance policies.

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The company collaborates with important reinsurers and monitors constantly their financial situation.

(c) Market risks

The company is exposed to market risks arising from open positions in interest, currency, and stock instruments, all of which are susceptible to general and specific fluctuations in the market.

The main risk is the possibility that revenues from financial assets would not suffice for financing obligations arising from insurance policies. Market risks are monitored, measured, and controlled on a current basis.

The main objective of managing market risks is to attain harmony or balance in the structure of assets and liabilities, particularly from the perspective of dues dates, interest rates, and currency structure. The point is to ensure that assets generate permanently adequate cash flow in the currency structure necessary for covering the company’s obligations payable to clients (including guaranteed yields) and simultaneously facilitate production of adequate profit for the company’s shareholders.

With this aim in mind, the company conducts regular monitoring of assets and liabilities. The outputs of this monitoring are used as material for decision-making on further allocations of financial investment.

Interest risks

The company is exposed to interest risks that are consequential to fluctuations of current interest rates in the market, causing the real value of and the revenues from financial investment to grow or decline.

Price volatility risk

The company is exposed to the price volatility risk, i.e., change if the value of financial instruments due to change in the market value. These changes may be accountable to factors that are specific for an individual instrument, or may be caused by their issuers or by factors impacting on all instruments tradable in the capital or financial market.

Currency risks

The company is exposed to currency risks as a consequence of transactions being executed in a foreign currency and assets and liabilities being denominated foreign currencies. As the company compiles its annual financial statement in Czech crowns, currency exchange variances have effect on the value of the Czech currency in relation to the respective currencies, thus impacting on the company’s financial statement.

In order to reduce this risk, the company has set up a fixed maximum currency risk exposure.

(d) Credit risks

The company is exposed to credit risks arising from the counterpart’s inability to pay the due amounts in full.

The main areas of the company’s exposure to credit risks:

- reinsurers' share of insurance liability

- reinsurers' debt related to loss claim already settled

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- outstanding premium

- risk of unpaid insurance principal or yields from financial investment

Concentration of credit risks occurs in groups contractual counterparts having the similar economic characteristics, whose capability to pay contractual obligations is subject to changes in economic or other conditions.

Credit risks are limited by external limits for the structure of financial investment (Decree No. 434/2009 Coll., implementing certain provisions of the Insurance Code).

Outstanding premiums are monitored on a current basis and the mode of creating adjusting items is defined. For recovery (collection) of insurance receivables, the company uses the services of an external lawyer.

(e) Operational risks

The term operational risk refers to potential losses arising from missing or inadequate internal processes, human resources, systems, or other causes, such as may occur as a consequence of internal or external events.

The company analyzes these risks and proposes remedial work procedures and processes with the aim of eliminating loss-generating events leading to operational risks.

(f) Liquidity risks

The company has to deal with liquidity requirements arising from loss claims on a daily basis. Liquidity risks means that no cash might be available when a liability is due for payment at proportionate costs.

Liquidity requirements are constantly monitored to ensure availability of the necessary resources.

The company has various sources of financing and maintains an adequate portion of funds in liquid financial instrument, in accordance with current legislation.

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II. SUPPLEMENTARY BALANCE SHEET DATA

II. 1. Long-term intangible assets As of 31.12.2010, the company’s owned the following long-term intangible assets:

Software Total Acquisition value as of 1.1.2010 13,728 13,728 Accruals 889 889 Decrements 0 0 Acquisition value as of 31.12.2010 14,617 14,617

Depreciation as of 1.1.2010 12,496 12,496 Write-offs 435 435 Adjusted decrements 0 0 Depreciation as of 31.12.2010 12,931 12,931 Residual value as of 1.1.2010 1,232 1,232 Residual value as of 31.12.2010 1,686 1,686

II. 2. Financial Investments

(a) Land and buildings (real estate)

As of 31.12.2010, like in 2009, the company owned no land or buildings.

(b) Financial investment into entrepreneurial groups

Participation in controlled entities

2010

Share of

basic capital in %

Acquisition value Real value Total amount

of basic capital

Total amount of equity

capital

Economic result current

period

Revenue from

dividends/share of

profitRegistered name & address EGIDA, a.s. 100 2,000 8,949 2,000 4,290 983 0Prague 6, U Hadovky 3/564

Total N/A 2,000 8 949 N/A N/A N/A 0

The company sold, as of 30.12.2010, its 60% share in M Securities o.c.p., a.s., at the price of CZK 4,892,000.00.

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2009

Share of

basic capital in %


of basic capital


capital


period

Revenue from

dividends/share of

profitRegistered name & address EGIDA, a.s. 100 2,000 3 258 2,000 3 953 695 0Prague 6, U Hadovky 3/564

Registered name & address M Securities o.c.p., a.s. Panenská 21, Bratislava 100 5 338 8 247

8 040 8 247

128 0

Total N/A 7 338 11 505 N/A N/A N/A 0

Participation with substantial interest

2010

Share of

basic capital in %


of basic capital


capital


period

Revenue from

dividends/share of

profitRegistered name & address M Securities o.c.p., a.s. Panenská 21, Bratislava

40 2 135 3 294 7 486 8 132 388 0

Registered name & address Maxima Slovakia, s.r.o. Krivá23, Košice

20 2 2 00 00 00 0

Total N/A 2 137 3 296 N/A N/A N/A 0

The company sold, as of 11.11.2010, its 10% share in ZEVETA Bojkovice, a.s. at the price of CZK 50,750,000.00.

2009

Share of

basic capital in %


of basic capital


capital


period

Revenue from

dividends/share of

profitRegistered name & address ZEVETA Bojkovice, a.s., Tovární 532 Bojkovice

28,6 120,189 143,912 497,426 559,181 4,311 0

Total N/A 120,189 143,912 497,426 N/A N/A 0

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(c) Shares and other securities with variable yield, other shares

Real value Acquisition value 2010 2009 2010 2009

Other

- Price quoted in the CR 32,402 31,195 31,719 31,719 - Price quoted in another

stock market 0 0 0 0

- Unlisted securities 145,530 0 129,424 0 Total 177,932 31,195 161,143 31,719

The company owns own tradable shares in Spolek pro chemickou a hutní výrobu, akciová spole�nost (Association for Chemical and Metallurgic Production, joint-stock company). These shares are not traded in the active market. For assessment of the value of these shares, as of 31.12.2010 and 31.12.2009, the company relied on expert appraisal, taking consideration of all important information available the day of the financial statement’s closing. The unlisted securities, as of 31.12.2010, involve investment into the open-end shares fund Allegro, open-end shares fund Hanover Asset Management, investi�ní spole�nost, a.s. (Investment Company, joint-stock company), and special fund of qualified investors at a total value of CZK 52,950,000.00. Furthermore, these items include the record of investment into ZEVETA Bojkovice, a.s., amounting the CZK 92,580,000.00. For assessment of the value of these shares, as of 31.12.2010, the company relied, like in 2009, on expert appraisal, taking consideration of the aforesaid sale.

(d) Debt securities appraised at real value against costs and yields accounts and realizable securities

Real value Acquisition value 2010 2009 2010 2009

Issued by governmental sector - Price quoted in the CR 51,337 60,442 49,190 59,118 - Price quoted in another

stock market 22,381 11,965 21,897 11,550

Other - Price quoted in the CR 0 0 0 0 - Price quoted in another

stock market 50,570 66,066 48,442 64,892

- Unlisted securities 0 0 0 0 Total 124,288 138,473 119,529 135,650

Securities quoted in another stock market are traded in the Slovak stock market. Under other securities the company records bonds of Via Chem Group, a.s., which could not be appraised at market value, because they have not been and are not traded to the extent notable under activities of the active market. Due to the fact that the company was planning to sell these bonds, their value was assessed, as of 31.12.2010, with consideration to the results of preliminary meetings with potential buyers. These securities were realized, prior to the financial statement’s closing date, see Par. IV.3 of the Annex to the financial statement.

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(e) Deposits with financial institution (in CZK‘000)

2010 2009 Payable within 1 year 100,301 45,017 Total 100,301 45,017

II. 3. Currency Structure of Financial Investment

Securities with variable yield

Securities with fixed yield

Deposits and otherfinancial investmentsCurren

cy 2010 2009 2010 2009 2010 2009

CZK 177,932 31,195 101, 906 126,508 97,670 35,578EUR 0 0 22,382 11,965 2,631 9,439 Total 177,932 31,195 124,288 138,473 100,301 45,017

II. 4. Receivables

31.12.2010 Receivables from policyholders

Receivables from

reinsurance brokers

Receivables from

reinsurance operations

Otherreceivables

Total

Due 0 273 17,749 9,830 27,852 Overdue 25,309 0 8,210 792 34,311 Total 25,309 273 25,959 10,622 62,163 Amount of adjusting items 5,989 0 0 506 6,495

Net total 19,320 273 25,959 10,116 55,668

Receivables from reinsurance operations are differentiated by date of issue, because reinsurance contracts do not specify the due date. The “due” category includes receivables payable within one year; the “overdue” category includes older-date receivables.

31.12.2009 Receivables

from policyholders

Receivables from

reinsurance brokers

Receivables from

reinsurance operations

Otherreceivables

Total

Total 14,493 2,396 15,687 9,026 41,602 Amount of adjusting items 6,012 700 0 506 7,218

Net total 8,481 1,696 15,687 8,520 34,384

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Other receivables

2010 2009 0 0 Deferred tax claim 2,365 2,418 Advance income tax paid 169 0 Other receivables 8,088 6,608 Other receivables total 10,622 9,026

II. 5. Other assets

(a) Long-term tangible assets

Automobiles Inventory Total Acquisition value as of 1.1.2010 270 286 556 Accruals 0 0 0 Decrements 0 0 0 Acquisition value as of 31.12.2010 270 286 556 Depreciation as of 1.1.2010 108 257 365 Write-offs 54 14 68 Depreciation loss 0 0 0 Depreciation as of 31.12.2010 162 272 434 Residual value as of 1.1.2010 162 29 191 Residual value as of 31.12.2010 108 14 122 Inventory in stock, as of 31.12. 2010, amounted to CZK 180,000.00.

II. 6. Temporary assets accounts

(a) Deferred policy acquisition costs in life insurance

2010 2009 Traditional life insurance 10 26 Total 10 26

(b) Estimated assets

2010 2009 Estimated premium written 4 541 2 108 Estimated reinsurance commissions 508 139 Share of claim settlement (excess loss 2009) 608 0 Share of profit IPA 861 0 Total 6 518 2 247

Estimated premium written

Under estimated assets the company records estimated premium written from policies coming into effect in 2010,but entered into the system only after the closing date in December, in the amount of CZK 4,541,000.00 (2009: 2,108,000.00), and the respective estimated reinsurance commissions.

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(c) Other temporary assets

2010 2009 0 0 Revenues from PO-share of profit IPA 0 3 445 Costs PO-other 910 112 Total 910 3 557

In 2010, the share of profit IPA reached a total of CZK 861,000.00 and was recorded under estimated assets.

II. 7. Equity Capital

(a) Registered (basic) capital

The company’s registered (basic) capital consists of 250,000 bearer shares at a nominal value of CZK 576, i.e., total value of CZK 144,000,000.00, and 250,000 ordinary bearer shares, certificated, at a nominal value of CZK 424, i.e., total value of CZK 106,000,000.00, by which it was increased in the course of 2007.

As of 31.12.2010, 100% of the registered capital’s increase has been paid up.

The amount of the company’s registered capital meets the requirements of the Insurance Code, in respect of insurance classes in which the company legitimately conducts business.

(b) Other capital funds

2010 2009 Valuation variances from revaluation of assets and liabilities 13,137 17,553 Other capital funds 282 282 Total 13,419 17,835

Valuation variances from revaluation of assets and liabilities to real value

2010 2009 Balance as of 1.1. 17 553 59 480 Change in real value of financial investment -4 361 -49 272

Change in deferred tax -55 7 345

Balance as of 31.12. 13 137 17 553

Planned distribution of profit generated during current period

In the current fiscal period the company generated profit in the amount of CZK 2,136,000.00. Decision about profit distribution will be made at the next General Meeting following completion of audit.

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II. 8. Technical Reserves

(a) Reserve for unearned premium (gross)

2010 2009 Non-life insurance 200,247 112,696 Life insurance 99 220 Total 200,346 112,916

(b) Reserve for premium in life insurance

2010 2009 Non-zillmerized reserve 1,029 694 Zillmerized deduction -10 -26 Zillmerized reserve recorded in balance sheet 1,019 668

(c) Claim settlement reserve

The claim settlement reserve was created at the end of the current period as follows:

2010 2009 RBNS 18,660 11,977 IBNR 13,094 12,115 Total 31,754 24,092

Results of loss claim liquidation

The difference between the claim settlement reserve created as of 31.12.2009, the payment made in the course of 2010 (related to loss claims considered in this reserve), and the residual value of this reserve, as of 31.12.2010, constitutes the result of loss claim liquidation.

The gross amount of loss claim liquidation is presented in the following table:

Insurance class 2010 2009 Accident and sickness insurance 727 1,425 Motor insurance - other types -61 459 Fire and other material/property insurance -76,109 14,654 Third-party liability insurance 1,139 - 568 Insurance of other losses 2,820 - 228 Other 1,045 0 Total -70,439 15,742

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The results of fire insurance claims and other property insurance liquidation were affected by loss claims of claims in the amount of CZK 77,105,000.00. In particular, two loss events that had occurred before the end of 2009, but no information on the full scope of those events was available at the time. Evident adequacy of reserves was fully compensated through excess-of-loss reinsurance.

II. 9. Reserves

Type of reserve Opening balance Creation Draw-down

Closing balance

0 0 0 0 Reserve for taxes 666 1,200 666 1,200 Other reserves 350 0 0 350 Total 1,016 1,200 666 1,550

II. 10. Liabilities

31.12.2010 Payables to policyholders

Payables to brokers

Payables for reinsurance operations

Otherpayables

Total

Due 6,285 11,545 19,608 3,279 40,717Overdue 149 767 0 0 916Total 6,434 12,312 19,608 3,279 41,633

31.12.2009 Payables to policyholders

Payables to brokers

Payables for reinsurance operations

Otherpayables

Total

Total 8,171 6,286 23,261 5,103 42,821

(a) Payables to social security and health insurers

Payables to social security and health insurers amount to CZK 479,000.00 (2009: 382,000.00), thereof CZK 332,000.00 (2009: 264,000.00) for social security and CZK 147,000.00 (2009: 118,000.00) for health insurance. None of these obligations are overdue.

(b) Payables to the state – tax liability and subsidies

The company’s tax liability amounts to CZK 185,000.00 (2009: 132,000.00), corresponding to tax liability arising from salaries for the month of December.

(c) Long-term payables (maturity in excess of five years)

Long-term payables with remaining maturity period exceeding five years, as of the fiscal closing date, are not on the company’s records.

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(d) Payables and receivables from ceded reinsurance

The company records surplus payables and receivables from reinsurers in the amount of CZK 6,351,000.00 (2009: - 7,574,000.00).

II. 11. Temporary liabilities

(a) Estimated payables

2010 2009 Estimated reinsurance premium 1,375 498 Commission as per estim. premium 1,512 756 Performance bonus 0 1,305 Other (deliveries to be billed, etc.) 704 292 Total 3,591 2,851

II. 12. Receivables and Payables to Entities in the Group

(a) Receivables and payables from/to fully controlled entities

Receivables Payables Company name 2010 2009 2010 2009 Long-term *) 0 0 0 0 Short-term 0 85 2 178 428 Total 0 85 2 178 428

(b) Receivables and payables from/to entities under substantial influence

Receivables Payables Company name 2010 2009 2010 2009 Long-term *) 0 0 0 0 Short-term 81 0 188 0 Total 81 0 188 0

*) Receivables and payables with maturity period ending in more than five years.

(c) Receivables and payable to other entities in the group As of the end of 2009 or 2010, the company had no receivables and payables to other entities in the group on record. All important transactions with entities in the group were executed under market conditions common in the trade.

II. 13. Payable Secured by a Lien and Guarantee

The company has no record of this kind of payables.

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III. SUPPLEMENTARY DATA TO PROFIT AND LOSS STATEMENT

III. 1. Non-life insurance The overview of non-life insurance in 2010 and 2009 is diversified by insurance group as follows:

Insurance

class

Gross premium

written

Gross premium

earned

Gross claim settlement

costs

Gross operating expenses

Reinsurance result

Direct insurance Accident & sickness 1,2

2010 199,981 135,240 16,087 111,985 -12,988 2009 47,729 47,876 3,179 38,662 -1,702 Motor third-party liability 10 2010 0 0 0 0 0 2009 0 0 0 0 0 Motor - other cover types 3,7 2010 6,954 9,168 15,277 2,006 2,948 2009 11,924 12,043 8,828 4,522 293 Air, sea & transport 4,5,6,7,11,12 2010 0 0 0 0 0 2009 0 0 0 0 0

Fire & other property damage 8,9

2010 51,156 47,981 84,941 10,254 50,920 2009 43,261 53,118 1,524 21,221 -30,737 Third-party liability 10,11,12,13 2010 28,590 29,677 1,029 4,551 - 19,376 2009 30,553 38,541 5,667 9,013 -21,938 Credit & guarantee 14,15 2010 0 0 0 0 0 2009 0 0 0 0 0 Other losses 16,17,18 2010 84,955 62,018 42,430 30,420 - 530 2009 75,002 66,907 33,191 58,175 3,778 Total 2010 371,636 284,084 159,764 159,216 20,974 2009 208,469 218,485 52,389 131,593 - 50,306

III. 2. Life insurance

Gross premium written in life insurance:

2010 2009 Individual premium 781 927 Group insurance premium (collective) 0 0 Total 781 927 Current premium 781 927

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Single premium 0 0 Total 781 927 Premium from no-bonus policies 781 927 Premium from bonus policies 0 0 Premium from policies where policyholder bears the investment risk 0 0

Total 781 927 Reinsurance result 0 0

III. 3. Total Gross Premium Written by Country Total gross premium written by country of policy origination:

2010 2009Czech Republic 354,999 190,403Slovak Republic 17,418 18,993Total 372,417 209,396

III. 4. Commissions and Other Policy Acquisition Costs 2010 2009

Non-life

insurance Life

insurance Total Non-life

insuranceLife

insurance TotalCommissions Acquisition 122,319 37 122,356 0 0 45,450Collecting 1,750 307 2,057 0 0 10,608Total commissions 124,069 344 124,413 0 0 56,058Other acquisition costs 8,539 0 8,539 0 0 7,302 Change in deferred acquisition costs 0 16 16 0 0 38,878

Total commissions and other acquisition costs 132,608 360 132,968 0 0 102,238

The company records collecting commissions under administrative costs. Other acquisition costs contain, in particular, the costs of salaries, promotion, advertising, and other administrative expenses related to insurance policy contracting.

III. 5. Administration Costs

2010 2009 Collecting commission Personnel expenses (salaries, soc. sec. & health insur.)

2 057 12 920

10 608 12 513

Rent 1 898 1 501 Consultancy incl. audits 4 984 5 386 Travel expenses 286 311 Material & energy consumption 401 536 SW services 1 287 1 748 Promotion & advertising 1 444 1 868 Other administrative costs 3 731 6 461 Total administrative costs 29 008 40 932

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III. 6. Other Technical Expenses and Yields

2010 Gross amount Reinsurers’ participation Net amount Non-life insurance Other technical expenses 3 186 0 3 186 Other technical yields 7 641 0 7 641 Balance - non-life insurance - 4 455 0 -4 455 Life insurance Other technical expenses 28 0 28 Other technical yields 0 0 0 Balance – life insurance 28 0 28 2009 Gross amount Reinsurers’ participation Net amount Non-life insurance Other technical expenses 5,348 0 5,348 Other technical yields 12,902 0 12,905 Balance - non-life insurance - 7,554 0 - 7,554 Life insurance Other technical expenses 0 0 0 Other technical yields 0 0 0 Balance - life insurance 0 0 0 The balance of other technical expenses and yields in non-life insurance consists of the following items:

2010 Gross

amount Reinsurers’ participation Net amount Creation (+) / Release (-) of adjusting items to receivables - 752 0 - 752

Creation (+) / Release (-) of other reserves 0 0 0 Currency losses (+)/gains (-) - 299 0 - 299 Broker commission �PP - 4,569 0 - 4,568 Late penalties & late interest - 211 0 -211 Decisions from receivables & payables from/to insur. & other 1,376 0 1,376

Balance of other expenses and yields - 4,455 0 - 4,455 The balance of other technical expenses and yields in life insurance consists of the following items:

2010 Gross

amount Reinsurers’ participation Net amount Creation (+) / Release (-) of adjusting items to receivables 28 0 28

Creation (+) / Release (-) of other reserves 0 0 0 Currency losses (+) / gains (-) 0 0 0 Balance of other expenses and yields 28 0 28

III. 7. Other Costs and Revenues

2010 Gross amount Reinsurers’ participation Net amount Non-technical account Other expenses 3,810 0 3,810 Other yields - 885 0 - 885

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Balance of other expenses and yields 2,925 0 2,925 2009 Gross amount Reinsurers’ participation Net amount Non-technical account Other expenses 149 0 149 Other yields - 2,170 0 -2,170 Balance of other expenses and yields - 2,021 0 - 2,021

The balance of other expenses and yields consists of the following items:

2010 Gross

amount Reinsurers’ participation Net amount Administrative costs - 4% share 1,532 0 1,532 Penalties and fines 2,278 2,278 Car sale - 450 0 - 450 Currency variances - 205 0 - 205 Adjust. MO + other - 230 0 - 230 Balance other expenses and yields 2,925 0 2,925

The above item – administrative costs-4% share – includes part of expenses that corresponds to a share of expenses arising from non-technical activities. Item – penalties and fines – includes the costs of court proceedings about a sale of real estate (late interest) and the costs of proceedings with �NB.

III. 8. Employees and Managing Staff

The average number of employees and managing staff, adjusted, and remunerations in 2010 and 2009:

2010 Average adjusted number of employees

Payroll expenses

Soc.sec. & health insurance

Other expenses

Employees 22 9,480 2,759 248

Managing staff 4 5,223 1,465 -

Total 26 14,703 4,224 248

2009 Average adjusted number of employees

Payroll expenses

Soc.sec. & health insurance

Other expenses

Total 24 11,619 3,150 9

The personnel costs for all employees are initially recorded under administrative costs in non-technical account and subsequently transferred to technical account, partly as acquisition costs and partly as administrative costs, as specified in Par. I.4(w).

(a) Remuneration of members of statutory, managing, and supervisory bodies

In the course of fiscal years 2010 and 2009, the following monetary and non-monetary remunerations were paid out to members of statutory, managing, and supervisory bodies:

2010 2009 Members of the Board of Directors 180 180 Members of the Supervisory Board 120 180 Total remunerations 300 360

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In 2010 and 2009 the company had no record of receivables from members of the Board of Directors or Supervisory Board due to loans or advances provided.

(b) Information on remunerations paid to the statutory auditor

The statutory auditor’s fee is accounted for under the company’s administrative costs. Total amount thereof is CZK 2,292,000.00 (2009: 2,469,000.00) and consists of the following items:

2010 2009 Ex-lege (mandatory) audit 1,468 2,219 Other verification services 824 250 Total remuneration (fee) paid 2,292 2,469

III. 9. Transfer of Expenses Between Technical and Non-technical Accounts The total amount of expenses transferred between the technical account in life insurance, non-life insurance, and the non-technical account using the key defined in Par. I.4.(x), as of the financial statement’s closing date, amounted to CZK 34,259,000.00 (2009: 28,819,000.00).

III. 10. The Result of Non-technical Account The result of non-technical account, as of 31.12. 2010, amounted to CZK 306,000.00 (2009: 5,050,000.00). the result reflects the extraordinary loss due to costs of a court action related to a dispute originated during the company predecessor’s time.

III. 11. Profit Before Tax As of 31.12.2010, the company’s before-tax profit amounted to CZK 3,006,000.00 (2009: 7,462,000.00).

III. 12. Taxes

(a) Income tax in the P & L Statement

2010 2009 Reserve for income tax, current period 1,200 665 Difference between tax due for previous period and release of reserve for deferred income tax - 328 0

Income tax due for revenues earned in previous periods 0 0

Change in deferred tax credit (receivables)/Change in deferred tax liability - 2 367

Income tax in profit and loss statement 870 1,032

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(b) Deferred tax credits/Deferred tax liabilities

In 2010 the company claimed deferred tax credit arising from revaluation of items in the balance sheet in the amount of CZK 2,369,000.00 (2009: deferred tax claimed in the amount of CZK 2,424,000.00) and tax liability in the amount of CZK 4,000.00 arising from depreciation differences (2009: deferred tax liability of CZK 6,000.00). Pursuant to fiscal procedures specified in Par. I.4(g), deferred tax was calculated using tax rate in effect at the time the tax liability or tax credit is claimed, i.e., 19%.

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IV. OTHER DATA

IV. 1. Factual Concern The company does not have a majority shareholder and is therefore not obliged to compile a report on intercompany relations.

IV. 2. Possible Future Liabilities

(a) Membership in the Czech Nuclear Pool

The company is member of the Czech Nuclear Pool. On the premise of joint liability, the company undertook to assume, in the event inability on the part of one or several of the Pool’s members, uncovered portion of this liability to the extent, on a pro rata basis, of its net liability used for the given policy. The company’s potential liability, including joint liability, is contractually limited to the double of its net liability for the given insured risk.

IV. 3. Consequential Events

The company General Meeting passed a decision, on 27.4.2011, on increasing its registered capital by public stock subscription in the amount of CZK 25 million, whereby subsequent augmentation of up to CZK 50 million is permissible.

In May 2011, the company signed a contract for sale of an 80% share of equity in Egida a.s. to Ironside Limited at the price of CZK 7,159,000.00. The price corresponds to equity participation recorded in the financial statement with closing date 31.12.2010.

As of 31.5.2011, the company signed a contract for transfer of the securities of Via Chem Group, a.s., at a total number of 485 shares at CZK 107,000.00 per share. With these contracts the company has realized its long-term intent to sell all of the said company’s securities in the company’s possession. By of the financial statement’s closing date, the transaction was partly completed ending with the amount of CZK 32,000,000.00.

On June 1, 2011, the company signed a contract for sale of real estate, namely, the company’s domicile, in the amount of CZK 32,000,000.00, i.e., a price that corresponds to the value assessed by a court-appointed expert appraiser. By the financial statement’s closing date, the transaction was settled in full.

Prague, June 15, 2011

________________________________ Ing. Siarhei Khimaroda

Member of the Board of Directors


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Statement to Report on Intercompany Relations Due to increase of the company’s registered capital, entered in the Companies Register on 21.9.2007, the company’s shareholders structure has changed. Due to this change in 2010, the company had no controlling entity according to the provisions of Section §66a, Commercial Code, and was therefore not subject to the obligation to compile a report on relations between the controlling and controlled entities in the group or relations between the controlled entity and other entities controlled by the same controlling entity.

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REPORT

of the Supervisory Board of MAXIMA pojiš�ovna, a. s., prepared for Extraordinary General Meeting

Dear shareholders, The Supervisory Board of MAXIMA pojiš�ovna, a.s., has convened and conducted its activities on a current basis since the last General Meeting. During its sessions, the Board focused on the activities of the Board of Directors (Directorate) and, above all, on the company’s overall situation and development as an insurance company.

The Board evaluated, primarily, the degree of financial assurance of the company’s operations, commercial activities, timely liquidation and loss claim settlement, assurance of internal operations and means for claim settlement, relations with the supervisory authority, and last but not the least the company’s response to new legislative updates pertaining to the insurance industry.

As far as cooperation with the company is concerned, the Supervisory Board states that the Board of Directors was always presented with the relevant records and decisions on the company’s activities and management, as well as information pertaining to the company’s economic results and general agenda in a timely manner.

With reference to the above findings, the Supervisory Board recommends that the General Meeting approve the company’s Financial Statement 2010, declaring a profit of CZK 2,135,981.70, to be used – along with undistributed profit of previous years amounting to CZK 7,134,275.32 – for compensation of a part of previous years’ losses and then, upon receiving the Auditor’s Statement, summon an Extraordinary General Meeting for re-approval of the company’s Annual Financial Statement 2010.

Prague, June 20, 2011

Ing. Jaromír Florián

Supervisory Board Chairman

KPMG KPMG �eská republika Audit, s.r.o. Telephone +420 222 123 111 Pob�ežní 648/1a Fax +420 222 123 100 186 00 Prague 8 Internet www.kpmg.cz Czech Republic

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AUDITOR´S REPORT

Independent Auditor’s Statement for Shareholders of MAXIMA pojiš�ovna, a.s. Financial Statement

Upon completing the Audit, on June 15, 2011, based on financial statements that constitute part of this Annual Report, we hereby issue the Independent Auditor’s Statement as follows:

“We have completed the audit of the Financial Statement of MAXIMA pojiš�ovna, a.s., i.e., the Balance Sheet as of 31.12.2010, Profit and Loss Statement, Overview of Equity Capital Changes in 2010, and Annex to the Financial Statement, including description of the most important fiscal methods applied and other supplementary data. Information on MAXIMA pojiš�ovna, a.s., is presented in Par. l of the Annex to the Financial Statement. Responsibility of the fiscal unit’s statutory body for the Financial Statement The statutory body of MAXIMA pojiš�ovna, a.s., is responsible for compilation of the financial statement, so that it renders an accurate and honest evidence of compliance with Czech accounting regulations and internal controlling system, as is considered to be indispensable for compiling a financial statement that is free of significant discrepancies accountable to fraud or error. The auditor’s responsibility It is our responsibility to draw up a report of our audit of the company’s financial statement. We have executed the Audit in compliance with the Act on Auditors, International Auditing Standards, and contingent application clauses of the Chamber of Auditors of the Czech Republic. Pursuant to the said regulations, we are obliged to adhere to ethical requirements and plan and conduct audits so as to attain reasonable certainty that the audited financial statement does not contain any significant inaccuracies. The execution of the Audit included certain auditing procedures with the aim of obtaining evidence of the amounts and circumstances recorded in the financial statement. The choice of auditing procedures is up to the auditor’s discretion, including assessment of the risk that the financial statement might contain significant inaccuracies accountable to fraud or error. During the assessment of these risks, the auditor evaluates the company’s internal controlling system that is relevant for the compilation of the financial statement so that it would reflect the company’s financial status accurately and honestly. The aim of this evaluation is to suggest suitable auditing procedures, not to judge the effectiveness of the fiscal unit’s internal controlling system. Furthermore, the Audit includes assessment of the suitability of the accounting methods applied, the reasonability of estimations made by the management, as well as assessment of the financial statement’s presentation as a whole. We are confident that the evidence collected provided us with adequate and appropriate material to enable us to express a qualified opinion in this Report.

The Auditor’s Statement We believe that the financial statement provides accurate and honest data on the assets and liabilities of MAXIMA pojiš�ovna, a.s., as of 31.12.2010, as well as its expenses, revenues, and economic results in 2010, in accordance with Czech accounting regulations.

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Emphasized circumstances We particularly point out to Par. II.2.d) and Par. IV.3 of the Annex to the Financial Statement which contain the presuppositions of the company’s management for the valuation of the bonds of Viachem Group, a.s., as there exists no reliable appraisal of the market value for these bonds. The company’s management had therefore resolved to assess their value on the basis of their estimated sale price. The sale transaction was completed prior to the financial statement’s compilation. This circumstance-emphasizing note does not constitute an objection on our part." Report on Intercompany Relations We have audited the accuracy of the data stated in the Report on Intercompany Relations of MAXIMA pojiš�ovna, a.s., for the year ending December 31, 2010. Responsibility for the compilation and accuracy of this Report is on the part of the company’s statutory body of competence. Our responsibility is to issue our standpoint to the Report on the basis of our verification. During the verification we proceeded in compliance with Auditing Standards No. 56 of the Chamber of Auditors of the Czech Republic. The Standards require us to plan and perform the verification with the aim to attain a reasonable degree of certainty that the Report of Intercompany Relations does not contain any significant factual inaccuracies. The verification process was limited primarily to asking questions of the company’s workers, using analytical methods, and proceeding selectively with the verification of the factual accuracy of the data obtained. This mode of verification therefore provides a lower degree of certainty than an audit proper. Since we have not performed a proper audit of the Report of Intercompany Relations, we do not include our standpoint on it in this Auditor’s Statement. Nevertheless, we state that our verification has not established the existence of any circumstances justifying a suspicion on our part that the Report of Intercompany Relations of MAXIMA pojiš�ovna, a.s., for the year ending 31.12.2010, contains any significant factual inaccuracies. The Annual Report We have verified concordance of the Annual Report with the Financial Statement under audit. Responsibility for the Annual Report’s accuracy is borne by the company’s statutory body of competence. Our responsibility is to issue a qualified statement on the Annual Report’s concordance with the Financial Statement. We have verified compliance with the International Auditing Standards and contingent application clauses of the Chamber of Auditors of the Czech Republic. The Standards require us to plan and perform the verification with the aim to attain a reasonable degree of certainty that the information in the Annual Report, describing the data presented in the Financial Statement, corresponds in all important aspects to the respective Financial Statement. We are confident that the executed Audit has provided us with adequately reliable material data for making this Auditor’s Statement. In our opinion, the information presented in the Annual Report reflects accurately in all the relevant aspects the factual data in the company’s Financial Statement. Prague, July 29, 2011 KPMG �eská republika Audit, s.r.o. Ing.Romana Benešová Partner License No. 71 License No. 1834

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