Solvency & Financial Condition Report · Solvency & Financial Condition Report European Reliance...

Solvency & Financial Condition ReportEuropean Reliance General Insurance Co. S.A.Reference date: 31/12/2018

S.A. Registration No.: 12855/05/Β/86/35G.E.M.I. No.: 322801000VAT No.: 094060402

2 | Solvency & Financial Condition Report

European Reliance General Insurance Co. S.A. | 3

ContentsIntroduction 4Summary 4Audit Report of the Independent Certified Public Accountant 8A. Business and Performance 10Business 11Underwriting Performance 19Investment Performance 25Performance of other activities 29Other Information 29Β. System of Governance 31General Information on the System of Governance 32Fit and Proper Requirements 39Risk Management System, including the Own Risk and Solvency Assessment (ORSA) 40Internal Control System 44Compliance Function 45Internal Audit Function 45Actuarial Function 46Outsourcing 46Other Information 47C. Risk Profile 48Insurance Risk 49Market Risk 57Counterparty Default Risk 67Liquidity Risk 69Operational Risk 71Other significant risks 72D. Valuation for Solvency purposes 73Assets 75Technical Provisions 81Other Liabilities 87Ε. Capital Management 89Own Funds 90Solvency Capital Requirements and Minimum Capital Requirements 92Use of the duration-based equity risk Sub-Module in the Calculation of the Solvency Capital Require-ment

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Differences between the standard formula and any internal model used 94Non-compliance with the Minimum Capital Requirements and Non- Compliance with the Solvency Capital Requirements

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F. Quantitative Reporting Templates 95


Introduction

According to article 38 of Law 4364/2016, an adjustment of the Greek Legislation to Directive 2009/138/EC of the European Parliament and Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), the Company has prepared and published the Solvency and Financial Condition Report (SFCR) for fiscal year 2018.The Report is subject for approval to the Company’s Board of Directors, is published and submitted to the Supervisory Authority on an annual basis, only after approval and audit by the legal auditor or auditing companies.The Company applies a Disclosure Policy approved by the Board of Directors and in the present Report implements all provisions of that Policy.This report was developed taking into consideration the Regulations (EU) 2015/35, especially articles 292 to 303, is in line with the structure defined in Annex XX and the guidelines on the submission and disclosure of figures and was approved by the Company’s Board of Directors in the meeting held on 23/04/2019. The quantitative reporting templates, in accordance with Annexes I and III of Act No. 105/12/12/2016 of the Executive Committee of the Bank of Greece, are published as part of the present report and fall within the aforementioned audit.The reference date is 31/12/2018 and the reporting currency is EUR (€). All amounts presented in the tables are in EUR thousands, unless otherwise stated. The amounts referring to the Solvency II Balance Sheet are briefly referred to as SII.

The Bank of Greece, as the Supervisory Authority according to Law 4364/2016 may request the amendment or reformation of the Company’s published reports or the publication of additional information and pursuit of other actions by the Management.

Summary

2018 was another successful year for our Company. The recorded results followed the upward trends of the previous years and totally confirmed the strengthening of the Company’s position in the Greek Insurance Market.The Company continues its course over the last 41 years, in a geopolitically and financially volatile environment, proving its endurance and long-term development, its ability to utilize new opportunities and confront risks. More specifically, the Company, despite all fluctuations in the financial recess, managed to succeed increase of most of the financial figures and keep many of them in the high levels of the previous year. More specifically:• The total income from Insurance Premiums and Policy

Fees increased by 4.1% at € 191 mil., comparing to 1.8%

increase of the total insurance market.• The Company’s Solvency Ratio strengthened by 14.1 p. p.

and reached 159.8%, further increasing its credibility and ensuring the future of thousands of insured.

• The total Assets, according to SII, increased by 1.7% to € 406.4 mil.

• The Own Funds according to Solvency II• increased by 7.9 % at 117.0 € mil.• The Pre-tax Profit reached high levels at € 14.9 mil.• The total number of personnel increased by 25 employ-

ees at 444 employees. Briefly, the key parts of the Report are the following:

Business and PerformanceThe Company is active in all modern insurance sectors, except for credit and surety insurance, with key sector the Motor Third Party Liability, representing 43.7% of the Company’s total Insurance portfolio. The Non-Life Insurance Sectors represent 30.2% and the Life Insurance Sector represents 26.1% of the total portfolio. The following table presents the key financial figures for fiscal year 2018 according to the I.F.R.S.

Underwriting Performance of the Group € 35.3 mil. 2017: € 43.1 mil.Pre-tax Profit€ 14.9 mil. 2017: € 22.2 mil.Gross written premiums and related income€ 191.0 mil. 2017: € 183.6 mil.Own Funds€ 116.5 mil. 2017: € 116.1 mil.MCR Ratio401.2 % 2017: 347.0 %SCR Ratio159.8 % 2017: 145.7%

The increase of the written premiums is mainly due to the increase of the sales network, the opening of new Retail Offices in new geographical regions, the import of new, attractive products and the marketing actions for the attraction of new customers. The significant events in fiscal year 2018 were the catastrophic fires in Mati in Attica and Kineta, the natural disasters due to earthquakes and floods, the fire a company in North Greece and the almost double number of fatal road accidents in almost similar fleet of vehicles.The Company reacted immediately to all of the above, supported the insured, by paying all compensations immediately and performing social actions that supported the affected residents, proving the consistency of the Organization to thousands of insured, immediately responding to their needs and requests.

System of GovernanceThe Company’s system of governance is based on the «Three


Lines of Defense», strengthening the creation of an effective Risk Management System. The Company’s Board of Directors is fully responsible to ensure the effectiveness and adequacy of the system of governance, taking into consideration the nature, range and complexity of the Company’s operations. The Company has adapted its organizational chart according to the provisions of Solvency II legislation, by establishing four key functions (Risk Management, Actuarial, Internal Audit, Compliance), sticktly ensuring their independence and establishing appropriate BoD committees with separate roles and responsibilities.Moreover, within the framework of its System of Governance, the Company has recorded all necessary policies and procedures and has established a framework for the assessment of the appropriateness and credibility of the Board members, and the responsible persons of the Company, through the creation of the independent Committee of Corporate Governance, Remuneration and Nomination.

Risk ProfileThe Company uses the Standard Formula, according to Solvency II Directive for the calculation of the regulatory capital requirements (Solvency Capital Requirement -SCR- and Minimum Capital Requirement -MCR). The appropriateness of the standard formula is assessed by the Own Risk and Solvency Assessment (ORSA). The results of the Solvency Capital Requirement per risk category with reference date 31/12/2018 are presented in the following graph (amounts in thous. €):

It is noted that the Company has never used adjustments for the Loss Absorbing Capacity of the Deferred Taxes (LAC).The Solvency Capital Requirement amounts to € 70,955 thous. on 31/12/2018. The Underwriting risk in the Non-Life Sector and the Market Risk are the most significant risks representing 62% and 18% respectively of the Basic Solvency Capital Requirement (BSCR).These risks are within the risk underwriting limits set by the Company in the Risk Management Strategy. Within the general Risk Management system of governance, the Company monitors the progress of the rest of the assumed risks, in order to ensure their management within the desired risk underwriting profile, based on its business goals.

Valuation for Solvency purposesThe valuation of assets and liabilities of the Company’s balance sheet was completed with actuarial methods and is based on the Company’s portfolio, according to the Solvency II framework.

Capital ManagementThe transition of Own Funds from the Balance Sheet according to the International Financial Reporting Standards (IFRS) to the Solvency II Balance Sheet is presented in the following table (amounts in thous. €):

Transition of Own Funds from the IFRS to Solvency II 31/12/2018 31/12/2017IFRS – Own Funds 116,489 116,064Assets -21,107 -16,497Deferred acquisition costs -17,591 -17,015Intangible Assets -1,389 -804Deferred tax assets 0 3,439Investments 3,125 1,312

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95,000

50,000

Market Risk CounterpartyDefault Risk

Non-LifeUnderwriting Risk

LifeUnderwriting

Risk

HealthUnderwriting

Risk

OperationalRisk

Diversification SolvencyCapital

Requirements

18% 9% 62% 5% 6%

15,6097,611

53,817 4,434 4,9085,763 21,187

70,955


Reinsurance Recoverables -1,462 236Reinsurance Receivables 535 260Receivables (trade, not insurance) -4,325 -3,924Liabilities 21,589 8,138Technical provisions – Non-Life 10,146 8,265Technical provisions – Health 9,886 8,203Technical provisions – Life 1,811 -8,869Technical Provisions - Index-linked and unit-linked -239 331Deferred tax liabilities -197 0Deposits from reinsurers 0 0Reinsurance Payables 182 208Solvency II – Own Funds 116,970 107,705Foreseeable dividends, profit distribution and charges -3,575 -3,300Solvency II – Eligible Own Funds 113,395 104,405

The Own Funds amount to € 116.970 thous., according to the Solvency II valuation and € 116,448 thous., according to I.F.R.S. valuation.The difference in the Own Funds is due to the different valuation method of the technical provisions, investments, reinsurance recoverables, impairment of the deferred acquisition costs, intangible assets and deferred taxation arising between the Solvency II and IFRS balance sheets.The difference between the Eligible Own Funds and the Own Funds in Solvency II balance sheet is the result of the Company’s provision for distribution of dividend of € 0.13 per share from the profit of fiscal year 2018.The Minimum Capital Requirement (MCR) Ratio amounted to 401.19%m presenting an increase of 54.2 percentage points comparing to 2017, whereas the Solvency Capital Requirement (SCR) ratio amounted to 159.81 %, presenting increase by 14.1 percentage points comparing to the previous corresponding time period, as presented below (amounts in thous. €).

Solvency Capital Ratios 31/12/2018 31/12/2017Minimum Capital Requirement (MCR) 28,265 29,053Solvency Capital Requirement (SCR) 70,955 71,643Eligible Own Funds 113,395 104,405Tier 1 113,395 100,815Tier 2 0 0Tier 3 0 3,590Solvency Capital Requirement (SCR ratio) 159.81% 145.73%Minimum Capital Requirement (MCR ratio) 401.19% 347.01%Total surplus (+) / deficit (-) from the Solvency Capital Requirement 42,440 32,761Total surplus (+) / deficit (-) from the Minimum Capital Requirement 85,130 71,762

For the calculation of the Minimum Capital Requirements (MCR) and the Solvency Capital Requirements (SCR), the Company used the Standard Formula.The MCR Ratio increased comparing to the previous fiscal year, mainly due to the 8.6% increase of the Eligible Own Funds for the coverage of the Minimum Capital Requirements and the 2.7% decrease of the Minimum Capital Requirement.The 8.6 % increase of the Eligible Own Funds comparing to the end of 2017 and the 1.3% decrease of the Basic Solvency Capital Requirements had the most significant impact on the increase of the Solvency Capital Requirement (SCR).

Impact of the transitional measures on the Solvency Capital RequirementsThe calculation of the Solvency Capital Requirements was based on the standard formula, using the following transitional measures that do not require approval by the Supervisory Authority.• Long-term guarantees measure due to volatility (Volatility Adjustment).• Use of the lowest rate of the standard parameter, for equities that the Company purchased up to 01/01/2016.The Company has also estimated the Solvency Capital Requirements without the use of the above transitional measures and the results are presented in the table below:


Solvency Capital Requirements without the use of transitional measures

With the use of transitional measures

Without the use of volatility adjustment

Without the use of the Equity transitional measures

Without the use of transitional measures

Solvency Capital Requirement (SCR ratio)

159.81% 156.07% 159.27% 155.54%

Minimum Capital Requirement (MCR ratio)

401.19% 375.04% 381.97% 375.04%

Concluding, the impact of the transitional measures on the calculation of the Solvency Capital Requirements, despite the significant increase of the volatility adjustment, does not affect to a significant extent the aforementioned results of the Company. More specifically, the SCR ratio and the MCR ratio present a decrease by 4.3 and 26.2 percentage points respectively, without the use of the above transitional measures.


Audit Report of the Independent Certified Public Accountant

Deloitte Société Anonyme Certified Public Accountants 3a Fragoklissias & Granikou Str. 15125 Maroussi, Athens, Greece

Tel.: +30 210 6781 100 Fax: +30 210 6776221-2 www.deloitte.gr

Audit Report of the Independent Certified Public Accountant

To the Management of the Insurance Company “EUROPEAN RELIANCE GENERAL INSURANCE CO.S.A.” We have audited the statements as of December 31, 2018, as provided by the Implementing Regulation (EU) 2015/2452, consisting of Solvency II Balance Sheet (template S.02.01.02), Technical Provisions (templates S.12.01.02 and S.17.01.02), Own Funds (template S.23.01.01), and the Other Information (templates S.19.01.21, S.22.01.21, S.25.01.21, S.28.02.01), (hereinafter the "Supervisory Statements"), which are included in the attached "Solvency and Financial Condition Report” of the Company “EUROPEAN RELIANCE GENERAL INSURANCE CO. SA”, (hereinafter “the Company”) for the fiscal year ended on December 31, 2018. The Supervisory Statements have been compiled by the Management according to the regulatory provisions and methodology of the Company described in Section “D” and “E” of the attached “Solvency and Financial Condition Report”, according to the provisions of L. 4364/2016. Responsibilities of Management for the Supervisory Statements Management is responsible for the preparation and fair representation of the Supervisory Statements, according to the regulatory provisions and the methodology described in Sections “D” and “E” of the attached “Solvency and Financial Condition Report”, and the requirements of Law 4364/2016, as also the internal controls that Management determines that are necessary to enable the preparation of the Supervisory Statements free from material misstatement, whether due to fraud or error. Accountant's Responsibilities It is our responsibility to form an opinion based on our audit on these Supervisory Statements. We have conducted our audit in accordance with the International Standards on Auditing (ISAs), as incorporated in the Greek Legislation (Government Gazette/B/2848/23.10.2012). These Standards require us to comply with ethical standards, plan and conduct such audit to give reasonable assurance on whether the Supervisory Statements are free from material misstatement. The audit includes actions for obtaining auditing evidence on the amounts included in the Supervisory Statements. The appropriate procedures are selected based on the accountant's judgment, including the risk assessment for material misstatement in the Supervisory Statements, that is due to fraud of error. When conducting these risk assessments, the accountant examines the internal controls related to the preparation and presentation of the Company's Supervisory Statements, to develop audit procedures appropriate to the Company’s circumstances, but not to form an opinion on the efficiency of the Company's internal controls. This audit also includes an assessment on the appropriateness of the method used and the reasonableness of the estimates made by the Management and the overall presentation of the Supervisory Statements. We believe that the auditing evidence we have collected is sufficient and appropriate to establish our opinion.

Opinion

In our opinion, the Supervisory Statements as of December 31, 2018, included in the “Solvency and Financial Condition Report” of the Company for the fiscal year ended on December 31, 2018, have been prepared, in all material aspects, according to the applicable regulatory provisions, the relevant provisions of Law 4364/2016 and the methodology described in sections “D ” and “E” of the attached “Solvency and Financial Condition Report (SFCR)”.


Emphasis of matter

Without qualifying our opinion, we draw attention to the “Introduction” of the attached "Solvency and Financial Condition Report", in which it is explained that the Bank of Greece is the Supervisory Authority of the Company, in accordance with L. 4364/2016, and may require amendment or modification of the Company’s published reports, or the publication of further information, and further actions whatsoever to be taken by the Management. The preparation of the Supervisory Statements and the “Solvency and Financial Condition Report” and our audit have been conducted under the assumption that the necessary approvals have been granted and there are no additional requirements by the Supervisory Authority. We do not form an opinion on whether the Supervisory Authority will grant relevant approval or request further information.

Basis for accounting and limited use

We would like to draw the attention to Sections “D” and “E” of the attached “Solvency and Financial Condition Report” that describe the regulatory provisions and the methodology for the preparation of the Supervisory Statements, which have been prepared to assist the management of the Company to fulfill its obligations, according to L. 4364/2016. As a result of the above, the Supervisory Statements and our relevant Report may not be appropriate for another purpose. The present Report has been prepared only for use by the Company’s management for the fulfillment of the regulatory obligations and therefore shall not be used by other parties.

Other Matters

Our audit on the Supervisory Statements does not consist a regular audit on the Financial Statements of the Company for the year ended December 31, 2018 and therefore we do not express an opinion on the Financial Statements.

Athens, April 24, 2019

The Certified Public Accountant

Despina Ksenaki Reg. No. Institute of Certified Public Accountants of Greece (SOEL): 14161 Deloitte Société Anonyme Certified Public Accountants 3a Fragoklissias & Granikou Str., 15125, Marousi Reg. No. Institute of Certified Public Accountants of Greece (SOEL): E 120

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This section presents information on the Organizational Structure, the Key Functions, the Position of the Company in the Insurance Industry and the financial performance of European Reliance General Insurance Co. S.A.Key elements:• Business Profile• Underwriting Performance• Investment Performance• Performance of other activities

Business and Performance

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Α.1 Business

Α.1.1 ProfileThe Company «EUROPEAN RELIANCE GENERAL INSURANCE Co. S.A.” was established in 1977 with registered offices in the Municipality of Chalandri, Greece. The Company operates throughout Greece and is under the supervision of the

Department of Private Insurance Supervision of the Bank of Greece. According to Article 4 of its Article of Association, the Company provides all kinds of insurance and reinsurance coverage, except for credit and surety insurance.The Company has designed innovative and flexible insurance schemes and continuously invests in new technologies, maintains a wide network of 110 retail offices (Figure A.4), covering almost the total of the entire Greek territory. With more than 5.300 insurance agents (Figure A.3) the sales network serves more than 620,000 insurance policies (Non-Life and Life Sector- Figure A.1) and the Company’s personnel in 2018 amounted to 444 employees (Figure A.2).

Non-Life Sector(2018)

Life Sector(2018)

620,990insurance policies

increased by 0.7%comparing to 2017

92,2%

7,8%

0

250

500

MenWomen

20172018

293

444419

151 146

273

Figure A.1 Total Number of Policies

Figure Α.2: Employees

5,300

5,400

5,500

20172018

5,379

5,433

Figure Α.3: Number of insurance agents

Attica (41)Agrinio (1)Alexandroupoli (1)Arta (1)Atalanti (1)Chalkida (3)Chania (1)Corfu (3)Corinth (3)Drama (2)Egio (1)Heraklion (6)Ioannina (3)Kalamata (2)Kalymnos (1)Karditsa (1)Kastoria (1)Katerini (2)

Kavala (1)Kefalonia (1)Komotini (1)Lamia (3)Larisa (4)Livadia (1)Makrakomi (1)Myconos (1)Nafplio (1)Naoussa (1)Patra (2)Rethymno (1)Rhodes (2)Samos (1)Serres (4)Skydra (1)Thessaloniki (8)Xanthi (2)

Figure Α.4: Retail Offices


The Company is currently the only insurance company listed in the Athens Stock Exchange.The Company’s operations are governed by the provisions of L. 2190/1920 on the Société Anonymes and the special provisions of L. 4364/2016, as applicable and in force. In addition to the above, the Company must comply with any provision, Law or decision of the Greek Capital Market Commission and the Athens Stock Exchange. It is noted that in the reference period (01/01/2018-31/12/20180), Law 2190/1920 was in force. From 01/01/2019, this Law has been replaced by Law 4548/2018.In 2018, the Company’s Financial Statements and the Solvency and Financial Condition Report have been audited by the certified public accountant “Deloitte Certified Public Accountants S.A.”.

Contact detailsEuropean Reliance General Insurance Co. S.A.Postal address: 274 Kifissias Avenue, 15232 Chalandri, GreeceTel.: +30 210 6829601 | Fax: +30 210 8119789Ε-mail: [email protected] company: Deloitte Société Anonyme Certified Public Accountants.First and Last Name of the Public certified Accountant– Auditor: Despina KsenakiPostal address: Fragoklissias 3a & Granikou Str. 15125.Tel.: +30 2106781100 | Fax: + 30 2106776232Supervisory authority: Bank of Greece –Department of Private Insurance Supervision (DPIS)Postal address: 3 Amerikis Str., 10564, Athens, GreeceTel.: +30 210 3205223 | Fax: +30 210 3205438 | Email: [email protected]

Α.1.2 General Information

Vision and ValuesThe Company’s vision, unchanged over time, is summarized as follows:• The creation and development of an organization that

will satisfy the insurance and investment needs of all citizens.

• The creation and development of an organization that will provide employees a permanent and stable environment and a working position that will help them fulfill their financial, administrative and social ambitions.

• The creation and development of an organization that will reward the investors and the shareholders for their trust.

• The creation of a powerful organization with strong financial, emotional and intellectual assets.

European Reliance S.A. has always based its development on its principles and key strategic goals.

PrinciplesIntegrity, diligence, industriousness, and prudent management are the key principles that characterize European Reliance General Insurance Co. S.A. These principles are applied in the Company’s relations with all transacting parties: insured, employees, shareholders and third parties.The Company retains its philosophy to stay close to the insured, treat them with respect in the difficult moments, serve them with constancy and loyalty. This philosophy, typical among the Company’s Management and employees, is embodied into its registered trademark «Pays straight away».This message expresses the understanding of the significance of the Company’s provisions for every agent, shareholder and customer.

Strategic goalsThe corporate business strategy is based on the following goals:• Constant improvement of quality and range of services

offered to the citizen-customer.• Creation of a society of satisfied individuals.• Influence and acquisition of an increasingly growing

customer market share on a daily basis, with ultimate goal to reach the first place.

• Creation and development of new business activities for the fastest implementation of the Company’s financial and qualitative goals.

Provided Products, Sales Network and Products Allocation Strategy

Products/ ServicesEuropean Reliance, has adopted the new “Vision”, as presented by the Company in 2015, and “aspires to a society of insured, that lives, creates and grows in an environment that ensures the goods for which they strive day and night: income, family, property and quality of life”.For this reason, it has created the following unique products with significant trade value:Income Protection Products:Pension Scheme “Private Pension Scheme”With the “Private Pension Scheme”, European Reliance undertakes lifelong pension plans for its insured. The pension begins when the insured reaches 65 years of age, is guaranteed and is based on an agreed amount. Comprehensive Income Protection System “Isodima”The Comprehensive Income Protection System “Isodima”, depending on the special needs of the insured guarantees:1. Lifelong monthly pension the height of which is agreed

when the insured reaches 65 years of age.2. Monthly income in cases of sickness or accident for as

long as there is disability for work, up to 24 months after the 15th day.

3. Monthly income up to the 65th year of age in cases of Total Permanent Disability due to sickness or accident,


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equal to the amount of the pension.4. Waiver of premiums in case of Total Permanent Disability.5. Returns of policy premiums from the pension plan in

case of loss of life of the insured before the starting date of the pension scheme.

6. Return of policy premiums via the scheme “Asfalistikos Goneas” and other free provisions of Asfalistikos Goneas.

7. Under certain conditions, payment of premiums in 12 monthly interest-free installments.

Family Protection Products:Integrated Family Protection System “Family Care 2”The Integrated Family Protection System “Family Care 2” guarantees:1. High quality of life for the loved ones of the insured, in

case of loss of life due to accident, for as many years, as the insured wishes, by paying to the family, the monthly income agreed.

2. Payment of the obligations of the insured up to the agreed amount, with no extra charges or hassle for their family.

3. Return of premiums paid on the anniversary of the policy, via the scheme “Asfalistikos Goneas”, so that the insured would pay only up to € 1 and payment of the balance in up to 12 interest-free monthly installments via the Euro-pean Reliance LifeCard Visa.

Private Health SystemThe “Private Health Care Scheme” is a comprehensive benefit scheme for the management of the economic impact caused by health issues of a person and the steps for recovery. It allows every citizen to select the desirable provisions, based on the actual financial abilities and it is not imposed similarly on citizens with different characteristics and needs (age, gender, family status, etc.) A citizen with Private Health System is able to choose the doctor, Medical Institution, type of hospitalization and other scheme services.Studies and Professional RehabilitationInsurance Scheme “Paideia”With the studies and professional rehabilitation insurance scheme “Paideia”, European Reliance undertakes the expenses for the studies of the children of the insured, for ages 1-8, up to the agreeable amount, regardless of whether the insured the parent of the child is alive or not.The studies of the child are whatsoever ensured.Property Protection Products:Comprehensive Property Protection Scheme “Klironomia”“Klironomia” is the only scheme in the insurance market that pays the inheritance tax “when the time comes”, so that all possessions are properly transferred to the right owners. It is offered ONLY by European Reliance and protects property from all risks, such as fire, earthquake, flood, etc.Comprehensive Home Protection System “Safe Home”The comprehensive home protection system “Safe Home” protects the property of the insured from any risk, such as fire,

earthquake, flood, etc.Quality of Life Products:Quality of Life Protection System “Easy life Plus”The protection scheme “Easy Life Plus”, offered exclusively by European Reliance, consists a partnership of European Reliance, its subsidiary Alter Ego S.A. and the international company Interpartner Assistance to ensure peace and tranquility to the policyholders in their daily problems, 365 days a year. More specifically, the companies provide to the insured: 1. Complete road and travel assistance in Greece and

abroad.2. Complete Legal Protection for Claims in cases of road

accidents.3. Full assistance at home and in the office with all specialty

techniques and a number of provided services.4. Full medical and nursing care, as well as checkups at

home and in the office, in cases of emergency, or regular or chronic diseases due to any cause.

Motor Insurance Products:The Company offers a series of innovative schemes and insurance packages that are in total compliance with the modern social and business requirements, so that the customers can drive with safety and certainty.Special Benefits InsuranceAsfalistikos GoneasEuropean Reliance offers the scheme “Asfalistikos Goneas” within the Corporate Social Responsibility framework as an act of solidarity to the Greek Society. The participants in the scheme Asfalistikos Goneas can ensure their daily shopping needs from large companies affiliated with Asfalistikos Goneas, without any obligation in cases of accident. If the participant in Asfalistikos Goneas scheme is already insured or purchases another insurance coverage (Life, Fire, Motor, etc.), our Company returns the premiums paid, except for one euro, depending on the amount of purchases made through the scheme “Asfalistikos Goneas”.

Sales Network - Product Promotional Strat-egyThe following diagram presents the way of customers’ access to the products and services of European Reliance.


Candidate Customers

European Reliance

Direct NetworkRetail O�ceCustomer Service Insurance Employees

Direct Network AgencyIndependent Network

AgencyInternet Independent Network (Insurance Brokers, Agents)

Alternative NetworksPublic SectorCooperating Businesses Cooperating Workstations Suppliers

Figure A.5: Methods of customers’ access to the services of European Reliance General Insurance Company S.A.

Although the Company uses the multichannel provision of products/services, it has strategically chosen to expand only via Insurance Intermediaries and for this reason, it does not offer products/ services with competitive terms through other channels.The Company’s sales network is based on the Agency System, which is supported by almost 110 retail offices throughout Greece and by a structure of sales that includes five administrative degrees of coordinators, as follows:• Commercial Division• Sales Force Network• Area Division• Retail Office Division• Sales ManagerThe current structure of the “Agency System” allows the administrative submission of independent Insurance Intermediaries (Insurance Consultants, Insurance Agents, Insurance Brokers) further enhancing the effectiveness and productivity of the sales network. Via this model, the sales network of European Reliance consists of 5,379 agents and is the biggest sales network in the Greek Insurance Market.At the same time, the Company develops Direct Sales, that refer to the following basic categories, without promoting AGENCY products or services that compete the products and services of the sales network:1. Participation in Group Insurance Policies, that exclude the Insurance Intermediaries from the terms of competition2. On-line Insurance through the website www.europaikipisti.gr/en/Home (less than 1% of total insurance premiums)The goals of the 2018 Company’s policy for the products and Sales Network are summarized as follows:Quantitative Goals• Attract new customers and improve the credibility of the existing customers• Attract new agents and improve the credibility of the existing agents.Qualitative Goals:• Market penetration (existing products in existing markets)• Creation of products (new products in existing markets)• Market expansion (existing products in new markets)• Differentiation (new products in new markets)


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Existing Agents/ Company’s EmployeesExisting Customer Database (cross selling)

Safe Home/ KlironomiaFamily Care 2 / Private Health System Paidia/Easy Life PlusPrivate Pension Scheme/ IsodimaEasy Life PlusAsfalistikos Goneas

Existing Agents/ Company’s Employees Existing Customer Database (cross selling)

New annually renewable Health ProgramsCyber InsuranceEnvironmental Third-Party LiabilityDrones InsuranceProfessional Third-Party Liability

Existing Agents/ New ProfessionalsBusinesses of Asfalistikos Goneas A�liated WorkstationsCustomers of SubsidiariesCompensated Third- Parties / Canceled Policies / UnemployedSafe Home/ KlironomiaFamily Care 2 / Private Health System/ PaidiaEasy Life PlusPrivate Pension Scheme / IsodimaEasy Life PlusAsfalistikos Goneas

Existing Agents/ New ProfessionalsBusinesses of Asfalistikos Goneas A�liated WorkstationsCustomers of SubsidiariesCompensated Third Parties /Canceled Policies / UnemployedNew annually renewable Health ProgramsCyber InsuranceEnvironmental Third-Party LiabilityDrones InsuranceProfessional Third-Party Liability

Figure Α.6: Products Promotional Strategy and Market Expansion

Our peopleOver the last years, we have expanded our research for ideal candidates, using multiple channels (career websites, Facebook, LinkedIn etc.). Our goal is to recruit the most appropriate candidates of the market in every work position. Since we strongly believe that our people are our driving force, we regularly conduct satisfaction surveys among our human resources, to enable them to share new ideas and suggest areas for improvement. Through the study of the results, the Company constantly improves the working practices and creates relationships of trust.Our people’s education and high training levels in their working field is a major pillar for our Company. Their constant training

and experience are the key elements that make the Company competitive in the Greek insurance market.

Shareholders’ Composition - Share CapitalBased on the shareholders’ register, the composition of the Company’s shareholders per investment category is presented in Figure A.7.Structure of the Company’s Share CapitalThe Company’s share capital amounts to € 17,327,316.51 and is divided into 27,503,677 common nominal shares, with nominal value of € 0.63 each. The Company’s shares are listed for trading on the Athens Stock Exchange.According to the shareholders’ register on December 31, 2018,

the Company’s share composition was the following (shareholders with direct and indirect participations higher than 5% and persons related to the Company’s Management):

InstitutionalInvestors

E.B.R.D.

OtherShareholders

Employees/Agents

51.70%

15.00%

6.92%

26.38%

Figure Α.7: Composition of Company’s shareholders on 31/12/2018


Full Name Identity Direct & Indirect participationChris Georgakopoulos Chief Executive Officer and Board member of

European Reliance General Insurance Company S.A.

7,085,775 shares or 25.764 %

European Bank for Reconstruction and Development (EBRD)

Investment Bank 4,125,552 shares or 15.000 %

Eric Sharp Board Member of European Reliance General Insurance Company S.A.

2,459,175 shares or 8.941 %

Stavros Lekkakos Chairman of the Board of Directors of European Reliance General Insurance Co. S.A.

2,350,000 shares or 8.544 %

Nikolaos Chalkiopoulos Vice Chairman of the Board Directors of Europe-an Reliance General Insurance Co. S.A. and Chief Insurance Operation Officer

453,350 shares or 1.648 %

Stefanos Verzovitis Chief Financial Officer and Board member of European Reliance General Insurance Company S.A.

400,637 shares or 1.457 %

George Diamantopoulos Board Member of European Reliance General Insurance Company S.A.

100,000 shares or 0.364 %

Christopher Poulios Board Member of European Reliance General Insurance Company S.A.

5,601 shares or 0.020 %

Other Shareholders - 10,523,587 shares or 38.262 %

Table A.1: Shareholders with direct and indirect participations higher than 5% and persons related to the Company’s Management on 3112//2018.

The distribution of shareholders on 31/12/2018 is as follows:• Natural persons: 2,975 shareholders• Legal Persons: 66 shareholders• Common Shares: 158 shareholdersShare’s InformationThe closing price of the share in the Athens Stock Exchange on 31/12/2018 amounted to € 3.41 (versus € 3.58 in the corresponding fiscal period). At the highest peak, the price of the share reached € 3.98 and at the lowest € 3.30. The capitalization of the Company on 31/12/2018 amounted to € 93.788 thous.

Α.1.3 Organizational StructureThe Group includes the parent company, European Reliance General Insurance Co. SA and the following subsidiaries:• Alter Ego S.A.• European Reliance Asset Management M.F.M.S.A.• Reliance Single-Member Insurance Agents S.A.

The simplified structure of the Group is presented in Figure A.8.

European RelianceGeneral Insurance Company S.A.

European RelianceAsset Management M.F.M. S.A.

Alter Ego S.A. Reliance Single - ΜemberInsurance Agents S.A.

Figure Α.8: Simplified structure of the Group


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The Organizational Structure of the System of Governance is presented in detail in the Company’s analytical organization chart, which, in combination with the Internal Regulations of Corporate Governance and Operations pf the Company, describes in detail and with clarity the responsibilities and liability limits of every organizational unit, ensuring that all responsibilities and liabilities are distributed and coordinated effectively.

Subsidiaries“European Reliance Asset Management M.F.M.S.A.” was founded in 1990 and specializes in management of mutual funds. The company is active in portfolio management, corporate finance, venture capital and develops investment banking activities for the provision of investment services. The goal of European Reliance Asset Management M.F.M.S.A. is to build long-term relationships with its clients that are based on trust, emphasizing the quality of the provided services and the human factor. The Company consists of a team of experienced partners and acknowledged executives, that use all modern technologies and can guarantee for the company’s best effectiveness.“Alter Ego Facilities Management S.A.» was founded in 1986 and is one of the largest companies that provides integrated Facility Management services. The Company operates throughout Greece, offering its services to leading Greek

and multinational companies and its active customer base includes more than 65 private companies.The Company specializes in the management of professional real estate (office buildings, hospitals, shopping centers, chain stores, industrial and storage facilities) and its services are in compliance with the International Standards for Quality, Occupational Health and Safety and Environmental Management. The Company has developed partnerships with leading international companies specializing in real estate, property management and facilities management, and is one of the founding members of the «Hellenic Facility Management Association». Since 2017, Alter Ego is the co-founder of Partner Hotel Greece, a leading company in the field of hotel accommodation management.«Reliance Single-Member S.A.» is an insurance broker, founded in 2012, non-active company.

Α.1.4 Significant Events during the reporting periodThe administrative functions with significant impact on the Company’s performance for fiscal year 2018 are the following:• Direct payment of claims to insured affected by the catastrophic fires in Mati (Attica) and Kineta with immediate response.• Strengthening the provided training to the Sales Network and personnel of internal operations mostly in matters of

personal data and new supervisory regulations• Readjustment of pricing tables in specific products• Extra judicial agreements for payment of outstanding claims, that result in direct payment of claims• Continuance of the Company’s Corporate and Social Actions• Promotion of the Company’s new products to the Greek Media• Opening of 6 new retail offices, in new geographical regions in Greece• Gap Analysis and Preparation for the new I.F.R.S. 17 and 9• Total compliance with the new Directives GDPR, PRIIPS and IDD• Use of new software for Solvency II Reports and the Reserving of the Non-Life Insurance Sectors• Continuance of the Operations of SAS Anti-Fraud system in the Motor Insurance Sector• Sufficient liquidity ratio for direct payment of all liabilities.Significant events that took place during the period from 01/01/2018 to 31/12/2018 are the following:


Date Event

12/02/2018 Provision of the innovating insurance scheme “Asfalistikos Goneas”. Over 10,000 smart phone users have downloaded and use the application “Asfalistikos Goneas”in their mobile phones.

26/02/2018 The Company signed another agreement with the oil companies EKO and BP within the scheme “Asfalistikos Goneas”, further expanding the Network of the cooperating businesses.

21/03/2018 European Reliance within the framework of continuous improvement of the provided services to its insured, created a new service for the activation of a standing order for the payment of insurance premiums. Through this new service, the insured of the Company will be able to activate on-line the direct payment of the premiums and at the same time they will receive 5% or 10% discount on their premiums.

22/03/2018 The Company has been classified as leading Organization, dedicated to the implementation and promotion of the Sustainability and Responsible Entrepreneurship in the award ceremony of the 21 “Most Sustainable Companies in Greece 2017”.

30/04/2018 European Reliance won another important distinction in the 2018 Loyalty Awards for the scheme Asfalistikos Goneas, winning the Silver award in the Category “Insurance - Best in Loyalty & Engagement”.

10/05/2018 The Company presented the new integrated Family Protection Scheme “Family Care”. “Family Care” is an act of responsibility, where the insured can be confident that under all circumstances, European Reliance will provide a fixed monthly income for the basic needs of the family.

22/05/2018 The Ordinary General Meeting of Shareholders approved the annual corporate and consolidated financial statements for fiscal year 2017. In the General Meeting of Shareholders, the Company presented to the Shareholders the developments of fiscal year 2017 and the objectives and growth prospects of the Company. Moreover, the shareholders approved the waiver of the Board members and auditors of any liability for the events of fiscal year 2017, the election of new Certified Public Accountants for fiscal year 2018, the remuneration of the Board members and the provision of license for their participation in the Board of Directors of the Companies of the Group.

05/07/2018 European Reliance General Insurance Co. S.A. received the Platinum Award for fifth consecutive year from the Hellenic Institute of Business Ethics -EBEN GR- for the total of its business activities, in a special ceremony held in the Annual Research Congress of EBEN EUROPE.

23/08/2018 European Reliance is included in the socially responsible Organizations and Employers of the special category “Leading Employers in Greece”, published by ICAP.

20/09/2018 European Reliance received the Silver Award for the implementation of the Scheme “Asfalistikos Goneas” in the category “Mobile Applications for Services and Governance” in the «Mobile Excellence Awards”.

26/09/2018 The Company presented significant increase in the total of its fiscal figures for the Q1 of 2018, comparing to the corresponding period of 2017.

01/11/2018 European Reliance within the framework of its new advertising campaign under general motto “Forecasting cannot be always precise”, and based on its extensive experience in the insurance sector presented the significance of the early forecasting for the protection of goods acquired with personal effort and sacrifices.

13/11/2018 Recertification of the Company by TÜV NORD according to the international standard ISO 9001:2015, which refers to the Quality Management System implemented by the Company in the planning and provision of insurance services.


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19/11/2018 European Reliance Group of Companies published its Sustainability Report for years 2016 and 2017, according to the GRIG4 Guidelines of the UN Global Compact and ISO 26000 Certification.

04/12/2018 European Reliance participated in the UN Global Compact of the United Nations and commits to apply, support and promote in all of its activities the 10 basic principles of the UN Global Compact, for human rights, working conditions, the environment and the fight against corruption.

13/12/2018 Recertification of the Company by the acknowledged organization TÜV HELLAS (TÜV NORD), in accordance with the international standard ISO 27001:2013 Certification, on the requirements of the Information Security Management System.

27/12/2018 The Group European Reliance received the “True Leaders” award for 8th consecutive year in the contest of the ICAP Group “True Leaders”, as one of the 6 companies that have received this distinction since the contest’s first establishment.

Figure Α.9: Significant Events of the Company during the reporting period

Other actions:At the same time, the Company:• Strengthened its Brand Name through new innovating modern marketing methods• Increased its Sales Network• Opened 6 new Retail Offices• Increased the number of insurance policies, with over 620,000 thous. in 2018.All of our Group’s actions and news are announced in the Company’s website https://www.europaikipisti.gr/en/Home, in the Section “Press Release” and the investment website of the Company, in the Section “Investor Relations” https://ir.europaikipisti.gr/en-us/home/europisti-investor-relations-home-page.

Α.2 Underwriting performance

In the reference period, the Company managed to fulfill its business goals, by increasing its market share (Figure A.10) and reaching 0.7% insurance policies increase (Figure A.11), with 620,990 insurance policies. The increase is mainly due to the new insurance agents, the opening of 6 new Retail Offices in new geographical regions, the import of new, attractive products and new Marketing actions to attract new customers.

0% 2.5% 5%

2017

2018 4.9%

4.7%

0 400,000 800,000

2017

2018 620,990

616,956

Figure Α.10: Market share (Company estimates) Figure Α.11: Number of insurance policies

In the Motor Third Party Liability Sector, a sector with the major part of the Company’s portfolio, the total of insured vehicles amounted to 503,540 vehicles in the reporting period, presenting 0.1% decrease comparing to 2017, and the loss ratio in-creased from 43.97% to 61.40% (Figure A.12), as a result of the double number of fatal road accidents in almost the same fleet as in 2017.


0 300,000 600,000

2017

2018 503,540

504,030

0% 40% 80%

2017

2018 61.40%

43.97%

Figure Α.12: Total number of vehicles and Loss Ratio of the Motor Third Party Liability

Regarding the other Non-Life Sectors, the total loss ratio presented increase from 21.59% to 32.60% (Figure A.13) mainly due to the catastrophic fires in Attica, the participation of the Company by 4% in the largest compensation in the Greek Insurance Market for a company in North Greece and the extreme weather conditions, earthquakes and floods. The Company paid a large part of the compensations immediately, within fiscal year 2018. The Loss Ratio in the Individual Life Insurance Sector (Additional Coverage, Personal Accident and Legal Protection) decreased from 63.77% to 62.19%, as a result of the underwriting policies in this sector (Figure A.14).

Written premiumsThe Company, in the reporting period increased the gross written premiums and related income to € 191,008 thous. from € 183,555 thous. (4.1% increase).

0% 17.5% 35%

2017

201832.6%

21.59%

0% 40% 80%

2017

2018 62.19%

63.77%

Figure Α.13: Loss ratios in Other Non-Life Sectors Figure Α.14: Loss Ratios of Individual, Additional Life Insur-ance Coverages

Motor ThirdParty Liability

Life Sector

Non-Life Sector

0

62,500

125,000

187,500

250,000

2018 2017

183,555191,008

84,98683,401

45,50649,786

53,06357,821

Figure Α.15: Gross Written premiums according to the IFRS (amounts in thous. €)


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The table below presents the total (gross) written premiums and related income for years 2018 and 2017 and their variance.

Non-Life Insurance 2018Balance Sheet

2017Balance Sheet

2018 Variancevs 2017

Accident 3,527 3,434 3%Health 2,570 2,017 27%Land Vehicles 17,233 15,566 11%Vessel 1,356 934 45%Cargo 1,199 1,055 14%Fire and natural perils 12,386 11,799 5%Other property damages 716 790 -9%Third Party Liability from Land Vehicles 83,401 84,986 -2%Third Party Liability for Vessels 431 348 24%Non-Life Third-Party Liability 2,866 2,583 11%Miscellaneous Financial Losses 718 623 15%Legal Protection 1,851 1,946 -5%Assistance 12,968 11,968 8%Total Non-Life Insurance Policies 141,221 138,049 2%Life InsuranceTraditional 7,053 6,008 17%Additional Coverages 20,722 20,028 3%Total Group Insurance 11,292 11,396 -1%Total Life insurance policies related to Investments 1,471 1,836 -20%Group Pension Fund Management 9,248 6,238 48%Total Life insurance Policies 49,786 45,506 9%Company’s Total 191,008 183,555 4%

Table Α.2: Allocation of Gross Written Premiums per Sector according to the IFRS (amounts in thous. €)

The 4.1% increase of the total gross written premiums comparing to 2017 derived from the increase of the insurance coverages of the Life Insurance Sector (9.4%) and most specifically the Traditional Life Insurance Coverages (17%), the Additional Life Insurance Coverages (3%) and Group Pension Fund Management (48%). The Non-Life Insurance Schemes, and most specifically the Land Vehicles (+11%), Assistance (8%), Vessels (45%) and Non-Life Third Party Liability (11%) contributed to the increase of gross written premiums.This increase of the Gross Insurance Premiums is mainly due to the enormous effort of the Sales Network to attract new customers (4,034 new policies comparing to 2017), the Company’s expansion in new geographical regions with new insurance agents and 6 new retail offices, and the design of new approachable products, oriented towards the modern needs of the insured. Moreover, the large demand of Companies active in Greece for Group Insurance Schemes (DAF Schemes) contributed to the increase of gross written premiums, with increase reaching 48%, comparing to 2017.The following figures present the course of the variance (%) of written premiums in the Life and Non-Life Insurance Sectors, comparing to the previous years for the Insurance Market (based on the annual statistical reports of the Hellenic Association of Insurance Companies) and the Company.


-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

Market

EuropeanReliance

201820172016201520142013201220112010

13.9%

-2.5%

-6.5%

-11.6%-9.5%

-1.3%

-5.8%

4.6%

0.1%1.8%

11.2%

6.7%

1.9%3.8% 3.1%

6.6%

4.1%1.1%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Market

EuropeanReliance

201820172016201520142013201220112010

33.0%

-4.2%

7.9%11.9%

4.6%

9.4%

9.6%

0.7%

-13.3%

-3.9%-2.0% -0.5%

6.1%

11.7%

1.0%

-7.6%-6.4% -10.6%

Figure: A.16: % Variance of total written premiums of the Company and the Insurance Market per year(Source: Hellenic Association of Insurance Companies & Company estimates)

Figure: Α.17: % Variance of Life written premiums of the Company and the Insurance Market per year(Source: Hellenic Association of Insurance Companies & Company estimates)

-15%

-10%

-5%

0%

5%

10%

15%

20%

Market

EuropeanReliance

201820172016201520142013201220112010

8.3%

2.6%

-6.5%

-12.3%

-5.7%

-13.0%

-7.6%

3.1%

2.1%

4.0%

16.9%

2.4%

8.7%

2.3%

9.8%

-0.6% -0.6%1.4%

Figure: A.18: % Variance of Non-Life written premiums of the Company and the Insurance Market per year(Source: Hellenic Association of Insurance Companies & Company estimates)


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Results -Profit of Underwriting PerformanceThe Underwriting profit (Technical Result) as a total amounted to € 35,263 thous, versus € 43,105 thous. in the corresponding time period, presenting 18.2% decrease.The Underwriting profit of the Life Insurance Sector amounted to € 5,963 thous. versus € -779 thous. in 2017, with positive results mainly due to the increase of net earned premiums and related income by € 4,280 thous. (+9.4%) and the increase from net revenues of Life Investments by € 3,042 thous. (+238.2%)The Underwriting Profit in the Motor Third Party Liability amounted to € 14,181 thous. versus € 30,763 thous., on the correspond-ing previous period, presenting 53.9% decrease, mainly due to the increase of insurance provisions by € 9,833 thous. (184.2% increase), increase of the paid claims by € 3,483 thous. (+8.0%) decrease of Net Earned Premiums and Related Income by € 1,688 thous. (1.9%) and decrease of the net investment revenue by € 1,528 thous.The underwriting profit in the Other Non-Life Sectors amounted to € 15,119 thous. versus € 13,121 thous. in 2017, presenting in-crease by € 1,998 thous. (+15.2%) due to the increase of the Net Earned Premiums and Related Income by € 3,424 thous. (6.4%) and the increase of the paid claims by € 3,205 thous.

-10,000 7,500 25,000 42,500 60,000

2018

2017

Life Insurance

Non-life Insurance

Total35,263

5,963

-779

29,300

43,884

43,105

Figure A.19: Underwriting Profit of the Company, according to the IFRS (amounts in thous. €).

Pre-tax ProfitThe pre-tax profit of the Company for 2018 amounted to € 14,941 thous. and to €10,497 thous. after tax, versus € 22,183 thous. pre-tax and € 15,555 thous. after tax in 2017. This profit decrease is mainly due to the increase of the insurance receivables by € 7,651 thous. (+8.9% comparing to 2017), as well as the strengthening of the insurance provisions by € 5,972 thous. (+180.1%, comparing to the previous period).

Comprehensive Income Statement 2018 2017 2018 Variance vs 2017

Gross written premiums and related income 191,008 183,555 4%Ceded premiums -15,624 -14,447 8%Variance of the reserve of unearned premiums -2,095 -178 1,076%Earned commissions -34,234 -33,909 1%Insurance Receivables -93,551 -85,900 9%Variance of Insurance Provisions -9,288 -3,316 180%Income and Investment Revenues 5,245 3,826 37%Other income 723 1,479 -51%Total expenses (provision, administrative and other expenses) -27,243 -28,927 -6%Pre-tax Profit 14,941 22,183 -33%

Table A.3: Statement of Total Comprehensive Income (amounts in thous. €).


Other Financial FiguresCeded premiums to reinsurers:Ceded premiums are analyzed per insurance sector as follows:

31/12/2018 31/12/2017Life Sector 612 598Motor Third Party Liability 653 188Other Non-Life 14,359 13,661Total 15,624 14,447

Table Α.4: Ceded premiums to reinsurers, according to the IFRS (Amounts in thous. €).

The increase of the ceded premiums in the Motor Third Party Liability is due to the return of reinsurance premiums from a Motor Third Party Liability Policy of 2009, completed in 2017 and resulted to the increase of the amount. The increase in other non-life sectors is mainly due to the increase of the written premiums of other Non-Life Sectors and mainly the Road Assistance sector (8% increase).It is noted that in 2018 there have not been any changes in the Company’s strategy regarding reinsurance. All of the Company’s reinsurers have very high credit ratings (min. Rate A-).

Rating of the 10 Reinsurers with higher participation rate S&PSWISS REINSURANCE COMPANY LTD AA-SCOR GLOBAL P & C AA-SCOR GLOBAL LIFE SE AA-XL RE EUROPE SE AA-HANNOVER RE AA-COVEA COOPERATIONS A+QBE RE EUROPE LTD A+ARCH RE EUROPE A+MAPFRE RE AMS AMLIN AG A

Table Α.5: Rating of the top 10 Reinsurers of the Company (S&P)

Variance of the Reserve of unearned premiums: The variance of the Reserve of unearned Premiums (Company and Reinsurers rate) is as follows:

31/12/2018 31/12/2017Total Variation Reinsurer’s Rate Company’s

RateTotal Variance Reinsurer’s Rate Company’s

RateTotal 2,554 459 2,095 1,114 936 178

Table A.6: Variance on the Reserve of unearned premiums according to the IFRS (Amounts in thous. €)

The difference in the variance of the reserve of unearned premiums in fiscal years 2018 and 2017 is due to the 2018 increase of written premiums by 4.1%, comparing to the variance of the previous reference period and the amendment of the policy period, mainly in the Motor Third Party Liability Sector and due to the continuance of the financial recession (increase of the three-month and six-month policy period).Earned commissionsThe earned commissions represent 17.9% of the Gross Written Premiums, versus 18.4% in the previous reference period. In 2018, there has not been any significant differentiation in the policy for acquisition of underwriting performance. Insurance ReceivablesThe Insurance Receivables of 2018 as a rate of the Gross written premiums amount to 49.0%, increased by 2.2% comparing to 2017, due to the increase of the fatal road accidents, the catastrophic fires in Attica and the intense natural disasters in 2018. The reinsurance receivables (Company’s Rate versus Reinsurers’ Rate) are as follows:


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31/12/2018 31/12/2017Total Variance Reinsurers’ Rate Company’s

RateTotal Vari-

anceReinsurers’ Rate Compa-

ny’s RateTotal Receivables 97,442 3,891 93,551 87,761 1,861 85,900

Table A.7: Insurance Receivables according to the IFRS (Amounts in thous. €).

Insurance provisionsThe variance of the Insurance Provisions (Company’s and Reinsurers’ rate) is as follows:

31/12/2018 31/12/2017Total Variance Reinsurers’ Rate Company’s

RateTotal Variance Reinsurers’ Rate Company’s

RateTotal 10,011 723 9,288 2,882 -434 3,316

Table Α.8: Charges from insurance provisions according to IFRS (Amounts in thous. €).

The increase of the overall charge of insurance provisions is due to the significant increase of the reserve of outstanding claims of Motor Third Party Liability and the corresponding significant increase of the reserve of outstanding claims, in the Property Sector, taking into consideration the increase of fatal road accidents, with the same number of vehicles, the catastrophic fires in Attica and the extreme weather conditions of 2018. Provision Costs / Operating Expenses and Other ExpensesThe Provision Costs / Operating and Other Expenses of the Company as a total amounted in 2018 to € 27,168 thous. vs. € 28,852 thous. in 2017, decreased by 5.8%, mainly due to the fact that in 2017, the Company paid in the Occupational Insurance Fund of Insurers and the Personnel of Insurance Companies the contributions for fiscal year 2016 (retroactively) and in 2017 the expenses for remuneration of employees increased by € 2,100 thous.Financial costThe financial cost of the Company, which refers to banking expenses and interest from liabilities to reinsurers amounted for fiscal year 2018 to € 75 thous. (similar to 2017).Financial and operating leasesThe Company has undersigned policies for fleet leasing, printing machinery, digitalization and storage of the physical record for the Company’s operating needs. The above expenses in 2018 amounted to € 303 thous. versus € 253 thous. in 2017, as analyzed in the table below:

2018 2017Fleet Leasing 113 79Printing Machinery Leasing 162 151Digitalization and storage of the physical record 28 23Total 303 253

Table A.9: Financial and operating leases according to IFRS (Amounts in thous. €).

A.3 Investment Performance

Market performances - Fiscal OverviewThe time period January-December 2018 had a rather negative effect on bonds and shares in the developed and emerging markets. The greatest decrease was recorded in Europe and the emerging markets, due to the uncertainty caused by the negotiations between the U.S.A. and China and the deceleration of the financial activity in the Eurozone. The environment in Europe was negatively affected by the political risk in Italy and France and by feelings of uncertainty after the Brexit negotia-tions. In the U.S.A. the markets presented decrease due to the increased possibility for constrain of the fiscal development in 2019. These uncertainties increased in the last quarter of the year, due to the fear for limitation of the monetary policy by the central Bank of U.S.A.Regarding the performances of the government bonds, the German bonds presented significant profit (mainly the long-term bonds) and the government bonds of other countries of the Eurozone achieved a positive performance (the Italian bonds ex-


The Investments for the Life insured that bear the Unit-Linked risk for the reporting year amounted to 9,729 thous.,versus 11,061 thous. on 2017. Regarding the valuation of the above Assets, the following should be noted:• The last readjustment of the value of investment real estate was performed on 31/12/2017 by an independent certified

valuator, based on the Comparative Method. For 2018, the Company evaluated based on the latest researches for real estate market in Greece, that there is no sufficient evidence that the value of the assets will variate in such a degree, to proceed to impairment. The increase of € 108 thous., comparing to the previous year, refers to additions/ improvements in the Real estate investments of the Company.

• The available for sale financial assets and the held to maturity investments are measured at fair value based on the stock prices on active markets.

• On 31/12/2018 the Company conducted a valuation study for the subsidiaries and the results are referred below in the Section “Investments in related undertakings”.

The composition of the investment portfolio, as shown in the following diagram, has changed comparing to the end of the previous year as follows:• 5.7% Increase of Investment in Government Bonds, 0.9% decrease of Investments in Greek mutual funds and 4.5%

decrease of Corporate Bonds. This exposure increase in government bonds is due to the capital controls.• Maintain the investments in Real estate, Cash Equivalents and Investments in subsidiaries in the same 2017 levels.

cluded).Regarding corporate Bonds, there was a decrease in the credit spreads of investment grade bonds and high yield bonds, due to the forthcoming termination of the Corporate Sector Purchase Program (CSPP) by the European Central Bank in 2019 and the deceleration of the economy in the Eurozone in the 2nd semester of 2018.

Investment PortfolioThe investment portfolio of the Company amounted to € 333,795 thous. in the end of 2018, versus € 325,707 thous. in the end of 2017. The current allocation of the main investment categories presents variations comparing to the allocation of 31/12/2017. The main variations appear at the following: (i) government bonds, the rate of which increased by 5.7 p.p., and (ii) corporate bonds, the rate of which decreased by 4.5 p.p.It should be noted that due to the capital controls, the inflows arising during the year could not be invested in assets abroad. The total inflows were invested in Greek Government Bonds and in Greek Treasury Bills. This limitation has a negative impact on the credit rating of the government bond portfolio and the overall bond portfolio.The Company’s investment portfolio on 31/12/2018 and 31/12/2017 is analyzed in detail below:

2018 2017 Variance (%)Real estate investments 15,858 15,750 108Corporate listed bonds 41,281 54,937 -13,656Government Bonds 225,351 201,247 24,104Greek Mutual funds 40,730 42,619 -1,889Greek Listed shares 168 614 -446Cash Equivalents 6,982 7,214 -232Investments in related undertakings 3,425 3,326 99Total 333,795 325,707 8,088

Table A.10 Analysis of total investments according to IFRS (amounts in thous. €).


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0%

25%

50%

75%

100%

Investments in Real estate

Investments in relatedundertakings

Listed Corporate Bonds

Government Bonds

Greek Mutual Funds

Greek Listed Shares

Cash and Cash Equivalents

2018 2017

61.8%

16.9%12.4%

67.5%

12.2%2.1%

13.1%2.2%0.2%0.1%

1.0%4.8%

1.0%4.8%

Figure Α.20: (%) Company’s Investment portfolio allocation

Investments in related undertakingsThe investments in related undertaking for years 2018 and 2017 are presented in the following table A.11

(Amounts in thous. €) 31/12/2018 31/12/2017Participation Country of Registered Offices % Rate Book Value % Ratio Book ValueEuropean Reliance Asset Man-agement M.F.M.S.A.

Greece 99.01% 1,943 99.01% 1,857

Alter Ego S.A. Greece 97.30% 1,422 97.15% 1,409Reliance Insurance Company Single-Member S.A.

Greece 100.00% 60 100.00% 60

Table A.11 Analysis of the Related Undertakings according to IFRS (amounts in thous. €).

In fiscal year 2018, the Company proceeded to acquisition of 733 shares of the subsidiary company “Alter Ego S.A”. and therefore, the participation rate amounts to 97.30%.The Company proceeded to valuation study for the subsidiary companies “European Reliance Asset Management M.F.M.S.A.” and “Alter Ego S.A.” and the outcome was goodwill of € 86 thous. and € 10 thous. respectively.The allocation of financial instruments per credit rating for the categories “Corporate Listed Bonds” and “Government Bonds” is presented in the following graphs:

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31%12%

2%1%AAA

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67%

20%9%1%

Figure Α.21: (%) Allocation of Corporate Bonds per Credit Rating

Figure A.22 (%) Allocation of Government Bonds per Credit Rating


Investment RevenuesThe total Investment Revenues and the Profit from Sale/ Valuation of Financial Assets for fiscal years 2018 and 2017 are ana-lyzed in the table below (amounts in thous. €):

31/12/2018 31/12/2017Investment RevenuesFinancial Instruments available for saleInterests of Financial Instruments 2,613 2,219Total 2,613 2,219Other InvestmentsIncome from investments in real estate (rents) 626 605Credit Interests from Deposits 30 42Other 167 178Total 823 825Total Investment Revenues 3,436 3,044Profit from the sale of financial instrumentsFinancial Instruments available for saleMutual Funds 103 256Bonds 2,311 229Total Profit from the Sale of Financial Instruments 2,414 485Profit/ Loss from Valuation of Financial InstrumentsUnit Linked Investments -605 0Mutual Funds 0 0Bonds 0 0Revaluation of real estate investments 0 297Total Profit/ (Loss) from Valuation of Financial Instruments -605 297Total 5,245 3,826

Table A.12 Investment revenues per category according to IFRS (Amounts in thous. €).

Investment ExpensesThe costs arising from the investment activities of the Company for fiscal year 2018 amount to € 688 thous. versus € 697 thous. In 2017 and are analyzed as follows: - € 433 thous. income tax (€ 544 thous. for year 2017) - € 38 thous. for custodial fees (€ 38 thous. in 2017) - € 109 thous. management fees (€ 109 thous. for year 2017) - € 108 thous. overall expenses for additions/ improvements in investments in real estate (€ 6 thous. in 2017)

SecuritizationRegarding the assets of the Solvency II Balance Sheet, we define as securitization the sum of investments in structured notes and collateralized securities.On 31/12/2018, and in 31/12/2017, the Company did not possess in its investment portfolio (except for assets referring to insurance policies related to investments “unit linked”, “structured notes” or “collateralized securities”.

Information on profit n loss of investments recognized directly in the Own FundsIn 2018, the Company recorded loss of investments of € 6,466 thous. from the valuation of available for sale financial instruments according to the IFRS (profit € 6,811 thous. in 2017) recognized directly in the Own Funds.Moreover, the Company for fiscal year 2018 recorded losses of € 90 thous., referring to the valuation of own-used real estate, losses registered as a reserve for revaluation of real estate, directly in the Own Funds.


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Α.4 Performance from other Activities

The Company, in the reference fiscal year, has recorded income from other activities, relevant to the insurance sector of total amount of € 479 thous., versus € 455 thous. In 2017. This income from commissions refers mainly to insurance commissions from the product “Asfalistikos Goneas”, from cooperating businesses and to commissions from a cooperating bank for the use of the credit/ debit cards “Lifecard visa” and “Lifecard debit”.The total other income of the Company is analyzed in the following table.

Parent Company(Amounts in thous. €)

31/12/2018 31/12/2017

Income from commissions 479 455Liabilities Write-off 36 126Release of provisions 193 887Other 15 11Total 723 1,479

Table A.13 Other Income according to IFRS (amounts in thous. €).

The Company does not have income from non-insurance activities. In a Group level, the income from non-insurance activities refers to income from the subsidiary companies Alter Ego Facilities Managements S.A. and European Reliance Asset Manage-ment M.F.M.C. S.A. as follows:

2018 2017 Variance (%)Income from non-insurance activities 11,356 11,386 -30Cost of non-insurance activities -10,335 -10,405 -70Gross Result 1,021 981 40

Table A.14 Income from non-insurance activities of the Group according to IFRS (Amounts in thous. €).

Α.5 Other information

Decisions sub judice or under arbitrationThere are no disputes of the Company, either sub judice or under arbitration, nor any decisions of courts or arbitration bodies, which may considerably affect the Company’s financial condition and operation.

GuaranteesThe Parent Company on 31/12/2018 accepted letters of guarantee for participation in tenders and excellent performance of insurance policies, amounting to € 1,042 thous. in total.

LiensNone of the Company’s fixed assets has any liens.

Remuneration of Executive Directors and members of the ManagementThe “short-term” provisions to the Executive Directors and members of the Management are the salaries, remuneration, em-ployers’ social contribution and other charges. The fund “Provisions after termination of service” includes the cost for programs for provisions after termination of services.The “Receivables” of the Executive directors and members of the Management are the granted loans from the group insurance pension scheme. All loans have been paid in 2018.On 31/12/2018, the Company had not formed provisions for bad debts related to due amounts from related parties due to non-existence of such risk.The “Liabilities” to Executive directors and members of the Management refer to the group insurance pension schemes. The liabilities deriving from this scheme amount to € 2,687 thous., on 31/12/2018 and € 2,783 thous., on 31/12/2017, including the actuarial reserves of Life Insurance.


The Company has neither provided, nor received guarantees or commitments of any kind referring to the related parties.The following table presents in detail the benefits and the liabilities of the Executive Directors and members of the Company’s Board of Directors in detail.

(Amounts in thous. €) 31/12/2018 31/12/2017Short-term provisions 2,005 1,645Provisions after termination of service 732 1,061Receivables 0 596Liabilities 2,687 2,783

Table A.15 Provisions and Liabilities of Executive Directors and Board members (amounts in thous. €).


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System of Governance

Β.This section presents the information on the Company’s System of Governance. More specifically, it includes information on the Risk Management System, the Internal Control System, the Actuarial Function, Outsourcing, and Fit and Proper Requirements.Key elements of the section:• General Information on the System of Gover-

nance• Fit and Proper Requirements• Risk Management System, including the Own

Risk and Solvency assessment (ORSA)• Internal Control System• Internal Audit Function• Actuarial Function• Outsourcing


B.1 General Information on the System of Governance

Corporate Governance refers to the total of principles and practices adopted by an Organization, in order to ensure its performance, and the interest of the insured, shareholders and stakeholders.

The Company’s System of Governance is based on the principles of Corporate Governance of European Reliance General Insurance Company S.A., to achieve the Company’s prudent and effective management, through the efficient utilization of all available productive resources and transparency in all business functions, to preserve the long-term interest of all shareholders. Corporate Governance has a positive contribution to the Company’s performance and focuses on the following sections:

• The Board of Directors and the executive Management in terms of the rate of the independent members, the composition of the BoD Committees, the Board assessment Procedure, the responsibilities of the Chairman and the CEO.

• The shareholders’ rights (one share-one vote principle).

• The assurance of the sufficient transparency levels and proper audit procedures with the contribution of the four independent Key Functions (Risk Management, Internal Audit, Compliance, Actuarial Function).

Within the framework of Corporate Governance, European Reliance General Insurance Co. S.A. aims to implement best practices in the functions of the Organization, including also voluntary commitments of the Company, as a result of its business ethics. European Reliance, as a Société Anonyme (S.A.) listed on the Athens Stock Exchanges implements the Greek legislation regarding the principles and practices of corporate governance and partially implements the Hellenic Corporate Governance Code on the listed companies, as published in the official website of the Athens Stock Exchange.

Moreover, the four independent key Functions of Internal Audit, Risk Management, Actuarial Function and Compliance contribute to the best possible function of the Company in the new legislative environment of Solvency II Directive.

The philosophy and culture governing the Statement of Corporate Governance are imprinted in a series of regulations and policies, such as the Internal Regulation of Corporate Governance and Operations, the Corporate Code of Conduct, the Compliance Policy, the Internal Audit Policy, the Policy of Conflict of Interests, the Remuneration Policy, etc.

In 2018, in addition to the update of all approved policies on Risk Management, Internal Control System, Internal Audit Function and Outsourcing, the Board of Directors updated and approved the Company’s Internal Regulation of Corporate Governance and Operations, to incorporate any changes that

occurred in the Company’s organizational structure. Moreover, within the framework of improving corporate governance and limiting the operational risk, the Board of Directors updated its delegated responsibilities, applying the 4-eyes-principle in the decision-making and the implementation of the procedures.

The Organizational Structure of the System of Governance is depicted in detail in the Company’s organization chart, that, in combination with the Internal Regulation of Corporate Governance and Operations describes in detail and with clarity the responsibilities and the liability limits of every organizational unit, ensuring that all responsibilities and liabilities are distributed and effectively coordinated.

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Board of Directors

Investment andAsset & Liabilities

Committee(ALCO)

InternalAudit Unit

AuditComittee

CEO

Legal ServicesDepartment

CEO’sOffice

RiskManagement

ComitteeIT & Digital

TransformationComittee

ITDepartment

Project ManagementOffice (DPO)

ActuarialFunctionRiskManagement Function

Customer Service &Complaints Department

Call Center

Bancassurance

BackofficeAnalytical CRM

Sales Network FinancialSupport Department

IT Planning andDevelpment

CurrentApplicationsMaintenance

Hardware / system /network support

Marketing & PublicRelations Department

Sales Network Training Dpt.

Contracts Department

Supplies Department

Claims Department

Property DamageDepartment

Bodily InjuryDepartment

Legal Department

Anti-Fraud Department

Receivables Department

Property Sector

Accounting

CashManagement

Vessel Sector

Motor third LiabilitySector

Cargo Sector

Other Non-Life Sectors

Life Sector Claims

Group Life and P.A.Claims

Group Life

Personal AccidentSector

Life Insurance

Complaint Comittee

Compliance &Anti-MoneyLaundering

DataProtectionOfficer(DPO)

ManagementSecretariat

General Commercial Division

CommercialDepartment

Sales ForceNetwork

CRMDepartment

Marketing &Sales Support

NetworkDepartment

Department ofRetail Offices

AdministrationLegal Protection

Department

Individual LifeInsurance

Department

ReinsuranceDepartment

Group LifeInsurance

Department

Non-LifeDepartment

MotorClaims

Department

MotorInsurance

Department

General Divisionof Finance andAdministration

InformationSecurity

Officer (ISO)

InvestorsRelations

Department

AccountingDepartment

CreditDepartment

Bad DebtsDepartment

HRDepartment

ManagementAccountingDepartment

Quality Managementand

CRS Department

General PortfolioDivision

Corporate Gov-ernance- Remu-

neration and Nomination Committee

Organizational Chart of European Reliance General Insurance Co S.A. as of 31/12/2018


More specifically, according to the Organizational Chart, the Company has been organized:A. In three (3) General Divisions with their own Divisions, as follows:• The General Commercial Division, which supervises the Sales Force Network, the Marketing and the Sales Support Net-

work, the Department of Retail Offices Administration, the CRM Department and the Procurement Department.• The General Portfolio Management, which consists of the Individual Life Insurance Division, the Group Life Insurance

Division, the Non-Life Division, the Motor Insurance Division, the Motor Claims Division, the Reinsurance Department and the Legal Services.

• the General Management of Finance and Administration, which consists of the Accounting Department, the Human Resources Division, Premium Collection Division and the Departments of Management Accounting, Investor Relations, Quality Management, C.S.R. and Bad Debts.

Each of the aforementioned Divisions has its own Subdivisions and Departments.B. In Divisions that support the Board of Directors:• Management’s Secretariat• CEO’s Office• Legal Services DepartmentC. In Committees that support the Management:• Investment, Asset & Liability Management Committee• Audit Committee• Corporate Governance, Remuneration and Nomination Committee• Risk Management Committee• Complaints Committee• IT Steering and Digital Transformation CommitteeD. In four (4) Independent Key Functions:• Internal Audit• Compliance• Risk Management• Actuarial FunctionThe Reporting Lines are as follows: - The General Directors refer to the CEO - The Directors of the various Departments refer to the General Directors - The Officers to the Directors and - The Employees to the Officers

Board of DirectorsThe Board of Directors is the highest administrative body of the Company, forms the strategy and development policy, monitors and supervises the Company’s asset management. The Board makes decisions, monitors all of the Company’s activities and constantly supervises the Company’s executives delegated with relevant executive responsibilities by the Board of Directors or according to the organization chart. The powers and responsibilities of the Board of Directors are described in its Articles of Association. Any matter relevant to the remuneration of the Company’s Executive Directors, Internal Auditors and the overall remuneration policy of the Company, are decided by the Corporate Governance, Remuneration and Nomination Committee.The Board of Directors consists of nine (9) members, executive or non-executive. The executive members are responsible for the Company’s daily management issues. The non-executive directors are responsible for promoting corporate matters. The number of the non-executive Board members may not be less than 1/3 of the total number of BoD members and if there is a fraction, it should be rounded to the next integer.There must be at least 2 independent members among the non-executive members. The identity of the executive or non-executive BoD members is defined by the Board of Directors. The independent members are appointed by the General Meeting of Shareholders. If the Board of Directors elects a temporary member up to the first General Meeting of Shareholders, as a deputy for another independent member that resigned, was absent, or for any other reason was deprived of his rights, the elected member must also be independent. During their term of office, the independent, non-executive Board members should not own shares representing over 0.5% of the Company’s share capital and must not be engaged in a dependency relationship with the Company, or with related persons, within the meaning of Art. 4, par. 1 of Law 3016/2002.In 2018, the Board of Directors had fourteen (14) ordinary meetings.

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The Board of Directors consists of the following nine (9) Members: (according to the latest General Meeting of Shareholders of May 22, 2018):

Stavros LekkakosChairman of the Board of Directors - Non-Executive Board MemberMr. Stavros Lekakos is the Chairman of the Board of Directors of European Reliance General Insurance Co. S.A. and a Board and Audit Committee Member in B&F Commercial & Garment Industries S.A. He began his career in American Express Bank and left 25 years later as the Vice-Chairman. He worked in Piraeus Bank as a BoD member, CEO, Vice Chairman of the Board and Chairman of the Executive Committee of Piraeus Bank Group. He has also been the President and CEO of Piraeus Bank Romania and other subsidiaries of Piraeus Bank in Greece and abroad. After Piraeus Bank, he became a President of the Board of Directors in Marfin Investment Group. He has a Degree in Finance from the University of Athens and an honorary degree of Doctor of Business Administration (Hon DBA) from the University of Bolton. He is a member of the American-Hellenic Chamber of Commerce and a founding member of the Business Councils: Greece – Kuwait, Greece - Qatar, Greece - United Arab Emirates and Greece -Saudi Arabia.

Nikolaos ChalkiopoulosVice-Chairman- Executive Board MemberMr. Chalkiopoulos has an extensive experience in the insurance Market as Executive Director in Insurance undertakings. He joined European Reliance General Insurance Co. S.A. in October 2002 and since 2005 holds the position of the Chief

Full Name Independent Member Participation in Ordinary BoD meetingsStavros Lekkakos, Chairman No 11/14Nikolaos Chalkiopoulos, Vice Chairman No 14/14Christos Georgakopoulos, CEO No 14/14Stefanos Verzovitis No 14/14Christopher Poulios Yes 13/14George Konstantinidis No 13/14Eric Sharp No 14/14George Diamantopoulos Yes 13/14Keith Morris Yes 12/14

Table B1: BoD members and participations in meetings

The Management of European Reliance General insurance Co. S.A. takes actions for the enhancement and strengthening of the diversity of its administrative and supervisory bodies.

Left to right, front row: Stefanos Verzovitis, Stavros Lekkakos, Christos Georgakopoulos, Nikolaos ChalkiopoulosLeft to right, back row: George Diamantopoulos, George Konstantinidis, Keith Morris, Christopher Poulios, Eric Sharp


Insurance Operation Officer. He has a Degree in Mathematics from the National and Kapodistrian University of Athens and is a member of the Hellenic Actuarial Society.

Christos Georgakopoulos Executive Board memberMr. Georgakopoulos is the founder and Chief Executive Officer of European Reliance General Insurance Co. S.A., since its first establishment. He has Degrees in Law and Economics from the Panteion and Aristotle University and has extensive experience in sales and marketing. He is the Chairman of the Board of Directors of the subsidiaries of European Reliance, European Reliance Asset Management Mutual Funds Management S.A.& Alter Ego Facilities Management S.A.

Stefanos VerzovitisExecutive Board MemberMr. Verzovitis has an extensive experience in companies, such as Ziridis School, Onassis Cardiac Surgery Center, Johnson & Son and Michelin Automotive Tires. He joined European Reliance General Insurance Co. S.A. in October 2000 and today holds the position of the Chief Financial Officer. He holds the Degree in Economics from the Athens University of Economics.

Eric SharpNon-Executive Board MemberMr. Sharp has extensive experience in the fields of General Commerce, Finance and Shipping in Greece and abroad. He joined European Reliance in September 2002 and today holds the position of Director of Retail Offices Administration.

George KonstantinidisNon-Executive Board MemberMr. Konstantinidis has been active in the establishment, administration and shareholding of businesses such as Centropell GMBH Frankfurt, Novus Finance S.A., Astropell S.A., Kiapell G.M.B.H. and CPL S.A. He joined the Board of Directors of European Reliance in 2000 and since 2007 is the Chief Executive Officer of the subsidiary company Alter Ego Facilities Management S.A.

George Diamantopoulos Non-Executive, Independent Board MemberMr. Diamantopoulos is the Chairman of the Board of Directors of the Hellenic Corporation of Assets and Participations and Deputy Chief Executive Officer of Resoul Hellas S.A. He is the Chief Executive Officer of Sponsor Value Hellas S.A. He has over 30 years of experience in consumer goods companies. In 1988 he worked in Kraft Foods (prior Jacobs Suchard Pavlides) and since 1997 he was the Area Director responsible for the area of the Balkans. In European Reliance he holds the positions of President of the Audit Committee, President of the Corporate Governance, Remuneration and Nomination

Committee and is a Member of the Risk Management Committee.

Keith Morris Non-Executive, Independent Board MemberMr. Morris has a Degree from the University of Manchester in Management Sciences with specialisation in Finance and Marketing. He has extensive experience in companies including HSBC, Citibank and IBM. He has held a number of Managing Director level appointments in Eagle Star Insurance, AIG Europe, Euler Trade Indemnity and RBS Insurance. He has been a Non-Executive Board member in several companies including Standard Life Assurance Company. He is currently Deputy Chairman of the Supervisory Board of Sava Re, a Slovenian insurance Group.

Christopher PouliosNon-Executive, Independent Board MemberMr. Poulios has a Degree from the Athens University of Economics (formerly Athens University of Economics and Business) and has been Accounting Manager in various insurance companies from 1968 to 2000.

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Board of Directors CommitteesThe Board of Directors has the final responsibility for the Com-pany’s performance, has established and delegated special subjects to the following committees:• Investment and Asset & Liability Management Commit-

tee• Audit Committee• IT Steering and Digital Transformation Committee• Risk Management Committee• Corporate Governance, Remuneration and Nomination

Committee• Complaints CommitteeThe duties, responsibilities and the function of each Commit-tee are based on the Operation of Regulation that is approved by the Board of Directors, as follows:

1. Investment and Asset & Liability Manage-ment Committee (ALCO)The Investment and Asset & Liability Management Commit-tee consists of five members and includes two (2) executive Board members of the Company, two (2) members that repre-sent European Reliance Asset Management. M.F.M. S.A., and one (1) independent member from the financial sector.The main responsibilities of the Investment and Asset & Lia-bility Committee is the update of the Investment Policy State-ment (IPS), the proposal to the Board of Directors for amend-ments for the Strategic Assets Allocation and the acceptable deviation limits, the decision making for the Ordinary Assets Allocation, the monitoring and assessment of the portfolio performance with reference to its benchmark, the balanced asset allocation, according to the future liabilities of the Com-pany, etc.The Investment and Asset & Liability Management Committee consists of the following members:• Mr. Nikolaos Chalkiopoulos, Vice Chairman of the Board

of Directors and Chief Insurance Operation Officer of the Company,

• Mr. Stefanos Verzovitis, Executive Board member and Chief Financial Officer,

• Mr. Ilias Lekkos, Chief Economist of Piraeus Bank Group,• Mr. Thomas Konstantinidis, Chief Executive Officer of

European Reliance Asset Management M.F.M.S.A.• Mr. Dimitris Antonopoulos, Portfolio Manager of Europe-

an Reliance Asset Management M.F.M.S.A.The Investment and Asset & Liability Management Committee (ALCO) convened 13 times in 2018.

2. Audit CommitteeThe Audit Committee consists of at least three (3) non-execu-tive Board members, most of them independent. All members are appointed by the General Meeting of Shareholders, have adequate knowledge on the Group’s corporate objective and at least one of the members must have sufficient prov-en knowledge in accounting and auditing. The President of

the Audit Committee must be an independent, non-executive member, appointed by the Committee’s members. The proj-ect of the Committee is the supervision of the Internal Audi-tors of the Company, the overview of the published financial information, the audit and assessment of the internal control systems, the assessment and coordination of the audit func-tion and procedures, based on the applicable Legislation that governs the Company and the proposal to the General Meet-ing of Shareholders for the selection of the Certified Public Accountants for every fiscal year.The Audit Committee operates according to a special regula-tion, which is part of the Company’s Internal Regulation of Op-erations. The Audit Committee’s regulation is approved and revised by the Board of Directors. The Audit Committee meets at least four times a year.The Audit Committee consists of the following members:• Mr. George Diamantopoulos, Independent, Non-Execu-

tive Board Member (President of the Committee)• Mr. George Konstantinidis, Non-Executive Board Member• Mr. Christopher Poulios, Independent, Non-Executive

Board MemberThe Audit Committee convened 12 times in 2018.

3. IT Steering and Digital Transformation CommitteeThe IT Steering & Digital Transformation Committee is a Spe-cial Coordinating Committee for Information Technology, comprised of representatives from the Board of Directors and the IT Department of the Company.The Committee aims at ensuring the achievement of corpo-rate objectives by assessing the needs of internal operations, the sales network, suppliers, etc., considering the relevant cir-cumstances (environment, resources, restrictions, laws) and the available options.The main responsibilities of the IT Steering & Digital Transfor-mation Committee is the overview, identification, and assess-ment of the short-term and medium-to-long-term IT projects, the approval of big IT projects, the follow up with the budget of the IT Department, the approval and supervision of cooper-ation with third parties (e.g. outsourcing), the overview of the adequacy of the available resources of the IT Department and the contribution to their allocation, the support in the develop-ment and materialization of the corporate program “Informa-tion Security Management Program”, etc.The IT Steering & Digital Transformation Committee consists of the following members:• Mr. Nikolaos Chalkiopoulos, Vice President of the Board

of Directors and Chief Insurance Operation Officer, • Mr. Stefanos Verzovitis, Executive Board member and

Chief Financial Officer,• Ms. Chrysoula Anagnostopoulou, Director of the IT De-

partment,• Mr. Fotis Kanellopoulos, Deputy Director of the IT De-

partment,• Mr. Panagiotis Georgiou, CEO’s Office Director


The It Steering Committee & Digital Transformation Commit-tee convened 10 times in 2018.

4. Risk Management CommitteeThe Risk Management Committee (RMC) is composed of members with sufficient knowledge and experience in the field of risk management. The President of the Committee has the necessary knowledge and expertise to complete the tasks. The Committee consists of at least one executive and one non-Executive Board Member.The Board of Directors assigns to the Risk Management Com-mittee (RMC) responsibilities relevant to the management of risks, so that all forms of risks are effectively monitored, in-cluding the operational and insurance risks, and so that their integrated control, their specialized handling and the required coordination for the insurance company are ensured.The Risk Management Committee consists of the following members:• Mr. Nikolaos Chalkiopoulos, Vice Chairman of the Board

of Directors and Chief Insurance Operation Officer, Actu-ary (President of the Committee),

• Mr. Stefanos Verzovitis, Executive Board member and Chief Financial Officer,

• Mr. George Diamantopoulos, Independent, Non-Execu-tive Board Member

• Ms. Eleni Tarapatsopoulou, Director of the Actuarial Function & Actuary FHAS

• Mr. Apostolos Papachristos (FIA - CERA)The Risk Management Committee convened 5 times in 2018.

5. Corporate Governance, Remuneration and Nomination CommitteeThe Corporate Governance, Remuneration and Nomination Committee is active in the four following pillars of corporate governance:• Introduction and monitoring of the implementation of the

Remuneration Policy,• Nomination of the Board members, • Board of Directors self-assessment procedures,• Compliance with the principles of corporate governance

and the applicable legislation.The Committee consists of at least three (3) Members, in their majority non-executive and independent Board Members, that have the required expertise and experience. The Presi-dent of the Committee has adequate knowledge and profes-sional experience in matters of Corporate Governance and Risk Management.The Corporate Governance, Remuneration and Nomination Committee meets on a semi-annual basis and has extraordi-nary meetings, when it is considered necessary.The Corporate Governance, Remuneration and- Nomination Committee consists of the following members:• Mr. George Diamantopoulos, Independent, Non-Execu-

tive Board Member

• Mr. Christopher Poulios, Independent, Non-Executive Board Member

• Mr. Chris Georgakopoulos, Chief Executive Officer, Exec-utive Board Member

The Corporate Governance, Remuneration and Nomination Committee convened 3 times in 2018.

6. Complaints CommitteeThe Company’s Board of Directors places special emphasis on the received complaints and for their proper management has established a Complaints Policy, special procedures and the Complaints Committee. The Complaints Committee consists of the Head Officer of the Complaints Management Function, the Head Officer Deputy, the Chief Financial Officer, the Complaints Management Officer, the Internal Audit Officer and the AML Officer.The Complaints Committee arranges semi-annual meetings to collect information on the common causes of Complaints, to draw conclusions, create and observe a plan of corrective actions for the limitation of complaints and their impact in the quality of the company’s provided services to the customers.The Complaints Committee consists of the following mem-bers:• Mr. Nikolaos Chalkiopoulos, Vice Chairman of the Board

of Directors and Chief Insurance Operation Officer (Head Officer of the Complaints Management Function),

• Mr. Panagiotis Georgiou, CEO’s Office Director• Mr. Stefanos Verzovitis, Executive Board member and

Chief Financial Officer• Mr. Kyriakos Dikoglou, Service Officer- Complaints Man-

agement Officer• Mr. Stylianos Malamos, Internal Audit Officer• Ms. Katerina Papadopoulou, Compliance Officer.The Complaints Committee convened 2 times in 2018.

Key FunctionsWithin the framework of compliance with the Solvency II legis-lative framework, the Company has established and recruited the following four Key Functions:• Risk Management• Internal Audit• Compliance• Actuarial FunctionThe four Key Functions are independent from the business functions and the management of the Company and refer di-rectly to the Board of Directors thought the BoD Committees.For the assurance of their independence, the Board has en-trusted them with all necessary powers to access all infor-mation, to help them perform their tasks in an objective and unbiased manner, and in this way avoid any risk for potential conflict of interests.All Key Functions may report extraordinarily to the Board of Directors at any time on findings that could be considered un-

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acceptable within their framework of operation.Moreover, regarding all written Policies, approved by the Board of Directors within the framework of the System of Gov-ernance, the organizational units are obliged to inform the Risk Management, Internal Audit, Compliance and Actuarial Functions for any kind of information related to the perfor-mance of their duties.The Risk Management Function prepares on a quarterly ba-sis detailed Risk Management Reports to provide sufficient information to the members of the Management, and an an-nual report, which is submitted through the Risk Management Committee to the Company’s Board of Directors and includes the assessment of the Risk Management System.The Actuarial Function prepares a written annual report to inform the Company’s Board of Directors in writing, through the Risk Management Committee. The report presents all un-dertaken projects and their results. It also identifies potential deficiencies and proposes ways for their correction. The inde-pendence of the Actuarial Function is verified by the Internal Audit Function through annual audits.The Internal Audit Function is administratively independent from units with executive responsibilities and from the depart-ments responsible to carry out or finalize transactions. The In-ternal Audit Function reports to the Board through the Audit Committee.The Compliance Function reports to the Corporate Gover-nance, Remuneration and Nomination Committee on any sig-nificant breach of the regulatory framework identified with the performance of its activities.The Compliance Function submits reports to the Board of Di-rectors on compliance matters, at least once a year.

Remuneration PolicyThe remunerations provided to the Company’s employees consist of fixed and/or proportional, and/or variable payments. The goals of the Remuneration Policy are the following:• Fair remuneration of the Company’s personnel• The consistency of the remuneration policy with the

values, goals and the Company’s strategy• The provision of motive for the achievement of higher

performances• The attraction, smooth collaboration and further growth

of experienced and qualified personnel that will result to further establishment and development of the Company.

• The Assurance that the total remuneration will not undermine or risk the Company’s Capital Adequacy and will not encourage the excessive risk underwriting by the employees, regarding the degree of the risk, as defined by the Company’s Risk Management Strategy.

The basic principles of the Remuneration Policy are the fol-lowing:• The remuneration of the personnel consists mainly of

fixed payments that are in compliance with the tenden-cies of the market, the wider financial status of the coun-try, the financial situation and strategy of the Company.

• The determination of the variable payments takes into consideration external factors, such as the market trends in similar industries/activities, the socioeconomic condi-tions of the country, and internal factors, including the achievement of business goals, the significance of the roles, the assessment of the performance of executives, the reward for implementing goals and the business ethics.

• The total amount of remuneration is formed based on avoidance of excessive risk-taking and avoidance of cases of conflict of interests related to the Company’s executives.

Any possible non-compliance of the employee with the poli-cies of the Company cannot offset the achievement of goals.

B.2 Fit and Proper Require-ments

In order to ensure the Company’s sound and prudent man-agement by the appropriate persons and to strengthen the insured’s and stakeholders’ protection, the Company has es-tablished and applies the present Policy and Procedures for the assessment of persons responsible for the key functions. The Policy was established in order to define the principles and criteria based on which the Responsible Persons will be assessed regarding their ability to adequately perform their tasks.The term “responsible persons” refers to the members of the Board of Directors, the Appointed Actuary, the Risk Manager, the Internal Audit Officer, the Compliance Officer, any person with special duties based on the applicable legislation, as well as any person with major auditing or administrative role, or with duties that may essentially affect the Company’s man-agement.The table below presents the persons responsible for every Key Function:

Last Name First name Key FunctionMonogyiou Tania Appointed ActuaryMalamos Stylianos Internal Audit OfficerVrachoritis Dimitris Risk Management OfficerPapadopoulou Katerina Compliance Officer

Table B.2: Responsible Persons for the Key Functions

The responsible persons are evaluated among others on the following characteristics:• Honesty, integrity and good reputation.• Professional training and market experience.• Knowledge of the insurance and fiscal markets and un-

derstanding of the customers’ needs.• Updating and understanding of the relevant business

and overall financial environment of the Company’s activities.

• Adequacy of their knowledge in relation to their future


undertaking tasks and possible certifications that will allow them to execute their tasks in their sectors.

• Knowledge of the relevant legal and regulatory frame-work.

• Non-existence of incompatibility or conflict of interest with the tasks to be undertaken.

The appropriateness and reliability of the Board members is annually reviewed by the Self-Assessment Process. The ap-propriateness and reliability of the rest of the “Responsible Persons” is annually reviewed within the context of the Annual Performance Evaluation and Target Setting.

Β.3 Risk Management System, including Own Risk and Solven-cy assessment (ORSA)

Risk Management SystemEuropean Reliance General Insurance Co. S.A. has an effec-tive Risk Management System, integrated in the organization-al structure and decision making, that has been approved by the Board of Directors and consists of the following:• Risk Management Strategy.• Risk Management Process for significant reports, includ-

ing the preparation of reports for the ongoing monitoring and analysis of figures.

• Organizational structure that determines the deci-sion-making process within the system.

• Registered Risk Management Policies to enable the im-plementation of the business strategy and audit mecha-nisms.

• Own Risk and Solvency Assessment.• Identification, Evaluation, Management and Monitoring

of risks through the creation and constant update of the Risk Registry, with participation of all parties involved in risk management.

• Organizational structure that determines the deci-sion-making process within the system.

Risk Management is a constant developing procedure, inte-grated in the organizational structure and the decision-mak-ing processes of the Company. It approaches all risks that may affect the past, present and future activities of the Company. It is integrated in the business culture and transforms the strat-egy in ordinary and business goals, determining responsibili-ties at all Company levels. The administrative executives and employees are responsible for the risk management of their work position.The Risk Management System protects and adds value to the Company and stakeholders supporting the Organization’s goals, with the following actions:• Provision of a framework that ensures that any future

activity will be conducted within a stable and controlled manner

• Improvement of the decision-making process, planning and priority determination through the wide and struc-tured understanding of the business activity, instability and opportunities/ threats for every project

• contribution in a more efficient use/ distribution of the capital and resources within the Company.

The effective risk management is enhanced by a strong struc-ture of reports and reviews, to ensure that the risks are ac-knowledged and effectively measured and that the appropri-ate audit measures and responses are in force.

Β.3.1 Risk Management StrategyThe Company acknowledges the risks that its business oper-ation faces and the need for effective risk management and therefore has developed a Risk Management Strategy. This Strategy is developed in a way that ensures the sufficiency of the Company’s eligible Own Funds to meet the solvency capital requirements. Furthermore, the Strategy reflects the Company’s position and defines general guidelines on risk management.More specifically, the Risk Management Strategy:• Determines the intended goals.• Defines the governance framework for the Company’s

Risk Management.• Defines the basic guidelines for the Risk Management

Strategy.• Defines the Company’s risk appetite/tolerance and sets

the indicators and the limits on the basis of which the aforementioned risks get specified and measured.

• Determines the Risk profile.• Determines Escalation procedures.

Β.3.2 Risk Management ProcessThe management of the underwritten risks have the following four stages:

Β.3.2.1 Risk identificationThe identification of risks is performed systematically for the existing and emerging risks at all Company levels to ensure that all of the Company’s significant activities and all subse-quent risks have been identified.All risks that have been identified and recorded in the Risk Register, which is regularly updated, have been grouped ac-cording to their characteristics and nature.Moreover, the Risk Management Dept. monitors the Compa-ny’s operating framework and identifies any future risks that may result from the Company’s Strategy or by external fac-tors. External factors may be:• Changes in the market conditions• Natural disasters• Demographic changes

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• Changes in the Regulatory frameworkInternal factors may be:• Changes in the infrastructure• Changes in the procedures• Changes in Outsourcing Companies, etc.The monitoring of all these risks is performed through the monitoring of the market developments regarding the under-writing performance and the current Strategy of the Company.

Β.3.2.2. Risk MeasurementAfter the identification and recording of the risks, the Risk Management Dept. undertakes the assessment of the signif-icance of risks and quantifies their impact. Risk assessment and measurement takes place by using both qualitative and quantitative methods.a) Qualitative assessmentThe Qualitative assessment includes a risk assessment based on previous experience and market comparison without the use of models or complex quantitative techniques.• Estimation of the impact and frequency of the occur-

rence of important events• In qualitative assessment, Risk Management uses esti-

mates from market experts.They assess whether there are facts that confirm that the risk appeared in the past, what was the impact on the Company, and which measures were taken for their mitigation.b) Quantitative assessmentThe Quantitative assessment is mainly conducted for the risks identified as significant for the Company. The assessment of risks is completed through models and quantification tech-niques, such as statistical analyses, stochastic and determin-istic reserving methods.Stress testingThe Stress testing is performed at least on an annual basis by the Risk Management Function. The Company prepares appropriate programs for treating emergency situations and develops programs for recapitalization schemes (Company’s sensitivity to future changes in financial circumstances that may have adverse effects on the company’s portfolio and re-serves).

Β.3.2.3 Risk Acceptance / Mitigation/ TransferThe Company, taking into consideration the assessment of the underwritten risks, chooses to accept, mitigate or transfer risks in accordance with its business Strategy and the estab-lished risk tolerance limits.The techniques for mitigation and transfer of risks that are tak-en into consideration by the Company include the following:• Use of reinsurance.• Product approval procedure.• Reexamination of premiums.• Establishment of loss and underwriting management

limits.• Establishment of concentration limits.Moreover, the Company has established policies and proce-dures to ensure the effective handling of every risk.Based on the risk assessment, the significant reports that do not comply with the risk appetite limits, should be limited, as soon as possible. In other cases, the Management may pro-ceed to actions for the limitation of risks, or accept the risk, if there is a transparent business strategy that has been appro-priately approved.

Β.3.2.4 Monitoring and Submission of ReportsAll risk owners involved in risk underwriting, monitoring, hedging and mitigation of risks are responsible for disclosing all risks to the Risk Management Function, which shall in turn record, quantify and report to the Risk Management Commit-tee any possible mitigation techniques for the existing risks. The Risk Management Committee receives and reviews the reports submitted by the Risk Management Function, notifies the Board for the most significant risks by the Company and ensures for their effective treatment. Furthermore, the Risk Management Committee delivers proposals and recommends actions to the Board of Directors, in case the Committee iden-tifies failure to implement the strategy established for the Company’s risk management or any deviations in its imple-mentation.The Risk Management Function is responsible to ensure that any risk exposure details are disclosed to the Board through an official and an unofficial report on a regular basis, to enable the Board to take evidence-based decisions.

B.3.2.5 Activation levels and escala-tion proceduresThe Company has set appropriate early warning mechanisms, to ensure compliance with the risk appetite profile. These mechanisms are triggered when the Company’s exposure to certain risks exceeds the limits set out in the approved Poli-cies and the Risk Management Strategy. The nature of actions / corrective measures taken are determined by the level of deviation from the defined limits.

Β.3.3 Organizational StructureModel of Governance for Risk ManagementThe Company has established a model for Risk Management based on the three lines of defense model, with the following structure:First line of defense: The risk underwriting units, all operating units (Divisions and Departments) responsible for assessing and minimizing risks on a basis of a given level of expected performance.Second line of defense: The Risk Management Function is responsible for the identification, monitoring, quantification (where possible), risk control, attends for the provision of ap-propriate methodologies and risk management tools. More-


over, the Risk Management Function reports to the compe-tent bodies, namely the Risk Management Committee and the Board of Directors.The Compliance Department, that monitors the regulatory framework and notifies the Management for the competent divisions, departments and Officers.The Actuarial Function that participates in the formation of a framework for the management of underwritten risks, forma-tion of technical provisions and its effective implementation, makes suggestions for the review of the framework, when it is found necessary.Third line of defense: The Internal Audit Function is respon-sible for the independent assessment of the compliance de-gree with the applicable Risk Management framework and its effectiveness levels.The Risk Management Strategy and Policies are in compli-ance with the Company’s structure of Corporate Governance.The parties involved in Risk Management are the following:• The Officers and Responsible persons for the Company’s

Divisions and Departments, mainly responsible for the implementation of the Risk Management Strategy and Policies. More specifically, the Officers and Responsible Persons of the Company’s Divisions and Departments, are responsible for the risk management and internal audit in their sectors, as well as the interaction and co-operation with other sectors. All officers or responsible persons are liable to identify, measure, manage, monitor and report all risks of their sectors.

• The Risk Management Function is mainly responsible for: - Identifying, quantifying, monitoring and controlling

risks. - Providing appropriate risk management methodolo-

gies and tools. - Coordinating and providing assistance for risk man-

agement-related issues to the Company’s divisions and departments.

- Monitoring the risk management system. - Monitoring the Company’s risk profile. - Preparing and updating the Risk Management Strate-

gy and Policies. - Informing the Board of Directors on issues related to

business strategy, investment and other operations. - Identifying emerging risks and evaluating potential

impact.• The Compliance Officer, is mainly responsible for:

- Monitoring requirements and deadlines provided by the applicable regulatory framework.

- Notifying all of the Company’s employees regarding the modifications in the regulatory framework and provision of guidance for the required changes in in-ternal regulations and procedures, with support of its operations by the Legal Services, where required.

- The constant cooperation with the Risk Management Officer.

- The assessment and management of the compliance risk.

• The Internal Audit is mainly responsible for carrying out sufficient internal audits on risk management procedures for all types of risks.

• The Risk Management Committee is mainly responsi-ble for monitoring all types of risks and ensuring their control, specialized treatment and required coordination at all Company levels. Within these frameworks, the Committee provides

• Consulting services to the Board of Directors and assists the fulfillment of its role, sets and reviews risk manage-ment policies and procedures.

• The Investment and Asset & Liability Committee (ALCO) with main responsibilities the implementation of the Strategy and Asset & Liability Management Policy in a way that limits the liquidation risk and the exposure to the interest rate risk and other market risks.

• The Board of Directors is mainly responsible for the ap-proval of the Risk Management Strategy and Policies and the periodical revisions of the Risk Profile and Appetite.

• The Risk Management System is integrated in the deci-sion-making process of the Board of Directors and this indicatively derives from the following:

• The Board of Directors has the ultimate responsibility and is responsible for the final decision making.

• The Board of Directors is able to assign certain respon-sibilities for decision making to the BoD Committees (for example the Risk Management Committee).

• The results of the Risk Management System are evalu-ated by the competent committees and the most signifi-cant are submitted for approval to the Board of Directors.

The Risk Management System is integrated in the deci-sion-making process of the Board of Directors and this indica-tively derives from the following:• The Board of Directors has the ultimate responsibility

and is responsible for the final decision making.• The Board of Directors is able to assign certain respon-

sibilities for decision making to the BoD Committees (for example the Risk Management Committee).

• The results of the Risk Management System are evalu-ated by the competent committees and the most signifi-cant are submitted for approval to the Board of Directors.

Β.3.4 Risk Management PolicyThe Company acknowledges the significance of the assumed risks and has registered and implements a specific Risk Man-agement Policy, in line with the Risk Management Strategy and the supervisory requirements. The Risk Management Pol-icy comprises of specialized sub-policies.In particular, the Company has:• Risk Underwriting and Reserving Management Policy.• Asset-Liability Management Policy.

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• Investment Risk Management Policy.• Liquidity Risk Management Policy.• Concentration Risk Management Policy.• Operational Risk Management Policy.• Reinsurance Risk Management Policy and other risk

mitigation techniques.• Own Risk and Solvency Assessment Policy.These policies aim to assist the employees to understand their responsibilities of the risks that the Company faces, as well as explain the relationship of the Risk Management Sys-tem with the general Governance framework and corporate culture of the Company.Furthermore, the Company has developed a Data Quality Policy that includes quality audit, monitoring and document-ing procedures for all of the Company’s internal and external data. The Company’s data are evaluated based on the quality standards for their appropriateness, sufficiency and accura-cy. These policies are an integral part of the Company’s Risk Management and are directly related to the Risk Management Strategy.These policies refer to all sectors of activity and are imple-mented in all competent parts involved in risk management.

Β.3.5 Own Risk and Solvency As-sessment (ORSA)Within the framework of the Company’s compliance with the new regulatory Solvency II framework, regarding the re-quirements of Pillar II for the Own Risk and Solvency Assess-ment, the Company performs self-assessment of risks on an annual basis. The assessment consists of repeated cycles of assessments and it is based on the interaction with the business plan, the management of the capital and sensitivity scenarios, so that the Board of Directors can ensure that the Company’s risks are covered with sufficient capitals.The Own Risk and Solvency Assessment is performed, when required, after:• Significant change in the business plan• Significant change in the Company’s risk profile• Request of the Supervisor• Activation of appropriate quantitative indicators, etc.The Own Risk and Solvency Assessment is a procedure that incorporates in the organizational structure and decision-mak-ing processes of the Company the following:• The framework for the identification, as well as appropri-

ate policies and procedures for the identification, record-ing, measurement, and report of all significant risks (and their sources) that the Company is exposed to through its business.

• Creation of a data base regarding the current or future risks, from all levels of a hierarchy and for all business functions. Constant and systematical recording of the risk factors and possible dysfunctional factors that may affect or alter the Company’s risk profile.

• Estimation of the Company’s actual risk profile through the qualitative and quantitative assessment (risks cov-ered by Pillar 1 and risks not covered or partially covered by Pillar 1) including the total of risks that may have an important/negative impact on the Company’s ability to correspond to its obligations.

• Direct relations of the ORSA procedure with the business strategy of the Company and the five-year business plan. Sufficient quantitative and qualitative assessment of risks to which the Company may be exposed to, based on its business plan and the total future solvency needs.

• Establishment and regular monitoring of the develop-ment of risks using special early warning indicators in order to effectively proceed to corrective measures.

• Registration of the assumptions used at the assessment and the deviations from the Standard Formula (risks cov-ered by Pillar I and risks not covered or partially covered by Pillar I).

• Regular briefing on the Risk Management Committee and the Board of Directors on the Company’s risk profile and the violations of the Policies, procedures and accept-ed limits of risk underwriting.

• Estimation of risks in stress tests and sensitivity analyses on the parameters of risk exposures.

• Disclosure of the results of the ORSA procedure on all Company’s levels, based on a specific procedure. Integration of the ORSA procedure and results on the decision-making process, in the strategic planning, the governance, the allocation of funds, development of products and the Company’s Risk Management Proce-dures.

• Direct involvement of the Management in a comprehen-sive, efficient and adequate procedure with confirmation of the appropriate limits in risk underwriting and con-firmation of the compliance with the regulatory capital requirements.

This risk self-assessment process is performed by the Compa-ny in three distinct stages:I. Risk identificationII. Risk assessmentIII. Risk rating

I. Risk identificationThe methodology used for risk identification and registration is performed initially with the development of a Risk Register, which includes the Company’s total current and emerging risk exposure of the Company, whether those risks are part of the standard formula or not, within the framework of the Compa-ny’s business performance.The risks identified and recorded in the Risk Register are grouped based on their characteristics and nature. The total risks identified by the Company are connected to its business plan and business strategy, aiming mainly at meeting the Company’s obligations towards the insured and achieving its business goals in general.


ΙΙ. Risk assessmentFor every risk listed in the Risk Register, the Risk Management Function cooperates with the Head Officers of Divisions/Units, to assess the probability and impact of risk’s occurrence. The estimation of probability and impact for each risk is performed by taking into account potential scenarios for the occurrence of each risk.Furthermore, the Company evaluates the internal audit mech-anisms for every risk separately, based on the qualitative cri-teria.The impact of each risk is assessed based on the quantitative or qualitative criteria, or the combination of them, depending on the nature of the relevant risk.

ΙΙΙ. Risk ratingThe result of this procedure (assessment of risk probability, risk occurrence, impact of risks and internal audit mecha-nisms) is the visualization of risks on a Heat Map – depending on their rating (probability, impact).The Company, in order to plan its capital structure throughout the 5-year business plan, performs a forward-looking assess-ment on the total solvency requirements. For their estimation, the Company identifies and manages risks to which the Com-pany is or might be exposed over the course of its business plan.Furthermore, as part of the Own Risk and Solvency Assess-ment, the Company performs stress tests and sensitivity sce-narios.These results and the amount of the capital requirements are taken into account by the Board of Directors, at the deci-sion-making procedures on the Company’s capital structure. The procedure must be conducted in cases of significant change in the Company’s risk profile, and in case of review of its business plan. The Own Risk and Solvency Assessment is reviewed and updated any time that is deemed necessary at least on an annual basis.The Own Risk and Solvency Assessment is incorporated in the organizational structure and the decision-making process. Indicatively:• The Risk Management Function coordinates the process

for the Own Risk and Solvency Assessment.• The Board of Directors determines the risk appetite and

the overall risk tolerance levels.• The Risk Management Function assesses and ensures

the planning sufficiency and the effective function of the risk management system. Monitors the underwritten risks regarding the risk appetite and submits relevant re-ports to the Risk Management Committee and the Board of Directors.

• The Company ensures that the Own Risk and Solvency Assessment is conducted based on the standard busi-ness procedures.

• The estimation on the capital requirements are taken into consideration in the financial projections of the Business plan.

Β.4 Internal Control System

The Company’s Board of Directors is responsible for the de-velopment and implementation of an effective Internal Control System, which shall provide to the Shareholders and the Com-pany’s Management reasonable assurance on the achieve-ment of the following goals:• The effectiveness and productivity of the corporate

functions.• The credibility of the financial statements.• The compliance with the applicable laws, regulations and

provisions.The structure of the Internal Control System of European Re-liance General Insurance Co. S.A. is based on the Internation-al COSO standard (Committee of Sponsoring Organizations) of Treadway Commission. The COSO framework is globally recognized for its contribution on issues of corporate gover-nance, business ethics, internal control, business risk man-agement, fraud deterrence and reports.COSO is a great tool for the estimation of the effectiveness of the Internal Control System of an Organization.

Main procedures of the Internal Control System (ICS)The ICS procedures are divided into five sectors:• Control Environment• Risk Assessment• Control Activities• Information and Communication• Monitoring

Control EnvironmentThe Control Environment is the basis for the development of appropriate audit mechanisms for the preparation and publi-cation of the Company’s financial statements.Some major characteristics of the Control Environment are in-tegrity, moral values, limitation - determination of various key roles, delegation of competencies - liabilities and the organiza-tional structure of the Company. The formation of the internal policies, procedures and the distribution of guiding manuals to the employees are important elements for the Company’s Control Environment. The Board of Directors of European Reli-ance General Insurance Co. S.A. has adopted clear operating structures and procedures. The participation of the Board of Directors in the creation and approval of corporate policies, guidelines and frameworks is of great importance.Furthermore, in this context, the Company has developed a Corporate Code of Conduct, an IT Security Policy, a Whistle Blowing Policy and a Complaints Policy for the creation and promotion of an environment and philosophy of internal con-trol.Another part of the Control Environment is the assessment and audit performed by the Board of Directors on the Compa-ny’s financial performance and results with the use of various

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tools such as the budget report, estimations, risks and KPIs analyses.

Risk AssessmentThe Company performs risk estimations and assessments in order to identify threats that could affect the Company’s Fi-nancial Statements and Financial Results.The Company evaluates risks on an ongoing basis and takes all necessary preventive measures to mitigate/eliminate those risks.

Control ActivitiesThe Company’s organizational structure is designed in a way that allows the Company to manage all risks that, according to the Company’s BoD, could possibly affect the credibility of the financial statements, the effectiveness and the performance of the corporate functions. The Control Activities of the Com-pany take into consideration the organizational structure that clearly defines all organizational roles, functions and respon-sibilities. Examples of the Company’s control activities are the audits, data comparisons and overview of the function of var-ious Departments.

Information and CommunicationThe Company runs information and communication systems, to achieve the completeness and accuracy of the Financial Statements. The exchange of information and all communica-tions are performed with the help of internal memos, guide-lines and policies, relevant to the Company’s operation and the preparation of the Financial Statements. The Employees are informed by the Management through corporate meet-ings, e-messages and corporate circulars. Every month, the Company’s Management receives financial information on the Company’s course in terms of strategic and tactical goals.

MonitoringThe Company’s financial performance is a regular topic of dis-cussion at the BoD meetings. The Audit Committee has a sig-nificant supervisory role in the adherence and implementation of the Internal Control System. The Company’s Management monitors and audits the financial results on a regular basis and completes analyses of the deviations that arise by the comparison of the budget and the financial reports. The inde-pendent public certified accountants of the Company perform reviews on the Company’s Internal Control System on an an-nual basis.

Β.5 Compliance Function

Compliance is defined as the obligation of the Company’s Board of Directors, the Management and Personnel to adjust and operate according to the applicable legislative and regu-latory framework, the decision and guidelines of EIOPA, the Company’s Articles of Association, the Internal Regulations and Codes of Conduct in the performance of their tasks, for the mitigation of the risk of financial loss, the promotion of the

Company’s good reputation and protection of its credibility and status.For this reason, the Company’s Board of Directors has ap-proved the Compliance Policy. The implementation of this Policy implies the constant compliance with the current ap-plicable legislative and regulatory framework, the prevention and deterrence of risks relevant to Compliance and is a ma-jor obligation of all functions, bodies and employees from all ranks of the Company.The Compliance Department refers to the Board of Directors, through the Corporate Governance, Remuneration and Nomi-nation Committee, and operationally refers to the Company’s Management, and most specifically to the General Divisions, for any significant violation of the regulatory framework de-tected in its business operations. The Compliance Depart-ment is administratively independent and submits reports to the Board of Directors on matters relevant to the responsibil-ities of the BoD annually, in a way that ensures its indepen-dence and avoids conflict of interest. The Compliance De-partment can access all data and information required for the fulfillment of its scope.

Β.6 Internal Audit Function

The Internal Audit Unit is administratively independent from other units with executive competencies and from the func-tions that are competent in the realization or finalization of the transactions. The Internal Audit Function reports to the Board of Directors through the Audit Committee.The Internal Audit is conducted in accordance with the “In-ternal Audit Statute” and the International Standards for the Professional Practice of Internal Auditing.The Internal Audit Function reviews and submits proposals for the improvement of the corporate procedures of the Organi-zation. The audit performed by the Internal Audit Department and the submitted improvement recommendations do not constitute executive work, nor do they release the Board of Directors (Audit Committee) from its legal obligations (Statute of the Audit Committee).The Internal Audit is a tool of the Board of Directors which, based on an analysis of the corporate risks, conducts inde-pendent audits in the Company’s Internal Control System, aiming to provide fair assurance to the Company’s Sharehold-ers and Management, on the achievement of the following objectives:• The effectiveness and productivity of the corporate

functions• The Compliance with the applicable laws, regulations

and provisions• The credibility of the financial statements.The Internal Audit adds value to the Company through the following: a) Provision of consultation for the planning or pro-posals for improvements on the risk management system and audit mechanisms b) Assessment of the adequacy and effec-tiveness of the above Internal Control System.


The annual internal audit plan defines the audit’s direction and objectives. The annual plan provides for the appropri-ate time for follow up on the misstatements of the findings of previous audits, as well as corrective actions per process. Moreover, the annual internal audit plan briefly presents the scheduled projects in which the Internal Audit participates and the required number of man-hours for each project. The audit procedure is performed systematically through the plan, implementation and improvement of the working methods.

Β.7 Actuarial Function

The Actuarial Function is one of the Company’s four key func-tions and consists of executives with mathematical, statistical and actuarial backgrounds, who have the necessary profes-sional and scientific qualifications, as defined by the Compa-ny. The Actuarial Function operates, under the supervision of the Board of Directors, and is responsible for:• The coordination of the calculation of technical provi-

sions• The opinion on the Underwriting Policy• The opinion on the Reinsurance Policy• The contribution to Risk Management.

a) Coordination of the calculation of techni-cal provisionsThe Actuarial Function calculates the Company’s technical provisions by implementing specific methodologies and pro-cedures:• Ensures the appropriateness of the methods and models

used, as well as the assumptions and assertions on which the calculation of the technical provisions is based.

• Develops various calculation scenarios• Justifies changes between two successive valuation

dates• Compares calculations with empirical observations• Assesses the adequacy and quality of the data used for

in the calculation• Makes recommendations for changes in the internal

procedures for improvement of data.

b) Giving opinion on the Underwriting Poli-cyThe Actuarial Function provides its opinion on the Underwrit-ing Policy.• Assesses the sufficiency of the premiums, using the cur-

rent experience through regular audits.• Reports cases where the premiums do not cover the

expenses, claims and guarantees.

c) Giving opinions on the Reinsurance Poli-cy

The Actuarial Function provides its opinion on the Reinsur-ance Policy, reporting cases where the reinsurance policy does not cover the claims.• Assesses the consistency of the Reinsurance Policy with

the Underwriting Policy and the Company’s risk appetite.• Assesses the reinsurance cost.

d) Contribution to Risk ManagementThe Actuarial Function contributes to the Risk Management in the creation and management of models for the quantification of the insurance risks. • Makes recommendations on the limit values of the insur-

ance risks.• Calculates the largest part of the Risk ratios used in the

Risk Management Reports.• Participates in the risk identification and estimation

procedures and in the total solvency needs for ORSA purposes, in Asset & Liability Management (ALM), and also in the mitigation techniques for the insurance risks.

Β.8 Outsourcing

“Outsourcing” is defined as an agreement of any form be-tween the Company and a service provider, whether super-vised or not, under which the service provider performs a procedure, provides a service or exercises an activity, which otherwise would be performed, provided or exercised by the Company itself.The Company has not outsourced any of its key functions. However, the Company has entrusted the Company’s As-set Management to European Reliance Asset Management M.F.M.S.A.The Company’s Board of Directors has established and ap-plies an Outsourcing Policy to Third Parties, in order to:a) define the objectives that must be met by every outsourcingb) describe the procedures that must be followed in every out-sourcing for the effective management of potential risks.c) determine the framework for the monitoring of outsourcingd) describe the ways of handling ineffective outsourcingIn case of outsourcing to third parties, the Company identifies and evaluates the most important objectives achieved, which are:• Limitation of cost• Focus on the Company’s key functions• Possibility of access to new technologies• Release of resources• Expertise• Quality of services• Flexibility in the determination of priorities• Improved management• Effective performance control.The Management of the Company pays special attention in

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the selection of the service providers and takes all necessary measures to ensure the confidentiality of the information.

B.9 Other Information

Evaluation of the sufficiency of the System of GovernanceThe Company’s Board of Directors is ultimately responsible for monitoring the sufficiency and evaluation of the Compa-ny’s System of Governance. To this project contributes the Au-dit Committee and the Internal Audit Function that monitors the compliance with the System of Governance.In line with the above, the Company’s Board has established the internal evaluation of the System of Governance, at least once a year or more often, if found necessary.The scope, findings and conclusions of the evaluation of the procedure of the System of Governance are recorded and sub-mitted to the Company’s Board of Directors, which ensures that the appropriate actions are implemented and recorded, based on the remarks of the evaluation, and that the Board receives regular updates on the progress of these actions.


C. Risk Profile

This section contains information on the Com-pany’s overall risk profile, taking into account the significant risks to which the Company is exposed to. This section includes the follow-ing for every major risk category:• Risk Exposure and Assessment• Capital Requirements• Risk Mitigation Techniques• Sensitivity Analysis

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Risk Management is an integral part of the Company’s daily business activities. The company implements a comprehensive approach to Risk Management, ensuring the achievement of its strategic goals (customers’ interests, shareholders’ interests, financial stability and effectiveness of procedures). This comprehensive approach adds value to the Company by identifying the correct balance between risk and performance, while ensuring that the Company meets its obligations towards all stake-holders.The Company aligns its broader Risk Management Strategy to ensure its capital sufficiency, according to the requirements of the Solvency II framework. For this reason, the Company adopts the quantitative specifications of the standard formula for the calculation of all capital requirements falling upon that method per risk category/subcategory.The Company calculates the following risks based on the standard formula (Value at Risk – VaR - at 99.5% confidence interval over a one-year time horizon):• Insurance Risk• Market Risk• Counterparty Default Risk• Liquidity Risk• Operational Risk• Other significant risks.The results of the capital requirements per risk category are depicted in the following table:

Capital Requirements 31/12/2018 31/12/2017Solvency Capital Requirement (SCR) 70,955 71,643Operational risk 5,763 5,559Basic Solvency Capital Requirements 65,192 66,084Diversification -21,187 -25,387Total (Without Diversification) 86,379 91,472Market Risk 15,609 19,412Counterparty Default Risk 7,611 7,628Life Underwriting Risk 4,434 7,074Health Underwriting Risk 4,908 5,497Non-Life Underwriting Risk 53,817 51,860

Table C.1: Capital Requirements per risk category (amounts in thous. €)

The calculation of the above risks has been based on the Standard Formula, using the following transitional measures which do not require approval by the Supervisory Authority.• Long-term guarantee measures due to volatility (Volatility Adjustment).• Use of the lowest rate of standard parameter, for equities that the Company purchased up to 01/01/2016. These results will be analyzed in detail in the following sections.Moreover, the Company applies an evaluation procedure for the total of risks to which it is exposed, regardless of whether they are included in the standard formula or not (liquidity risk, capital management risk, etc).The purpose of this procedure (Own Risk and Solvency Assessment) is to ensure efficient risk management and assessment of total capital requirements, to enable the Company to meet its obligations at any given time.The risk management cycle (identification, measurement, management and monitoring) contributes to the assurance of suffi-cient and immediate actions that need to be considered in case of changes in the Company’s risk profile.

C.1 Insurance risk

The underwriting risk is the current or future risk arising from loss or adverse changes in the value of the insurance liabilities, due to inappropriate assumptions at the pricing and the formation of technical provisions.According to Solvency II framework, the capital requirements for the insurance risk arise from the capital requirements in each one of the three following risk categories:• Non-Life Underwriting Risk• Life Underwriting Risk


• Health Underwriting Risk.The Company has included in the Health Underwriting Risk the report on the guarantees provided through the Life-Sector insurance policies (individual and group), the acquisition value and the value at maturity.As part of the Company’s insurance risk management, the Company has set effective policies and procedures to mitigate and hedge insurance risk, which include:• A recorded policy and adequate risk underwriting procedures.• Complete and sufficient criteria for risk underwriting, clearly defined per line of business (monitoring of risk underwriting

limits).• Determination and evaluation of the product development procedure.• Determination of appropriate underwriting risk limits for all risks deriving from the insurance policies for the entire policy

period.The capital requirements of the underwriting risk at the reporting period (for the year ended 31/12/2018) and in the previous period (the year ended 31/12/2017) are presented in the following graph:

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53,817 51,860

4,434 7,074 4,908 5,497

The Non-Life underwriting risk has the greatest impact on the underwriting risk, as it comprises the largest part of the Company’s portfolio. All risks shown in the graph are within the risk limits defined by the Company as part of its Risk Management Strategy.

C.1.1 Non-Life Underwriting Risk

C.1.1.1 Risk exposure and assessmentThe Non-Life Portfolio of the Company consists of the Motor Third Party Liability Insurance from Land Vehicles, Other Land Vehicles, Vessels, Cargo, Fire and Other Damages to Property, Non-Life Third Party Liability, Legal Protection, Assistance, Various Monetary Losses.The following table presents the insurance sector, according to the Accounting plan and Solvency II framework.

Accounting plan Solvency II19(10) Land vehicle third party liability 4 Land vehicle third party liability12(3) Land Vehicles 5 Other land Vehicles15(6) Vessel 6 Marine, aviation and transport21(12) Vessel liability 6 Marine, aviation and transport16(7) Goods in Transit 6 Marine, aviation and transport17(8) Fire and natural perils 7 Fire and other damages to property

Figure C.1: Underwriting risk per insurance sector (amounts in thous. €)

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18(9) Other damage to property 7 Fire and other damage to property22(13) Non-Life Third party liability 8 Non-Life third party liability26(17) Legal expenses 10 Legal expenses27(18) Assistance 11 Assistance25(16) Miscellaneous monetary losses 12 Various Monetary Losses

Table C.2: Lines of business under the Accounting plan and Solvency II

The Non-Life Underwriting Risk consists of the following risk subcategories:I. Premium and reserve riskII. Lapse riskIII. Catastrophe risk

I. Premium and reserve riskThe current or future risk for profit and funds arising when the existing claims are higher than the expected ones, as a result of the time difference in the payments of claims and/or the difference in the frequency of the claims from the expected and/or of erroneous parameters and assumptions on the calculation of the reserve. The premium risk arises from the volatility existing at the current moment, the frequency and severity of the underwritten risks, which have been undertaken by the Company. The capital requirement expresses the deviation between the assumptions taken into consideration at the pricing of the insurance products and the realized experience.

II. Lapse riskThe current or future risk for profit and funds arising due to non-payment of the premiums and that leads to cancellation of the insurance policy. This risk is not considered significant for the Company, since most of the Company’s non-life insurance policies are comprised of motor insurance (third party liability and land vehicles) for which the Company issues a policy with policy period equal to the period of the payment of premiums, according to the applicable Commercial Policy, (i.e. if a client wants to pay the premiums on a semi-annual basis, the Company issues a policy of semi-annual duration) and the premiums are collected before the issuance of the policy.

III. Catastrophe RiskIt is the risk for profit and funds that may arise due to a series of extreme or emergency events over one-year time horizon. The Company signs reinsurance policies with solvent companies to mitigate the catastrophe risks. The majority of the reinsurance policies in non-life insurances is XoL and cover the largest part of the Company’s portfolio. The Reinsurance- policies are reviewed annually in order to ensure the sufficiency of the protection level and the suitability of the Own Retention.The catastrophe risk, relevant almost exclusively to the probability of earthquake, is reinsured under the XoL policy. The protection level is selected after taking into consideration the following results of the two samples for the estimation of the capital requirements of the catastrophe risk of earthquake:• Standard Sample of EIOPA• Sample of Risk Management Solutions (RMS)

C.1.1.2 Capital requirementsThe calculation of the Non-Life Underwriting risk was based on the Standard Formula, as defined by Solvency II framework, using the volatility adjustment for the discount of cash flows for technical provisions.The following table presents the results of the Solvency Capital Requirement for Non-Life- Underwriting Risk, as well as results of the risk sub-modules.

Non-Life Underwriting Risk 31/12/2018 31/12/2017Premium and reserve risk 52,713 51,181Lapse risk 0 0Catastrophe risk 3,888 2,493Total (Without diversification) 56,601 53,674Diversification -2,784 -1,814Total capital requirement 53,817 51,860

Table C.3: Capital Requirements for Non-Life Underwriting Risk (amounts in thous. €)


The Capital Requirement for the Non-Life Underwriting Risk derives from the premium and reserve risks and more specifically from the Motor Third Party Liability Sector, that corresponds to 90%. The Capital Requirement for the Non-Life Underwriting Risk presents 3.77% increase which substantially derives from the increase in premium and reserve risk and the catastrophe risk. The increase of the catastrophe risk is due to the increase of the capital charge of the man-made catastrophe risk of the Fire Sector, as a result of the increase of the number of insured risks, included in the calculation of the charge. The Company has undersigned reinsurance policies, which are assessed on the risk absorbing capacity of the additional risk and the forecasted increase on written premiums.The 1.6 percentage points increase in the diversification (diversification benefit, from 3.3% to 4.9%) is mainly due to the increase of the capital charge for the catastrophe risk.The Company, according to the Business Plan, forecasted for 2019, 6.76% increase in written premiums in the Non-Life and Health Insurance (NLST) Sectors, which mainly derives from the Motor Third Party Liability (11.85%). The following graph presents the development of the written premiums for years 2017 & 2018 and the forecasts of the business plans, taken into consideration in the corresponding reference periods.

Figure C.2 Non-Life Written Premiums (amounts in thous. €)

C.1.2 Life Underwriting Risk

C.1.2.1 Risk exposure and assessmentThe Company’s Life portfolio comprises of traditional products (whole life, endowment, short-term, pure endowment, pension) and group pension schemes (DAF).The Company pursues business in Unit-Linked individual insurance schemes. The Unit Linked Insurance Schemes transfer the financial risk to the policyholder, while the Company undertakes the coverage in certain products through a guarantee of a part of the financial risk.The major risks to which the Company is exposed based on its Life portfolio are the following:I. Mortality riskII. Longevity RiskIII. Lapse RiskIV. Expense RiskV. Catastrophe Risk

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2019 Budget Report2018 Balance Sheet2018 Budget Report2017 Balance Sheet

Other Non-Life SectorsMotor Third Party Liability

84,98688,302

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64,459 65,84369,113 69,534

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The risks above are estimated using the parameters of the standard formula under the Solvency II Directive to determine the capital requirements.

I. Mortality risk The risk of loss or adverse change in the value of insurance liabilities, that results from changes in the level, trend or volatility of the mortality rates, where an increase in the mortality rates leads to an increase in the value of the insurance liabilities. The Company preserves in its portfolio, whole life, short-term and endowment insurances, that consist of the most important categories of products exposed in mortality risk.

II. Longevity Risk The risk of loss, or of adverse change in the value of insurance liabilities, resulting from changes in the level, trend, or volatility of mortality rates, where a decrease in the mortality rate leads to an increase in the value of insurance liabilities. The Company preserves in its portfolio pension schemes (individual and group), pure endowment and endowment coverages that consist the most important categories of products exposed in longevity risk.

III. Lapse RiskThe risk of loss or of adverse change in the value of insurance liabilities, deriving from changes in the level or volatility of the rates of policy terminations, renewals, maturities and surrenders. All of the Life Insurance Coverages of the Company are exposed to this risk.All of the above scenarios apply similarly to all relevant insurance and reinsurance policies.

IV. Expense RiskThe risk of loss, or of adverse change in the value of insurance liabilities, deriving from changes in the level, trend, or volatility of the expenses incurred in serving insurance or reinsurance policies. All of the Life Insurance Coverages of the Company are exposed to this risk.

V. Catastrophe RiskThe risk of loss, or of adverse change in the value of insurance liabilities, deriving from a significant uncertainty of pricing and provisioning assumptions related to extreme or irregular events. All of the Life Insurance Coverages of the Company are exposed to this risk.

C.1.2.2 Capital requirementsThe calculation of Life Underwriting Risk was based on the Standard Formula based on Solvency II Directive, using the volatility adjustment for the discount of the cash flows of technical provisions. The results of the capital requirement for the Life Underwriting Risk are presented in the following Table:

Life Underwriting Risk 31/12/2018 31/12/2017Mortality risk 905 1,590Longevity risk 112 73Disability risk 0 0Lapse risk 3,903 5,626Expense risk 502 1,717Revision risk 0 0Catastrophe risk 323 347Total (Without diversification) 5,744 9,354Diversification -1,310 -2,280Total capital requirement 4,434 7,074

Table C.4: Capital Requirements for Life Underwriting Risk (amounts in thous. €)

The total capital requirement of the Life Underwriting Risk decreases comparing to the previous year, mainly due to the decrease of the lapse risk. The lapse risk, and more specifically the risk for decrease of the lapse rates is the major source of risk. This is justified mainly by the nature of the portfolio of the Company that participates in the calculation of the specific risks, which consists of high guarantee products (savings products). The decrease of the lapse risk derives from the decrease of the portfolio for saving products of higher guarantees (due to increased acquisitions within the year and maturities) in combination with the revision of the experience study on the behavior of the insured.The mortality risk participates significantly in the formation of the capital requirements for the specific risk. This derives from


the composition of the Company’s portfolio, which mostly consists of products with main risk factor the mortality risk. The mortality risk decreases due to the decrease of the term and whole life insurance portfolio and the revision of the assumptions of whole life products.

C.1.3 Health Underwriting Risk

C.1.3.1 Risk exposure and assessmentThe Company’s Health Portfolio consists of two types of portfolios. The first includes Non-Life insurance for medical expenses and income protection. The second includes Individual Health Care Insurance, medical expenses, other additional coverages (waiver of premiums, disability, death due to accident and loss of income) attached to the Life and Group Risk Life Insurance Policies (death, disability, accident, sickness).Within Solvency II framework, the capital requirements for the Health Underwriting Risk derive from the diversification of the capital requirements for each one of the three following- subcategories:• Health Underwriting Risk on a similar technical basis as

Life Insurance (SLT Health),• Health Underwriting Risk on a non- similar technical

basis as Life Insurance (NSLT Health),• Health Catastrophe Risk.

I. Health Underwriting Risk on a similar technical basis as that of Life Insurance (SLT Health)The Company’s Health portfolio consists of in-hospital and medical expenses schemes, that offer benefits in case of accident or sickness, as well as other additional coverages.The major risks to which the Company is exposed to for the SLT Portfolio are the following:a) Mortality riskb) Longevity Riskc) Disability Risk - Morbidity riskd) Lapse Riske) Expenses RiskThe above risks are assessed using the parameters of the Standard Formula based on the Solvency II Directive to determine the capital requirements.a) Mortality riskThe risk of loss or of adverse change in the value of insurance liabilities, that result from changes in the level, trend, or volatility of mortality rates, where an increase in the mortality rate leads to an increase in the value of the insurance liabilities.The most important categories of Products exposed to the mortality risk are the death coverage due to accident and the coverage for waiver of premiums.b) Longevity RiskThe risk of loss or of adverse change in the value of insurance

liabilities, deriving from changes in the level, trend, or volatility of mortality rates, where a decrease in the mortality rate leads to an increase in the value of insurance liabilities. All of the Health Insurance programs of the Company are exposed to this risk.c) Disability- Morbidity RiskThe current or future risk for profit and funds resulting from changes in the level or the volatility of disability and morbidity rates. This risk includes hospitalization expenses, medical expenses and other additional coverages (waiver of premiums, disability and loss of income).d) Lapse RiskThe risk of loss or of adverse change in the value of insurance liabilities, resulting from changes in the level or volatility of the rates of termination, renewals, maturity and surrenders. All of the Health Insurance coverages of the Company are exposed to this risk. All of the above scenarios apply similarly to all relevant insurance and reinsurance policies.e) Expenses RiskThe risk of loss, or of adverse change in the value of insurance liabilities, deriving from changes in the level, trend, or volatility of the expenses incurred in serving insurance or reinsurance policies. All of the Health Insurance programs of the Company are exposed to this risk.

II. Health Underwriting Risk on a non- similar technical basis as that of Life Insurance (Non-SLT Health)The Company’s Health portfolio (NSLT) consists of Non-Life insurance plans (medical expenses, income protection) and group insurance policies, (death, disability, accident, sickness).The subcategory NSLT Health Underwriting Risk (the management of which is based on a non-similar technical basis as to those of Life Insurance), consists of the following subcategories:• The subcategory- Premiums Risk and Reserve Risk in

NSLT Health Insurance• The subcategory Lapse Risk in NSLT Health Insurance

PoliciesThe Health Underwriting Risk on a non-similar technical basis as that of Life Insurance (Non-SLT Health) consists of the following risk subcategories:a) Premium and Reserve RiskThe current or future risk for profit and funds arising when the existing claims are higher than the expected ones, as a result of the time difference in the payments of claims and/or the difference in the frequency of the claims from the expected and/or of erroneous parameters and assumptions on the calculation of the reserve. The premium risk arises from the volatility existing at the current moment, the frequency and severity of the underwritten risks, which have been undertaken by the Company. The capital requirement expresses the deviation between the assumptions taken into consideration at the pricing of the insurance products and the realized experience.

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b) Lapse RiskThe current or future risk for profit and funds arising due to non-payment of the premiums and which leads to cancellation of the insurance policy.

III. Catastrophe Risk It is defined as the loss risk, deriving from an important uncertainty for the occurrence of future catastrophic events within the following year.The Company arranges reinsurance coverage for the catastrophe risk of individual and group health insurance coverages with the policy Catastrophe Excess of Loss for its own retention.

C.1.3.2 Capital requirementsThe calculation of the Life Underwriting Risk was based on the Standard Formula under Solvency II framework, using the volatility adjustment for the discount of cash flows of technical provisions. The Capital requirements are calculated per line of business for Health insurance pursued on a non-similar to life techniques (NSLT) and at policy level for Health insurance pursued on a similar to life technique (SLT).The results of the capital requirement for the Health Underwriting Risk are presented in the following table.

Health Underwriting Risk 31/12/2018 31/12/2017Health Underwriting Risk 4,908 5,497Total Diversification -1,231 -1,309Health Underwriting Risk pursued on a similar technical basis as that of Life Insurance (SLT Health)

2,770 3,132

Diversification -711 -788Total sub-risks without Diversification 3,481 3,920Mortality risk 51 64Longevity Risk 8 5Morbidity Risk 595 645Lapse Risk 2,440 2,768Expense Risk 386 438Revision risk 0 0Health Underwriting Risk pursued on a non-similar technical ba-sis as that of Life Insurance (Non-SLT Health)

2,551 2,896

Diversification 0 0Total sub-risks without Diversification 2,551 2,896Premium and reserve risk 2,551 2,896Lapse Risk 0 0Health Catastrophe Risk 818 778Diversification -428 -389Total sub-risks without Diversification 1,246 1,167Massive Accident with reinsurance 149 148Concentration Scenario with reinsurance 400 330Pandemic Scenario with reinsurance 698 689

Table C.5: Capital Requirements for Health Underwriting Risk (amounts in thous. €)

The capital requirements for the Health Underwriting Risk derive mostly from Health insurance pursued on a similar technical basis as that of Life Insurance (SLT Health). The decrease of the risk is due to the revision of the experience assumptions on these products.

C.1.4 Underwriting risk mitigation techniquesThe Company, within the framework for management of the underwriting risk, has established effective policies and procedures to mitigate and hedge the underwriting risk, such as:• A recorded policy and adequate procedures for risk underwriting.• Complete and adequate risk underwriting criteria clearly defined per insurance sector (risk underwriting limits monitored


for every insurance sector).• Underwriting risk mitigation procedure through effective reinsurance policy, and with the use of other techniques, where

found necessary.• Independent assessment of the overall reinsurance policy by the Actuarial Function. The estimate refers to the adequacy

of the reinsurance policies, the effective transfer of the underwriting risk and sufficient dispersion to counterparties.• Principles and procedures for the formation of technical provisions.• Principles and defined procedures for development and introduction of new products related to the underwriting risk

(pricing etc.)• Integration of limitations related to investments, the calculation of premiums and reinsurance techniques when

developing a new insurance product.• Approval procedures for the creation of a new product or for significant changes in already existing products.• Assessment of the assumptions used at the pricing and reserving of products.The Company has developed a reinsurance policy which includes among others, eligibility criteria (credit rating limits) and reinsurers’ evaluation. At the same time, it applies audit mechanisms to monitor the compliance with the Company’s reinsurance policy by all parties involved.The Company’s Reinsurance Department is responsible for the analysis of the efficiency and effectiveness of the reinsurance policies, by evaluating the necessity of changes in special reinsurance terms, according to the underwriting objectives of the Company. The Actuarial Function offers significant help in the monitoring of the adequacy of reinsurance policies and provides opinions on the reinsurance policy.The Internal Audit conducts independent audits to ensure the effectiveness of the reinsurance policies and recommends possible findings to the Audit Committee.It is highlighted that without the policies for risk assignment, the Company’s Solvency Capital Requirement (SCR) would increase by € 101 mil. and the SCR Ratio would decrease to 58.46%.

C.1.5 Underwriting risk sensitivity analysisThe sensitivity analysis includes the assessment of the sensitivity of the solvency capital requirements to small changes of each of the significant risks to which the Company is mostly exposed. The Company performs sensitivity analysis for the largest underwriting risk, the Non-Life Underwriting Risk, by developing a sensitivity scenario in the Motor Third Party Liability Sector, as the main source of this risk. The results are presented in the following table:

Sensitivity Analysis Solvency II ScenarioGross Best Estimate of Outstanding Claims 140,714 144,855Net Best Estimate of Outstanding Claims 131,178 135,319Gross Best Estimate of Premiums Reserve 30,667 33,721Net Best Estimate of Premiums Reserve 30,462 33,516Risk Margin 13,965 14,294Eligible Own Funds 113,395 108,062Premiums and Reserve risk 52,713 53,732Lapse risk 0 0Catastrophe Risk 3,888 3,888Non-Life Underwriting Risk 53,817 54,834Solvency Capital Requirement (SCR) 70,955 71,952SCR Ratio 159.81% 150.19%

Table C.6: Sensitivity Analysis for Non-Life Underwriting Risk (amounts in thous. €)

During the development of the sensitivity scenario, the Company performed quantification of the arising variations in the best estimate of the outstanding claims (of this sector), the Own Funds, the Solvency Capital Requirement and the corresponding SCR ratio, provided the cost of the expected future payments of the Motor Third Party Liability Sector increases by 1% every year due to inflation, until the requirements of the Company are fully settled, on behalf of the Company. The new charge of the premiums and reserves risk has been calculated and the charge of the catastrophe risk remained stable.

C. 1. 6 Concentration of the Underwriting risk The highest concentration of the underwriting risk is observed in the Non-Life underwriting portfolio and derives from the premium and reserve risk, producing the highest capital requirements among all risk of the Standard Formula. The high concentration of the Non-Life Underwriting Risk is due to the fact that this particular portfolio corresponds to 69% of the total

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technical provisions (excluding the risk margin).More specifically, the largest Non-Life portfolio refers to the Motor Third Party Liability Sector and corresponds to 84% of the total technical provisions of Non-Life insurance.Regarding the catastrophe risks of the Non-Life Sector, the largest concentration is observed in the Natural Catastrophe risk, and more specifically, in the subunit Earthquake risk. The largest concentration of underwriting risk for the earthquake coverage is found in seismic zones 7 and 9, namely in Central Greece. The Company has sufficient reinsurance coverage for the Earthquake risk and has undersigned a reinsurance policy “Catastrophe Excess of Loss” assessing the loss absorbing capacity, according to the expected development of the insured funds within the following year and monitors their development on a monthly basis.

C.2 Market Risk

It is defined as the current or future risk arising directly or indirectly from fluctuations in the level and volatility of the market prices of assets, liabilities and financial instruments.The total portfolio of the Company exposed to the Market Risk per Assets category, as shaped in the fiscal years ending 31/12/2018 and 31/12/2017, is presented in the following table:

Assets 31/12/2018 31/12/2017Property, plant and equipment held for own use 18,068 18,015Property (other than for own use) 15,858 15,750Holdings in related undertakings, including participations 3,425 3,326Equities 168 614Government Bonds 228,147 202,054Corporate Bonds 41,601 55,428Collective Investment Undertakings 40,730 42,619Deposits other than cash equivalents 2,698 3,706Assets held for index-linked and unit- linked contracts 9,729 11,061Total 360,426 352,572

Table C.7: Asset analysis per investment category (amounts in thous. €)

The total portfolio amounted to € 360,426 thous., in the end of 2018, increased by 2.2%, comparing to 2017. The main factors contributing to this increase were the net inflows, the unrealized losses, the realized losses and interest income.For the calculation of the solvency capital requirement of the Market Risk, the Company uses the look-through approach, where possible, for participations in Undertakings for collective investments in transferable securities (UCITS).The Company has assigned the management of investments in European Reliance Asset Management M.F.M.S.A., acting as external asset manager and investment consulting.However, the investments are made in accordance with the decisions of the Board of Directors.According to Solvency II Directive, the capital requirements for Market Risk derive from the diversification of the capital requirements for each of the following risk categories:• Interest Rate Risk• Equity Risk• Property Risk• Credit Spread Risk• Currency Risk• Concentration riskWithin the framework of managing the Company’s Market Risk, the Company has established effective Policies and Procedures for the mitigation and hedging of risk. More specifically, the Company has policies approved by the Board of Directors that include the total of the Procedures and Investment Limits for the treatment of the Market Risk.The above risks are estimated using the Standard Formula based on the Solvency II Directive to determine the capital requirements.The Capital requirements of the Market Risk for the fiscal periods ending on 31/12/2018 and 31/12/2017 are presented in the following graph:


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CurrencyRisk

CreditSpread Risk

PropertyRisk

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InterestRate Risk

1,108 1,276

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Figure C.3 Market Risk per risk category (amounts in thous. €)

All risks shown in the graph are within the risk limits defined by the Company within the Risk Management Strategy.The Market Risk amounts to € 15,609 thous. On 31/12/2018. The greatest impact on the formation of the overall Market Risk are the Equity Risk, Property Risk and Credit Spread Risk, as presented in the graph above and will be further analyzed in the following sections.The risk decreased from € 19,412 thous, in the end of 2017 to € 15,609 thous. on 31/12/2019. To this decrease contributed the following factors: - The decrease of Equity Risk, due to the significant decrease of the prices of shares owned by the Company in its portfolio

and the decrease of the “Symmetric Adjustment” used in the calculation of risk. - The decrease of the Credit Spread Risk, due to the decrease of the portfolio exposure to corporate bonds for the

improvement of the ratio of the excess return to the supervisory capital requirements and the increase of credit rating.

C.2.1 Interest Rate Risk

C.2.1.1 Risk exposure and assessmentThe current or future risk deriving from changes in the value of Assets, Liabilities and financial instruments, due to changes in the yield curve or the volatility of interest rates.The Interest Rate Risk derives from the mismatch of the Company’s Assets and Liabilities.The Assets and Liabilities that are used to calculate the Interest Rate Risk are presented in the following table.

Interest Rate Risk Exposure 31/12/2018 31/12/2017Assets 310,559 300,444Bonds 297,793 287,276Reinsurance recoverable 10,068 9,462Time deposits 2,698 3,706Liabilities 250,134 241,201Technical provisions – Non-Life 176,210 169,921Technical provisions- Life 58,305 56,489Technical provisions- Health 4,755 3,684Technical provisions for contracts where the Policyholder bears the investment risk

10,864 11,107

Table C.8 Assets and Liabilities used for the calculation of the Investment Risk (amounts in thous. €)

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In 2018, there has been an increase in the bond portfolio, comparing to the corresponding period of 2017. This increase is due to the fact that the new inflows arising were invested mainly in Greek Government Bonds, due to the high return of the Greek Government Bonds and the improvement of the credit rating of Greece.On the contrary, the time deposits decreased and were invested to a high extend into Greek Government Bonds. In 2018, the total best estimate on technical provisions presented increase of € 8,933 thous.More specifically, the technical provisions of Non-life Insurance increased, due to the increase of the outstanding claims in the motor third party liability sector and the Fire Sector.Moreover, the best estimate of Life Insurance technical provisions presented an increase, comparing to the previous year. This variation is due to the decrease of the reserve of Time Value of the Guarantees and Option Rights due to the new experience study of the assumptions on the cancellation of whole life insurance coverage, the decrease of the best estimate of Traditional coverages, due to the new experience study of cancellation assumptions, and the increase of the credit balance of the Group Pension Funds (DAF) due to increased contributions.Moreover, we observed an increase in the Best Estimate of Health Insurance Coverage which derives mostly from the SLT Health Insurance and most specifically the Additional Coverages for Life Individual Insurance Policies. This increase is due to the new experience study of the cancellation assumptions.Then, the best estimate of the technical provisions where the policyholder bears the investment risk, decreased mainly due to the decrease of the reserve, as a result of the decrease of the price of the related funds.

C.2.1.2 Capital requirementsThe capital requirements for the Interest Rate Risk are defined by the calculation of the impact of the basic Own Funds due to changes in the yield curve, taking into consideration the Company’s assets and liabilities. The calculation was based on the Standard Formula, based on the Solvency II Directive, using the volatility adjustment for the advance payment of the cash flows for technical provisions.The results of the capital requirements for the interest rate risk are presented in the following table:

Interest Rate Risk 31/12/2018 31/12/2017Capital Requirement in case of decrease in the yield curve 849 1,276Capital Requirement in case of increase in the yield curve 1,108 0Capital requirement for the Interest Rate risk 1,108 1,276

Table C.9: Capital requirement for Interest Rate Risk (amounts in thous. €)

The following figures were taken into account in the calculation of the Interest Rate Risk:• Values of Assets and Liabilities on the reference date.• Yield curves used in risk calculation, as provided by EIOPA.The Interest Rate Risk amounted to € 1,108 thous., on 31/12/2018, decreased by € 168 thous., comparing to the previous year. This variation is mainly due to the decrease of the duration of the bond portfolio through the decrease of the duration of the government bonds portfolio. This decrease was aiming at the coverage of mismatches between Assets and Liabilities figures in the following years and the estimate that the long-term interest rates will recover to a greater extent than the short-term interest rates in the following years. The duration of the Liabilities presented a slight variation.Moreover, in 2018 the risk-free yield curve reached lower levels than the previous year. More specifically, over the last 5-10 years, the yield variated by 9 b.p., and for longer periods of over 20 years by 11 b.p. As a result, the value of the Assets and Liabilities increased, and most specifically, the value of the Assets increasing less, due to the shorter duration of the Assets. This variation did not affect the risk variation to a great extent.

C.2.2 Equity Risk

C.2.2.1 Risk exposure and assessmentThe current or future risk resulting from changes in the values of assets, liabilities and financial instruments, due to changes in the level or volatility of market prices of equities, share indexes and their derivatives.For the assessment of the Equity Risk, the Company’s exposure is divided into three categories of equities under Solvency II Directive.


• The type 1 Equities include shares listed on regulated markets in countries-members of the European Economic Area or of the Organization for Economic Cooperation and Development (OCDE).

• The type 2 Equities include shares listed on regulated markets of countries that are non-members of the European Economic Area or the Organization for Economic Cooperation and Development (OCDE), non-listed shares, commodities and other alternative investments.

• They include all assets, apart for those covered in the subunits of the interest rate risk, property risk or credit spread risk.• The strategic participations are the investments in own funds for which the participating insurance company proves the

following evidence:a. that the value of the investment in own funds is possible to be less volatile in the following 12 months than the value

of other shares at the duration of the same period, as a result of the nature of the investment and the influence of the participating company in the related undertaking.

b. that the nature of the investment is of strategic importance, taking into consideration all relevant factors, among which:• the existence of a clear, decisive strategy to maintain the participation for a long period of time• The coherence of the strategy reported in figure (a) with the basic policies that govern or limit the actions of the

undertaking• The ability of the participating company to maintain its participation in the related undertaking• The existence of a stable connection• When the insurance or reinsurance participating company is a member of the Group, the coherence of this strategy

with the basic policies that govern or limit the actions of the undertaking.The Company’s exposure to the above categories is presented in the following table.

Equity Exposure 31/12/2018 31/12/2017Strategic partnerships 3,425 3,326Listed shares (Type 1) 21,038 23,354Other shares (Type 2) 303 0Total exposure 24,766 26,680

Table C.10: Equity exposure (amounts in thous. €)

C.2.2.2 Capital requirementsThe calculation of the Equity Risk was based on the Standard Formula based on Solvency II Directive. The Company applies the Measure on Equity, as required by the Law, for equities purchased before 01/01/2016.The results of the capital requirements for the Equity Risk are presented in the following table:

Equity Risk 31/12/2018 31/12/2018Capital Requirement 5,926 8,267

Figure C.11 Capital Requirement for the Equity Risk (amounts in thous. €)

The following figures were taken into account in the calculation of the Equity Risk:• The values of the shares included in the Company’s equity portfolio.• The best estimate for the technical provisions, where the policyholder bears the investment risk.• The symmetric adjustment in the charge of the capitals, due to the shares• The implementation of the Measure on Equity, as required by the Law for shares purchased before 01/01/2016.The Equity Risk decreased from € 8,267 thous. in the end of 2017 to € 5,926 thous. on 31/12/2018. This decrease is mainly due to the following factors:• Decrease of the value of the bond portfolio, due to fall of the prices of the equities.• Decrease of the symmetric adjustment used in the risk measurement and provided by EIOPA.The use of the transitional measure did not affect to a great extend the risk variation.

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C.2.3 Property Risk

C.2.3.1 Risk exposure and assessmentThe current or future risk resulting from changes in the values of Assets and financial instruments, due to changes in the level, or volatility of market rates of real estate.The Company’s exposure is presented per investment category in the following table:

Risk Exposure per category 31/12/2018 31/12/2017Tangible assets 16,880 16,899Investments in Real estate 15,858 15,750Total exposure 32,738 32,649

Table C.12 Company’s Exposure per investment category (amounts in thous. €)

C.2.3.2 Capital requirementsThe calculation of the Property Risk was calculated based on the Standard Formula under Solvency II Directive. The results of the capital requirement for the Property Risk are presented in the following table:

Property Risk 31/12/2018 31/12/2017Capital Requirement 8,184 8,162

Table C.13 Capital Requirement for Property Risk (amounts in thous. €)

The Property Risk increased from € 8,162 thous., on 31/12/2017 to 8,184 thous. in the end of 2018. This variation is due to the increase of the investment in real estate, due to additions and improvements of the Company’s buildings.

C.2.4 Credit Spread Risk

C.2.4.1 Risk exposure and assessmentThe current or future risk deriving from changes in the values of Assets, Liabilities and financial instruments, due to changes in the level, or in the volatility of the credit spreads.The calculation of the capital requirements for the Credit Spread Risk depends on the following factors:• The fair value of the Corporate bonds and time deposits.• The modified duration.• The credit rating grade.The Company is only exposed to the Credit Spread Risk for Corporate Bonds (including the time deposits).The Company’s total exposure to Corporate Bonds and time deposits is presented in the following table:

Exposure by investment category 31/12/2018 31/12/2017Corporate Bonds 60,618* 74,724*Time deposits 2,696* 3,699*Total Exposure 63,314 78,925

Table C.14: Exposure per investment category (amounts in thous. €)*Accrued interests not included

The Company’s exposure to Corporate Bonds per credit rating and average weighted duration is presented in the following table:

Exposure to Corporate Bonds per credit rating 31/12/2018 31/12/2017Rating Exposure Years Exposure YearsAAA 998 9.3 0 0.0AA 10,341 3.2 13,458 2.6A 37,990 2.7 44,732 2.9BBB 6,027 2.7 9,757 3.3


BB 1,854 3.5 232 6.3Lower than BB 0 0.0 3,001 3.3Unrated 3,407 3.0 3,544 3.7Total exposure 60,618 74,724 74,724

Table C.15: Exposure of Corporate Bonds per credit rating (amounts in thous. €)

The Company’s exposure to time deposits per credit rating and average weighted duration appears n the following table:

Exposure to time deposits per credit rating 31/12/2018 31/12/2017Rating Exposure Years Exposure YearsAAABBBBBLower than BB 2,696 1.0 3,699 1.0UnratedTotal exposure 2,696 3,699 3,699

Table C.16: Exposure of time deposits per credit rating (amounts in thous. €)

C.2.4.2 Capital requirementsThe Credit Spread Risk was calculated based on the Standard Formula under Solvency II Directive.The results of the capital requirement for the Credit Spread Risk are presented in the following table:

Credit Spread Risk 31/12/2018 31/12/2017Capital Requirement 3,131 4,346

Table C.17: Capital requirement for the credit spread risk (amounts in thous. €)

The Credit Spread Risk amounted to 3,131 thous. on 31/12/2018 and remained decreased comparing to the end of 2017. This decrease is due to the decrease of the portfolio exposure to government bonds and the increase of the rate of bonds with higher quality.

C.2.5 Currency Risk

C.2.5.1 Risk exposure and assessmentThe current or future risk resulting from changes in the values of Assets, Liabilities and financial instruments, due to changes in the level or in the volatility of foreign exchange rates. The Company’s exposure to assets invested in foreign currency is presented in the following Table:

Exposure to Foreign currency 31/12/2018 Total GBP USD OtherAssets 1,964 458 1,061 444Liabilities 0 0 0 0Net Exposure 1,964 458 1,061 444

Table C.18: Company’s exposure to 2018 assets invested in foreign currency (amounts in thous. €)

Exposure to Foreign currency 31/12/2017 Total GBP CHF OtherAssets 1,361 893 455 14Liabilities 0 0 0 0Net Exposure 1,361 893 455 14

Table C.19: Company’s exposure to 2017 assets invested in foreign currency (amounts in thous. €)

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C.2.5.2 Capital requirementsThe calculation of the Currency Risk was based on the Standard Formula under Solvency II Directive. The results of the capital requirement for the currency risk are presented in the following table.

Currency Risk 31/12/2018 31/12/2017Capital Requirement - revaluation of the foreign currency 0 0Capital Requirement - devaluation of the foreign currency 448 373Capital requirement for the currency risk 448 373

Table C.20: Capital Requirement for the Currency Risk (amounts in € thous.)

The Company’s exposure to assets invested in foreign currency increased in the current year, comparing to 2017. The Currency Risk increased from € 373 thous. on 31/12/2017 to € 448 thous. on 31/12/2018.It is worth noting that the contribution of the Currency Risk in the total capital requirements is very low.

C.2.6 Concentration Risk

C.2.6.1 Risk exposure and assessmentThe concentration risk is the current or future risk deriving from lack of dispersion, i.e. concentration, either of assets or insurance liabilities in individual items of Assets or Liabilities, such as the sector of finance, the line of business, geographical position, the counterparty, or a group of related counterparties, etc.The reports of the investments participating in the calculation of the capital requirement for the concentration risks are presented in the following table.

Exposure to Concentration Risk 31/12/2018 31/12/2017Corporate Bonds 60,926 75,179Real Estate 32,738 32,649Equities 21,341 23,354Strategic Investments 3,425 3,326Time deposits 2,698 3,706

Table C.21: Company’s Exposure to Concentration Risk (amounts in thous. €)

C.2.6.2 Capital requirementsThe calculation of the Concentration Risk was based on the Standard Formula under Solvency II Directive. The results of the capital requirement for the concentration risk are presented in the following table:

Capital requirement for the Concentration Risk 31/12/2018 31/12/2017Capital Requirement 0 0

Table C.22: Capital requirement for Concentration Risk (amounts in thous. €)

The Concentration Risk remains at zero levels, due to the insufficient variations in the Assets portfolio of the Company.

C.2.7 Market Risk mitigation techniquesThe Company, within the framework of the Management of the Market Risk, has established effective policies and procedures to mitigate and hedge the risk. In particular, the Company owns Policies approved by the Board of Directors, including the Procedures and investment Limits for the management of the Market Risk, and for the analysis, assessment, monitoring, reporting and audit of this Risk, in the following sections:• Investment management• Asset-Liability management• Investment risk managementThe Company has established the Investment, Asset & Liability Committee and the Risk Management Committee to make proposals for risk management actions for their approval or review.Furthermore, for any possible investment in assets, in accordance with the prudent person principle introduced by Solvency II


framework, the following procedures are required:A quantitative assessment of the risk impact deriving from the investments, and the risk’s impact on the Company’s risk- profile.• Assessment of the degree of compliance of the investment with the standards set out by the Company’s through its

policies on quality, safety, liquidity, profitability and availability of the total portfolio.• Ensuring that the investment does not harm the stakeholders’ and policyholders’ interests.• Ensuring that the investments will be made on financial instruments traded on regulated markets and the use of financial

derivatives will not be selected.• Ensuring that all investments are performed only in financial instruments for which the Company can sufficiently identify,

assess and manage the investment risk.• Avoiding lending or pledging any of the Company’s Assets to obtain additional returns.• Ensuring that the portfolio is invested mainly in fixed-rate Government and Corporate bonds, and secondly in shares,

holdings, real estate and deposits.• Ensuring that all investments are made in high credit rating securities, with an average credit rating of “A-”.• Avoiding investments in financial assets issued in foreign currency to eliminate the currency risk.• Ensuring that assets of the investment portfolio are selected in a way that ensures a sufficiently diversified portfolio.• Avoiding concentration in one type of investment, issuer or group of connected issuers, geographical area or line of

business.

Asset-Liabilities ManagementThe Company monitors the development of cash flows of the reserves over time, deriving from the Company’s insurance activities and invests its assets in a way that ensures the Asset-Liability risk management.The Company identifies that the average duration and the height of the assets and liabilities are the main causes of the interest rate risk. The main scope of the Company is to cover the liabilities for all years. This can be achieved in the following methods, which are part of the Asset & Liability Management Policy.i. The present value of Assets is equal or higher with the present value of Liabilities.ii. The weighted duration of Assets should be within the predetermined limits comparing to the weighted duration of

Liabilities.iii. The compound interest of free cash flows of assets in the risk-free yield curve.The bonds are selected and mapped with the Best Estimate Reserves in time buckets, based on their maturity.

Asset and Liability classification based on maturity 31/12/2018 31/12/2017Buckets Assets Liabilities Assets Liabilities0 to 1 years 107,700 84,207 98,994 79,5101 to 2 years 20,577 39,697 46,783 32,6162 to 4 years 79,447 41,936 49,305 38,4404 to 6 years 41,051 24,748 47,733 21,0636 to 8 years 14,976 15,462 15,186 16,1368 to 12 years 20,415 17,461 20,748 23,597Over 13 years 26,394 26,624 21,694 29,839

Table C.23: Asset and Liabilities classification based on maturity (amounts in thous. €)

The gap observed in year 2020 is due to the selection of big investment positions for the years 2019, 2022 and 2023, the existence of negative returns of government bonds of high credit rating for the following five years and the non-existence of Greek government bonds with maturity date 2020, 2021 and 2022.

C.2.8 Market Risk ConcentrationThe assets in the investment portfolio are selected to contribute in the avoidance of risk concentration in one type of investment, geographic region or line of business.The Company’s significant risk concentrations at the reference period are reflected in the following tables per investment category, geographical area and line of business.The Company’s quantitative exposure is presented per investment category in the following figures:

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Other

Utility Services

Industrial

Financial

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33%2018 51%

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30%2017

Other

Utility Services

Industrial

Financial

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7%

15%60%2018

Other

Utility Services

Industrial

Financial

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7%

15%

54% 2017

Other

Utility Services

Industrial

Financial

Figure C.4: Quantitative Exposure of the Company to corporate bonds per line of business

Figure C.5 Quantitative Exposure of the Company to equities per line of business

The Company’s quantitative exposure to Government, Corporate bonds and Equities per geographical region is presented in the following tables:

Other countries

Netherlands

Italy

U.S.A.

Un. KingdomGreece

Germany

France

15% 2%

4%

33%

36%

10%

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Other countries

Netherlands

Italy

U.S.A.

Un. Kingdom

Greece

Germany

France9%

2%

6%

8%

15%

29%

6%

25%

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Other countries

Netherlands

Italy

U.S.A.

Un. Kingdom

Greece

Germany

France

12%

29%

13%

34%

6%

6%

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Other countries

Netherlands

Italy

U.S.A.

Un. Kingdom

Greece

Germany

France9%

6%

9%

14%1%

4%

27%

30%

2017

Figure C.6: Company’s Quantitative exposure to Government Bonds per geographical region

Figure C.7: Company’s Quantitative exposure to Corporate Bonds per geographical region


Other countries

Netherlands

Italy

U.S.A.

Un. Kingdom

Greece

Germany

France5% 4%

66%

16%

3%2%1%3%

2018

Other countries

Netherlands

Italy

U.S.A.

Ην. Βασίλειο

Greece

Germany

France5% 4%

72%

3%2%

5%8%

2017

Figure C.8: Equity Exposure per geographical Region for years 2018 and 2017

The Company invests a significant part of its investments in Government and Corporate Bonds and secondly in Equities, Par-ticipations, Real Estate and Deposits.Regarding the portfolio allocation of corporate bonds and Equities per line of business, the largest exposure is observed, main-ly in the sector of finance. Moreover, regarding the allocation of investments of the Company per geographical region, a large part of the portfolio of government bonds and equities is invested in Greece and the largest exposure of the Corporate Bonds Portfolio is observed in U.S.A. and the United Kingdom.

C.2.9 Sensitivity Analysis of the Market Risk Besides calculations performed under the Standard Formula, the Company performs Market Risk Sensitivity Analysis sce-narios. These scenarios take into account the impact of various risk factors and their results are assessed in the Company’s decision-making process in relation to the Company’s capital structure planning and the development of action plans, in accor-dance with the established strategy and risk tolerance levels.In the reporting period, the Company performed a sensitivity analysis on the investment portfolio for Equity and Credit Spread risks, based on the following assumptions:• The Company estimated that if the global geopolitical crisis intensifies, the Equity Market will decrease, and this may re-

sult to decrease of the market prices in the Company’s Equity Portfolio. The analysis is based on the assumption that the risk exposure from prices in the Equity Market will decrease by 30%.

• The Company estimated that the maturity of the Asset Purchase Program -APP in the end of 2018 will result to increase of the credit spread risks of the corporate bonds portfolio. The analysis is based on the assumption that the credit spreads of the corporate bonds are increased by 100 base units.

The sensitivity of the supervisory Own Funds under the Solvency Capital Requirements and the SCR Ratio is presented in the following table:

Market Risk Sensitivity Scenario 31/12/2018Own Funds Solvency Capital Require-

mentsSCR Ratio

Equity Risk -5.5% -1.3% -6.9 b.p.Credit Spread risk -0.9% -0.1% -1.3 b.p.

Table C.24: Market Risk Sensitivity Scenarios (amounts in thous. €)

An important part of the Company’s investment portfolio has been invested in Equities and Corporate Bonds.At the reference period, the developed and emerging markets presented a fall. The major causes of this fall were the geo-political crisis between U.S.A. and China, the deceleration of the economy in the Eurozone and the uncertainty of the Brexit negotiations. The Company, within the framework of geopolitical tension and demanding valuation of Equities, considers very reasonable the option for decrease of the price of Equities.

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In December 2018, the “Corporate sector purchase program - CSPP” for the purchase of corporate bonds by European Central Bank expired, however the ECB will continue to reinvest in bonds until the inflation rate is lower than 2%. These developments are expected to have an impact on the Purchase of Corporate Bonds and as a result increase the credit spreads.According to the above results, the scenario of further decrease of the prices of equities seems to have an impact on the Solvency Capital Requirement Ratio of the Company. Furthermore, the increase of the credit spreads seems to impact on a lesser degree the Company’s capital requirement due to the high credit rating and the short duration of corporate bonds in the Company’s portfolio.

C.3 Counterparty Default Risk

The current or future risk for loss or adverse change in the financial situation, deriving from fluctuations in the credit rating of the issuers of financial instruments, counterparties and debtors to whom insurance and reinsurance undertakings are exposed. This risk is expressed either as the counterparty’s failure to comply or incomplete performance.As Counterparties are considered the insurance intermediaries, reinsurers, credit institutions and any debtor and guarantor.

C.3.1. Risk Exposure and AssessmentBased on the Solvency II framework, the Company’s assets exposed to the Counterparty Default Risk are the following:i. Credit exposure Type 1, which including exposure related to:

- risk mitigation contracts (recoverable amounts from reinsurance activities), - cash in bank (current deposits)

ii. Credit exposure Type 2, including exposure related to: - Receivables against intermediaries and insured - mortgage loans to personnel, insurance agents and life insured

The calculation of the counterparty default risk on credit exposure type 1 includes the Reinsurance Risk Mitigation Benefit. This amount arises through a hypothetical scenario for the calculation of the Company’s capital requirement, not taking into consid-eration the reinsurance risk mitigation benefit and corresponds to every insurance sector and reinsurance entity, identifying the entity’s participation in the overall result.Regarding the credit exposure Type 1 in the reporting period, the largest exposure belongs to the reinsurers, as presented in the following table:

Exposure Type 1 31/12/2018 31/12/2017Reinsurers 10,742 10,151Banks (Current deposits) 7,840 7,633Total Exposure 18,583 17,784

Table C.25: Exposure Type 1 (amount in thous. €)

The exposure to reinsurers per credit rating is as follows:

Exposure to reinsurers per credit rating 31/12/2018 31/12/2017Rating Exposure ExposureAAAAA 4,936 4,053A 5,806 5,418BBB BBLower than BB Unrated 680Total Exposure 10,742 10,151

Table C.26: Exposure to reinsurers per credit rating (amounts in thous. €)

The Exposure to Banks (current deposits) per credit rating is as follows:


Exposure to Banks (current deposits) per credit rating 31/12/2018 31/12/2017Rating Exposure ExposureAAAAAA 759 1,513BBBBBLower than BB 7,071 6,110Unrated 10 10Total Exposure 7,840 7,633

Table C.27: Exposure to Banks (current deposits) per credit rating (amounts in thous. €)

Regarding the credit exposure Type 2 at the reference period, the largest exposure is monitored in receivables from insurance intermediaries, as presented in the following table:

Exposure Type 2 31/12/2018 31/12/2017AssetsReceivables from insurance coverage and insurance interme-diaries

14,332 15,507

Receivables (trade not insurance) 11,541 6,841Loans and mortgages to individuals 2,172 2,741LiabilitiesInsurance and intermediaries’ payables -4,222 -5,081Total Receivables 23,823 20,008

Table C.28: Exposure Type 2 (amount in thous. €)

As arising by the above tables, regarding the reinsurers, in the present year the receivables increased by € 591 thous., com-paring to the previous year. The largest risk exposure is presented by reinsurers with credit rating “A”, but there was also an in-crease in the average credit rating comparing to the previous year. This derives from the Company’s Policy to select Reinsurers with credit rating equal to or higher than “A-”.Regarding the Banks, the Company invested in current deposits the amount of € 7,840 thous., increased by € 207 thous. com-paring to 2017. This is mainly due to the Company’s Policy for direct cash availability for liquidity reasons and direct payment of claims. The largest exposure mainly appears in Banks with credit rating “Lower than BB”. The Company, due to the capital controls, has made investments in Greek Banks with low credit rating.Regarding the credit exposure Type 2, the receivables from intermediaries and the receivables from loans to individuals pre-sented a decrease of € 1,175 thous. and € 569 thous. respectively. On the contrary, other receivables presented increase by € 4,700 thous. The Company constantly aims to reduce the exposure to insurance intermediaries and the loans to personnel and insurance agents.

C.3.2 Capital requirementsThe Counterparty Default Risk was calculated based on the Standard Formula under Solvency II Directive. The results of the capital requirement for the Counterparty Default Risk are presented in the following table:

Capital requirement for the Counterparty Default Risk 31/12/2018 31/12/2017Exposure Type 1 3,901 3,227Exposure Type 2 4,235 4,903Total (Without Diversification ) 8,136 8,130Diversification -525 -502Total capital requirement 7,611 7,628

Table C.29: Capital requirement for the counterparty default risk (amounts in thous. €)

The Counterparty Default Risk on 31/12/2018 amounted to € 7,611 thous.

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It is worth highlighting that the risk decreased by € 17 thous. Within the year, comparing to the previous fiscal year, mainly due to the decrease of the insurance receivables and the receivables from loans to individuals.

C.3.3 Counterparty Default Risk mitigation techniquesFor the treatment of risk Type 1, the Company has established a Reinsurance Risk Management Policy and an individual Re-insurance Policy, approved by the Board of Directors, that includes certain limits to ensure the Company’s exposure to coun-terparty default risk. For the treatment of risk Type 2, the Company has established certain time limits for the collection of receivables and strict terms for the conclusion of surety agreements. For the management of the Counterparty Default Risk, the Company has a Risk Management Committee, that performs the following actions:• Approves, supervises and performs ordinary and extraordinary, when needed, reviews on the Company’s reinsurance

strategy.• Approves deviations from the current reinsurance strategy framework and notifies the Board for material issues.• Evaluates and approves the proposals of various divisions and supervisors.• Ensures that the Board of Directors is timely and sufficiently updated for all material issues on the management of the

reinsurance strategy.• Receives credit assessments for the reinsurers by specific credit rating agencies.• Sets the limits on the credit rating of each Reinsurer, the exposure to reinsured funds and the amount of reinsurance

premiums per Reinsurer.• Receives a written report from the Risk Management Function on the time limits for the collection of receivables, to elimi-

nate the credit exposure.

C.3.4 Sensitivity ScenarioThe following table presents the results of the decrease per degree of credit rating of the individual counterparties (reinsurers and credit institutions) by one step, for credit exposure Type 1 (recoverable amounts from reinsurance activities and current de-posits). The sensitivity of the Own Funds, the Solvency Capital Requirements and the SCR Ratio are presented in the following table:

Sensitivity Scenario for credit rating decrease 31/12/2018 Own Funds Solvency Capital

RequirementsSCR Ratio

Counterparties credit rating decrease by 1 degree -0.006% 0.73% -1.18 p.p.

Table C.30: Sensitivity Scenario for the decrease in credit rating - Variance

The most important factor for the formation of the capital requirements of the counterparty default risk type 1 is the credit rating degree of the reinsurers and the credit institutions in which the Company has deposits. The Company’s exposure to reinsurers consists the largest part of the total exposure to the counterparties type 1. According to the above results, the scenario for decrease of the credit rating of the reinsurers and credit institutions by one degree, did not affect to a great extent the total capital requirements of the Company, because the Company has undersigned reinsurance policies with reinsurance companies of high credit rating.

C.4 Liquidity Risk

C.4.1 Risk exposure and assessmentThe current or future risk deriving from the Company’s inability to meets its obligations with directly liquidated assets, when they fall due, without significant losses.Sources of riskThe Company recognizes the following as main sources of liquidity risk:• Possible Asset-Liability mismatch. This mismatch may be related to the assets, the duration, performance.• Unexpected fluctuations in cash flows. Part of these fluctuations are due to the development of the


• Underwriting Risk, the Credit Spread Risk or the Market Risk in general.• Market developments with negative consequences on the Company’s ability to liquidate its Assets (speed, cost)

Inability to raise sufficient funding resources for the required needs or finding funding resources for an unreasonable expected cost.

The following graph presents the expected non-discounted inflows from investments in Bonds, the expected non- discounted outflows of Liabilities and the reinvestment of “free” flows of bonds based on the risk-free yield curve. The inflows contain the amounts of the vouchers and the inflows from the Bond Fund.

10

100,000

50,000

2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 21 22 23 24 25Maturity (in years)

Expected Inflows Expected Outflows Reinvestment of “Free” Cash Flows

Figure C.9: Expected future non- discounted flows of Bonds & Liabilities (amounts in thous. €)

Based on the graph below:• The non-discounted inflows from Bond investments are larger than the Liabilities investments for all years apart from

2020. This is explained by the selection of significant investment positions for the years 2019, 2022 and 2023, the existence of negative returns of the government bonds with high credit rating for the following five years and the non-existence of Greek government bonds with maturity date 2020, 2021 and 2022.

• The reinvestments in “free” flows of bonds - based on the risk-free yield curve- are positive for all the projection years.Combining all the above, we conclude that the future investment portfolios are expected to have high liquidity ratio.Moreover, the continuance of the average duration of the investment portfolio in relation to the continuance of the liabilities, ensures the future liquidity ratio of the Company and the ability to respond to liabilities, when they become due.

C.4.2 Liquidity risk mitigation techniquesThe Company applies the following liquidity risk mitigation techniques:• The allocation of duties to persons or organizational units regarding the determination of the desired liquidity level, the

measurement of the real liquidity level and its comparison with the desirable level.• The determination of the acceptable and maximum investment limits in specific categories of assets and the short-term

borrowing, taking into account the protection of the Company in cases of normal liquidity needs, in cases of crisis.• The procedures for the estimate of the liquidity cost in terms of decreased return of assets or specific characteristics of

insurance products, e.g. higher acquisition fees etc.• The procedures for the estimation of potential liquidity needs in the near, short-term and medium-term future, at least in

cases of normal liquidity requirements, in crises and in cases of panic, taking into account the classification of the total assets of the Company, depending on its liquidation rate and the classification of the Company’s liabilities, depending on the capability of the insured to request for the liquidation of the insurance policies within the considered time periods.

• The assessment of the sufficiency of the composition of the Company’s assets with respect to the nature, life and liquidity rate of the invested assets, so as to cover the Company’s liabilities, when they fall due.

• The determination of administrative acts, as well as the persons or organizational units authorized to undertake them, for the management of cases of lack of liquidity.

• The determination of administrative acts, as well as the persons or organizational units authorized to undertake them, for the management of cases of lack of liquidity.

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The Liquidity Risk is kept at low levels, by retaining sufficient cash equivalents and credit limits that ensure the Company’s ability to meet its financial obligations. The Company still has zero loans. Furthermore, the Group has access to adequate short-term borrowing (which has not however used over the past decade) for the cover of emergency cash needs, if necessary. Finally, it is worth highlighting that the Investment, Asset & Liability Management Committee uses appropriate tools to systematically monitor this risk.

C.5 Operational RiskThe current or future risk for profit and funds deriving from inappropriate or inadequate internal procedures or from inappropriate or inadequate personnel or inappropriate or inadequate operating systems or from external events.

C.5.1 Risk exposure and assessmentThe capital requirement for the Operational Risk is calculated using the Standard Formula, taking into account any charges defined in terms of the total earned premiums, technical provisions and the expenses of insured bearing the investment risk in the Company’s reference period.More specifically, the exposures of the items participating in the calculation of the capital requirement for the operational risk are presented in the following table.

Parameters for the Calculation of the Capital Requirement of the Operational Risk 31/12/2018 31/12/2017Basic Capital Requirement for the Operational Risk 5,752 5,587Capital Requirement based on the Earned Premiums 5,752 5,587Capital Requirement based on the Technical Provisions 5,570 5,368Amount of expenses for life insurance policies, where the policyholder bears the invest-ment risk in the previous 12 months

45 183

Table C.31: Exposure to the Operational Risk (amounts in thous. €)

C.5.2 Capital requirementsThe results of the operational risk’s capital requirement are presented in the following table:

Capital requirement for the Operational Risk 31/12/2018 31/12/2017Capital Requirement 5,763 5,559

Table C.32: Capital Requirement for Operational Risk (amounts in Thous. €)

The Operational Risk increased (to the minimum) from € 5,559 thous. in the end of 2017 to € 5,763 thous. οn 31/12/2018, due to the increase of the capital requirement related to premiums and the technical provisions.

C.5.3 Risk Mitigation TechniquesThe management of the Operational Risk includes the following:• Recorded Policies and Procedures for the operation of the Company’s units, including acceptable exposure limits to the

Operational Risk.• The availability of sufficient systems and procedures for the identification of every material source of Operational Risk,

the monitoring, assessment (measurement) and reporting of the underwritten risks and the implementation of corrective actions, whenever it is deemed necessary.

For the mitigation of this risk, the Company has established a sufficient audit and report mechanisms to identify, assess and manage the Operational Risk. The Operational Risk mitigation techniques implemented by the Company are the following:• Personnel training and evaluation.• Establishment or improvement of the action plans for business continuity and emergency plan.• Improvement or introduction of new IT systems and infrastructure.• Development and constant upgrade of the audit mechanisms (e.g. processing of information, monitoring of actions,

automations, task allocation, supervision of management).


• Establishment of material early warning indicators to identify the factors that favor the occurrence of risk events.• Supervision of the Internal Audit and Compliance Departments.

C.5.4 Sensitivity analysisThe Company conducts stress testing and sensitivity analyses for the parameters of the operational risk. The Scenarios are developed based on the following approaches:• Failure of key operations, personnel or operating systems and• Occurrence of external events.The results of these tests are taken into consideration for the establishment and review of the policies and limits of exposure to the Operational Risk.

C.6 Other significant risks

As part of the Company’s business plan and Own Risk and Solvency assessment, the Company assesses the overall risk profile, in addition to risks calculated with the Standard Formula. The Identified risks are the following:

Country RiskThe current or future risk for the Company’s financial position arising from the political decisions that affect the Company’s operations (e.g. Currency depreciation lending capabilities, changes in the Country’s debt, etc.).

Macroeconomic riskThe current or future risk for the Company’s financial position arising from changes in the macroeconomic environment due to non-effective assessment of the macroeconomic factors.

Outsourcing RiskThe current or future risk for the Company’s financial position, arising from Outsourcing of functions, leading to possible failure of the Provider to meet the obligations or decrease in the quality of provided services.The above risk categories are treated with administrative acts and audit monitoring mechanisms for the factors that contribute to increase of risk for the activation of the action plans.More specifically, the Company has performed the following actions for the treatment of the Country risk:• Participation of its Representatives in Organizations and Associations and briefing on the possible developments on

relevant subjects.• Communication of the representatives with other Financial Institutions and Supervisory Authorities.• Identifies and includes the future impact of political developments in its Strategy.• For the treatment of the Macroeconomic risk, the Company performs the following actions:• The Company has established the Investments Committee which operates according to the approved Regulation of

Operations.• The Company has assigned the management of its portfolio to European Reliance Asset Management M.F.M.S.A., with

which the Company has undersigned an Agreement of Professional Services.• The Company undersigns, as an Attachment to the Professional Services Agreement, the Investment Policy Statement

(IPS), that defines the investment goals and limitations.• For the treatment of the Outsourcing Risk, the Company performs the following actions:• The Company does not establish its functions to service providers that present increased possibility of failure to meet

their obligations.• The Company does not accept low quality outsourcing services or providers with significant delays or does not respond

to the Company’s actual needs, for its basic operations.• The Company has established an Outsourcing Policy, that describes in detail the procedures and audit mechanisms.

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D.Valuation for Solvency purposesThis section describes the valuation of the Company’s assets, technical provisions and other liabilities, based on the Solvency II framework. Moreover, this section analyzes the methods and key assumptions for each item of the balance sheet and explains possible significant variations between the methods and the key assumptions, used based on the Solvency II and IFRS Frameworks.Key elements of the section:• Assets• Technical Provisions• Other Liabilities


Table D.1 Balance sheet according to Solvency II and IFRS

31/12/2018 31/12/2018 31/12/2017 2018 versus 2017

Assets IFRS Solvency II Variance Notes Solvency II Solvency II Variance NotesDeferred acquisition Costs 17,592 0 -17,592 A1: 0 0 0 (VA1)Intangible Assets 1,389 0 -1,389 (A2) 0 0 0 (VA2)Deferred tax assets 0 0 0 (V3) 0 3,590 -3,590 (VA3)Property, plant and equipment held for own use

18,068 18,068 0 (A4): 18,068 18,015 53 (VA4)

Investments (other than assets held for index-linked and unit-linked contracts

329,503 332,628 3,125 332,628 323,496 9,132

Property (other than for own use) 15,858 15,858 0 (A5) 15,858 15,750 108 (VA5)Holdings in related undertakings including participations

3,425 3,425 0 (A6) 3,425 3,326 99 (VA6)

Equities 168 168 0 168 614 -446Equities – listed 168 168 0 (A7) 168 614 -446 (VA7)Bonds 266,632 269,749 3,117 (A8) 269,749 257,481 12,267 (VA8)Government Bonds 225,351 228,147 2,796 228,147 202,054 26,093Corporate Bonds 41,281 41,601 321 41,601 55,428 -13,826Collective Investment Undertakings 40,730 40,730 0 (A9) 40,730 42,619 -1,889 (VA9)Deposits other than cash equivalents 2,690 2,698 8 (A10) 2,698 3,706 -1,007 (VA10)Assets held against index-linked and unit-linked policies

9,729 9,729 0 (A11) 9,729 11,061 -1,331 (VA11)

Loans and Mortgages 2,391 2,391 0 (A12) 2,391 3,543 -1,152 (VA12)Loans on policies 219 219 0 219 803 -584Loans and mortgages to individuals 2,172 2,172 0 2,172 2,741 -568Reinsurance Recoverables 11,670 10,207 -1,462 (A13) 10,207 9,462 745 (VA13)Non-life and health similar to non-life 11,624 9,924 -1,700 9,924 9,158 766Non-life excluding health 11,316 9,740 -1,576 9,740 8,735 1,006Health insurance similar to non-life 308 183 -124 183 423 -240Life and health similar to life, excluding health and index-linked and unit-linked

39 283 244 283 305 -21

Health Insurance similar to life 0 76 76 76 80 -3Life Insurance excluding health and index-linked and unit-linked

39 207 168 207 225 -18

Life index-linked and unit-linked 6.9 0.6 -6.4 0.6 0.2 0.4 0,4 Insurance and intermediaries’ receivables

14,332 14,332 0 (A14) 14,332 15,507 -1,175 (VA14)

Reinsurance receivables 0 535 535 (A15) 535 689 -154 (VA15)Receivables (trade, not insurance) 15,867 11,541 -4,325 (A16) 11,541 6,841 4,700 (VA16)Cash and cash equivalents 6,982 6,982 0 (A17) 6,982 7,214 -232 (VA17)Total Assets 427,523 406,415 -21,107 406,415 399,419 6,996

Table D.1: Balance Sheet according to Solvency II Directive and IFRS Assets (amounts in thous. €).

This section refers to the valuation of the Company’s assets, technical provisions and other liabilities based on the Solvency II framework. More specifically, for each item of the Balance Sheet the following are analyzed:• Valuation of the Balance Sheet on the reference date.• The methods and key assumptions used based on the Solvency II framework.• Explanation of any significant variations between the methods and key assumptions used based on the Solvency II

framework and the Financial Statements.The following tables present the valuation differences between the Balance Sheet according to Solvency II Directive and the Balance Sheet according to the IFRS with reference date 31/12/2018 and the variations between the Solvency II balance sheets for fiscal years 2018 and 2017 (amount in thous. €).

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Liabilities 31/12/2018 31/12/2018 31/12/2017 Solvency II2018 vs 2017

Technical provisions – Non-Life (excluding health)

IFRS Solvency II Variance Notes Solvency II Solvency II Variance Notes

Best Estimate 191,014 180,868 -10,146 180,868 176,924 3,944 Risk Margin 191,014 171,380 -19,633 (Π1) 171,380 164,847 6,533 (ΔΠ1) Technical Provisions -Health non similar to life

0 9,487 9,487 (Π2) 9,487 12,076 -2,589 (ΔΠ2)

Best Estimate 6,833 5,278 -1,556 5,278 5,445 -168 Risk Margin 6,833 4,829 -2,004 (Π3) 4,829 5,074 -244 (ΔΠ3)Technical Provisions -Life (excluding health and index- linked and unit-linked)

0 448 448 (Π4) 448 372 76 (ΔΠ4)

Technical Provisions -Life (excluding health and index- linked and unit-linked)

13,374 5,044 -8,330 5,044 6,432 -1,388

Best Estimate 13,374 4,755 -8,618 (Π5) 4,755 3,684 1,072 (ΔΠ5)Risk Margin 0 288 288 (Π6) 288 2,748 -2,460 (ΔΠ6)Technical provisions - life (excluding health, index-linked and unit-linked)

63,777 61,966 -1,811 61,966 65,244 -3,278

Best Estimate 63,777 58,305 -5,472 (Π7) 58,305 56,489 1,816 (ΔΠ7) Risk Margin 0 3,661 3,661 (Π8) 3,661 8,755 -5,094 (ΔΠ8)Technical Provisions - Index-linked and Unit-linked

10,707 10,945 239 10,945 11,166 -221

Best Estimate 10,707 10,864 158 (Π9) 10,864 11,107 -243 (ΔΠ9)Risk Margin 0 81 81 (Π10) 81 59 22 (ΔΠ10)Deferred tax liabilities 206 402 197 (Ε3) 402 0 402 (ΔΕ3)Insurance and intermediaries’ payables 4,222 4,222 0 (Π11) 4,222 5,081 -858 (ΔΠ11)Reinsurance payables 182 0 -182 (Π12) 0 0 0 (ΔΠ12)Any other liabilities, not elsewhere shown

20,721 20,721 0 (Π13) 20,721 21,422 -701 (ΔΠ13)

Total Liabilities 311,034 289,445 -21,589 289,445 291,714 -2,269 Positive variance between assets and liabilities

116,488 116,970 482 116,970 107,705 9,265

Table D.2: Balance Sheet according to Solvency II Directive and IFRS- Liabilities (amounts in thous. €).

D.1 Assets

According to Article 75 of Solvency II Directive, the Assets are measured at the amount which they can be traded between the well-informed and willing persons, as part of a transaction on equal terms.According to articles 9 and 10 of the Delegated Regulation 2015/35, the valuation of Assets and Liabilities (excluding technical provisions) is based on the fair-value approach. More specifically, the funds of every Tier for every Asset and Liability in the Balance Sheet, which are measured at fair value, are classified in the following three tiers, based on the quality of data used to measure their fair value.Tier 1The best valuation of the market price is a value certified by a regulated market (mark- to-market) for the assets and liabilities. If there are appropriate prices for similar items of the Assets or Liabilities, the price of these items is used in the valuation.Tier 2If there is no relevant price or if the market is not active, the Company uses appropriate techniques for the determination of the price. The Company uses the most suitable methods existing in the market (mark-to- model), in order to achieve the right result.Tier 3If the existing data cannot be used or are found unreliable, the Company shall use its own databases for the necessary variables (mark-to-model). If a model is used for the valuation of a Liability item, there shall be no change in the way and method of its valuation in the future.In any other case, the Company uses a specialized valuator for the determination of the market price of Assets and Liabilities.The following tables describe the valuation method for the Company’s assets, as shown in table D.1, and present an explanation of any significant differences in the valuation of the balance sheet according to Solvency II Directive, the Financial Statements (IFRS) and the explanation of the differences between the Balance Sheets for Solvency II for years 2018 and 2017.


Deferred acquisition costs:(A1): The variance presented in the balance sheet “Solvency II” and the balance sheet based on the IFRS is due to the total impairment of the deferred acquisition costs based on Solvency II Directive.The balance of the account for fiscal year 2018, based on the IFRS is analyzed as follows:

Life Insurance Non-Life Insur-ance

Total

Commissions and other expenses of future fiscal years on 31/12/2018 5,779 11,813 17,592

Table D.3: 2018 Commissions and other expenses of future fiscal years (amounts in thous. €)

(VA1): This account remained zero in the Solvency II balance sheets for fiscal years 2018 and 2017.

Intangible Assets(A2): The Intangible assets are valued at acquisition value, less the impairments. The intangible assets include the installation costs and purchases of software licenses. According to Solvency II Directive, the intangible assets without the market value are valued at zero.(VA2): This account remained zero in the Solvency II balance sheets for fiscal years 2018 and 2017.

Deferred Tax Assets / Liabilities(A3): The 2017 deferred tax Assets/ Liabilities of the Company based on the IFRS have been calculated as follows:

(Amounts in thous. €) 31/12/2018 31/12/2017Deferred tax assetsReadjustment of depreciations of intangible assets 123 43Provision for bad debts 2,123 1,800Pensions & other provisions after the termination of service 506 464Insurance provisions 744 718Impairments 5 34Impact from distribution of dividends 0 892Readjustment of the value of financial instruments 624 963Off settable Tax Losses (PSI) 1,196 1,433Deferred Tax Liabilities 0Readjustment of value of own-used property -2,639 -2,783Readjustment of value of investments in real estate -2,888 -3,045Accrued Interests of Financial Instruments 0 -368Asset / Liabilities Variance -206 151

Table D.4: Calculation of Deferred Taxation according to IFRS for years 2018 and 2017 (amounts in thous. €)

According to the table above, the deferred taxation for fiscal year 2018 is a liability.Any differences arising between the two balance sheets are due to the different valuation methods used under the IFRS and Solvency II. The Deferred taxation under Solvency II is measured using the income tax coefficients that are expected to be present at the time when the deferred tax liabilities will be settled or when the deferred tax assets will be liquidated or offset. According to the Solvency II Directive, the deferred tax assets are calculated at € 7,252 thous. and the Deferred tax liabilities are calculated at € 7,449 thous.(VA3): The difference is mainly due to the change of the deferred tax assets, according to the IFRS from € 151 thous. in 2017 to deferred tax liabilities of € 206 thous. in 2018 and most specifically, the changes in the readjustment of the value of the investments in real estate, the provisions for bad debts and the readjustment of the impairments of tangible assets.

Property, plant and equipment for own use(A4): The Company valuates the real estate for own use at fair value, and the equipment and means of transport are measured at book value, decreased based on the impairment rates, as defined for each asset at acquisition date. The Company monitors the value of the real estate on a regular basis at least once every two years and performs frequent valuations, in case of significant changes in the market.

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The above valuation method applies both for the Solvency II and IFRS balance sheets. The most recent valuation of the Company’s Tangible Assets for the fiscal year ending 31/12/2017 was performed by an independent real estate auditor on 15/01/2018, based on the Comparison Approach.The estimation study was compiled based on the Company’s outsourcing on 20/12/2017 on an independent company for valuation of real estate and referred to the valuation of the Market Value of ten (10) real estate and more specifically, a real estate on 211 El. Venizelou Str., in Nea Smirni, Athens, Greece, a real estate in 37 Vavala Str., in Kastoria, a real estate in 7-15 G. Stavrou Str., in Xanthi, a real estate on 26γ Eleftheriou Venizelou Str., in Kavala, a part of a real estate in 274 Kifisias Avenue in Chalandri, Athens, a real estate in 35 Filellinon Str., in Chalandri, a real estate in 269 V. Olgas Avenue, in Thessaloniki, a real estate in 89-91 Ermou Str., in Patra, a real estate in M. Alexandrou & Kouma 1 Str., in Larissa, and a real estate in 18 25th Martiou Str., in Katerini, as expected on 31/12/2017. The Market Value was applied as defined in the Valuation Professional Standards Global “Red Book” (10th Edition, July 2017) of the Royal Institution of Chartered Surveyors (RICS) that incorporates completely the International Valuation Standards (IVS) of the International Valuation Standards Council (IVSC). Moreover, for purposes of financial information for the property value included in the financial statements compiled in accordance with the International Financial Reporting Standards, hereinafter, “IAS”, “IFRS”, the basis of the Market Value as above is absolutely compatible with the Fair Value according to IFRS No. 13, Fair Value).Based on the latest research for acquisition of real estate in 2018, the Greek real estate market, after a decade of declining trend (35%-45% cumulatively in prices) appears visible signs of recess. According to the latest available data, the prices of the real estate categories present an increase comparing to the 2017 levels (+2.5% increase in residence in the last quarter of 2018, +2.2% and +3.7% increase in offices and retail stores in the second semester of 2017). This positive trend is also verified by the fact that Athens has become a rising destination for the attraction of funds in the real estate market, rising to the 14th position among 31 European countries (versus 29th one year ago) in a recent study of a big consulting company.According to the above researches and the provisions of the International Accounting Standards IAS 16 and IAS 36 regarding the valuation of real estate, the Company has estimated that there are no sufficient indications that the value of the assets has changed to a degree that requires impairment for the period 31/12/2018.(VA4): The difference between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017, is mainly due to changes in the balance sheets according to IFRS in years 2018 and 2017 of total value € 53 thous., which are analyzed as follows:

(Amounts in thous.) Fields and Land

Buildings Means of Transport

Furniture and other

equipment

Improvements in leased real estate of third

parties

Fixed Assets under

construction

Total

Amortized acquisition cost as 31/12/2017

11,056 5,690 14 1,102 153 0 18,015

Plus:

Additions/ Transfers 0 104 7 531 49 0 691

Less:

Sales/ Write offs 0 0 0 -16 0 0 -16

Remeasurement at fair value 0 0 0 0 0 0 0

Depreciations of period 0 -139 -5 -444 -34 0 -622

Amortized acquisition cost as of 31/12/2018

11,056 5,655 16 1,173 168 0 18,068

Table D.5: Variation of Real estate, facilities and equipment for own use, according to IFRS for years 2018 -2017 (amounts in thous. €)

Property (other than for own use)(A5): This account refers to the Company’s investment in real estate. The Company valuates this account with the same way that valuates real estate held for own use. The above valuation method is the same for the Solvency II and IFRS Balance Sheets.The last valuation of the Investment Real estate of the Company for the fiscal year ending 31/12/2017 was performed by an independent real estate valuator on 15/01/2018, based on the comparison approach.The estimate study was compiled in accordance with the Company’s outsourcing on 20/12/2017, in an independent company of real estate valuation and referred to the valuation of the Market Value of four (4) real estate and more specifically a real estate on 33 Marni Str., in Athens, a building in Klaus and Olynthou Str., in Patra, a part of a real estate in 274 Kifissias Avenue in Chalandri, and a land in Evangelismos, in Egnatia Street, in Thessaloniki, as of 31/12/2017. The Market Value was selected as Basis of Value, as defined in the Valuation Professional Standards Global “Red Book” (10th Edition, July 2017) of the Royal Institution of Chartered Surveyors (RICS) that incorporates completely the International Valuation Standards (IVS) of the International


Valuation Standards Council (IVSC). Moreover, for purposes of financial information for the property value included in the financial statements, compiled in accordance with the International Financial Reporting Standards, hereinafter, “IAS”, “IFRS”, the basis of the Market Value as above is absolutely compatible with the Fair Value according to IFRS No. 13, Fair Value).Regarding the impairment audit of investments in real estate for 2018, the aforementioned in the above section A4 apply: Property, plant and equipment for own use(VA5): The difference between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017, is mainly due to changes in the balance sheets according to IFRS in years 2018 and 2017 of total value of € 108 thous., analyzed as follows:

Value 31/12/2017 15,750Additions 108Value at 31/12/2018 15,858

Table D.6: Variance of Real Estate (apart from real estate held for own use) according to IFRS for years 2018 -2017(Amounts in thous. €)

Holdings in related undertakings(A6): The Company measures its holdings in related undertakings at fair value. The Company determines the fair value of holdings by using valuation techniques in cases where the financial instruments are not traded on an active market.More specifically, it refers to the following subsidiaries:

Participation Country of Registered Offices

Participation

European Reliance Asset Management M.F.M.S.A. Greece 99.01%Alter Ego Facilities Management S.A. Greece 97.30%Reliance Insurance Company Single-Member S.A. Greece 100.00%

Table D.7: Participation’s Rate in subsidiaries for 2018

The methods applied for the valuation of the above companies are the following:a) Price to book ratio.b) Method of Current Stock price / Earnings per Share.c) Method for Discounted Cash Flow, DCF d) Enterprise Value/ Earnings Before Interest, Tax, Depreciation & Amortization, EV/ EBITDAFor the valuation of the investment, a combination of the methods referred above has been performed.The above valuation methods are the same for Solvency II and IFRS balance sheets.(VA6): The difference between the Balance Sheets for Solvency II purposes between fiscal years 2018 and 2017 is mainly due to the changes in the Balance Sheets according to I.F.R.S. in years 2018 and 2017 of total value € 99 thous., mainly due to the change of the participation rate in the Company Alter Ego Facilities Management S.A. from 97.15% in 2017 to 97.30% in 2018 and the valuation of the subsidiaries, using the following methods at fair value on 12/31/2018.

Equities – listed(A7) The impairment of listed equities in which the Company has invested are measured at fair value. In the case of equities listed and traded on a regulated active market or other regulated market operating normally, recognized and open to the pub-lic, the Company valuates them at published closing prices. More specifically, the total amount of € 168 thous. refers to shares listed in the Athens Stock Exchange, which were measured at fair value, based on the closing price of 31/12/2018.The above valuation method is the same for the Solvency II and IFRS balance sheets.(VA7): The difference between the Balance Sheets for Solvency II purposes between fiscal years 2018 and 2017 is mainly due to the changes in the Balance Sheets according to I.F.R.S. in years 2018 and 2017 of total value € 446 thous., mainly due to the decrease of the price of the share of Piraeus Bank S.A. on 31/12/2018 by 72.6% comparing to the corresponding period of the previous year.

Government and Corporate Bonds(A8): The valuation of fixed income instruments (bonds/ securities) is based on tier 1 of the hierarchy followed for the determination of fair value, as analyzed above.The variance presented between the Balance Sheet according to Solvency II and the Balance Sheet according to IFRS, is due to a different valuation method used for bonds:

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a) According to Solvency II Directive, all bonds are measured at fair value (including the accrued interest), while according to IFRS, the bonds held to maturity are measured at acquisition cost, less the amortized costs.b) Under IFRS, the earned interest for bonds is depicted in the account “Receivables (trade, not insurance).(VA8): The variance between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017, is mainly due to the facts that the Company in 2018 purchased government bonds of total value of 116,998 € thous. (including the accrued interests) and sales/maturities of € 90,905 thous. (accrued interests included). Moreover, the Company in 2018 proceeded to acquisitions of corporate bonds of € 9,444 thous. (accrued interests included) and the sales/maturities of € 23,270 thous. (accrued interests included).

Undertakings for Collective Investments (Mutual Funds)(A9): The valuation of mutual funds is based on tier 1 of the hierarchy, followed in order to determine the fair value, as described above. In cases of shares from undertakings for collective investments in transferable securities that fulfill the provisions of Directive 2009/65/EC and/or other undertakings for collective investment, the Company measures these shares at net asset value.The above valuation method is the same for the Solvency II and IFRS balance sheets.(VA9): The variance between the Balance Sheets for Solvency II between fiscal years 2018 and 2017 by € 1,889 thous., is due to the fall of the prices of shares of mutual funds within 2018.

Deposits other than cash equivalents(A10): The time deposits are valuated under Tier 1 of the hierarchy followed for the determination of fair value, as analyzed above and is calculated based on the invested capital and the accrued interests.The variance presented between the Balance Sheet according to Solvency II and Balance Sheet according to IFRS, is due to the different valuation method of time deposits.a) According to Solvency II Directive, all time deposits are measured at fair value (including the accrued interests). The difference in the valuation for 2018 amounts to € 6 thous.b) According to IFRS, the earned interest for time deposits (total € 2 thous.) are presented in the account “Receivables (trade, not insurance).(VA10): The difference between the Solvency II Balance Sheet between fiscal years 2018 and 2017 is mainly due to the fact that the Company’s investment strategy for 2018 was based on the investment of inflows in bond markets and the maintenance of deposits in the same levels with 2017.

Assets held against index-linked and unit-linked policies (Investments for life insured who bear the invest-ment risk)(A11): It refers to investments for Life Insured who bear the investment risk and their valuation comply with tier 1 of the hierarchy followed for the determination of fair value, as described above. More specifically, the assets held against index-linked and unit-linked policies, refer to Undertakings for Collective Investment that are valued at net asset value.The above valuation method is the same for the Solvency II and IFRS balance sheets.(VA11): The difference between Solvency II Balance sheets for fiscal years 2018 and 2017 is mainly due to the decrease of written premiums (24.8%) and more specifically of investments for Life insured that bear the investment risk (Unit-Linked) and due to the decrease of the share’s price.

Loans and Mortgages(A12): Based on Solvency II Directive, the Company measures the loans using the total fair value, including the accrued interests.The loans to personnel, to insurance agents and life insureds are registered at the date of disbursement at the level of the amount granted plus the direct costs related to the loan.When a loan qualifies as doubtful, the book value is reduced at the estimated recoverable value, which is defined as the present value of the expected future cash flows, including the estimated recoverable amounts from guarantees and physical collaterals, prepaid with the initial effective interest rate of the loan.The above valuation method is the same for the Solvency II and IFRS balance sheets.(VA12): The difference between Balance Sheets according to Solvency II for fiscal years 2018 and 2017, is due to the fact that in 2018, the total amount of loans to personnel, insurance agents and life insured decreased as follows:


(Amounts in thous. €) 31/12/2018 31/12/2017Loans to personnel- insurance agents 2,820 3,540Loans to Life Insured 219 803Fiscal year’s provisions -648 -800Total 2,391 3,543

Table D.8: Change of loans analysis according to IFRS for years 2018 -2017 (amounts in thous. €).

The effective interest rate of loans to personnel and insurance agents amounts to 5.25%, the loans to insured of the Individual Life Insurance Sector to 5.25% and loans to Insured of the Group Life Sector to 3.35%.It is noted that in 2018 the provisions for doubtful loans of insurance agents reached the amount of € 648 thous.

Reinsurance Recoverables(A13), (VA13): It refers to reinsurance receivables related to the reinsurers’ rate in reserves for outstanding claims and premiums. The deviation between the Solvency II and IFRS balance sheets is due to the different valuation method. Under Solvency II framework, the best estimate for recoverables must take into account the estimate for the collectability of the liabilities on behalf of the reinsures and the integration of the time value of money. It is noted that the current account related to reinsurance policies is presented in the account «Receivables from Reinsurance Activities».Ιt is noted that in 2017 the provisions for doubtful receivables from reinsurance balances reached the amount of € 1,113 thous.

Insurance and intermediaries’ receivables (A14): Insurance and intermediaries receivables refer to amounts from insurance policies issued up to the date of preparation of the financial statements and remain uncollected. If the collection of the receivables is not possible within the provided time limits, the policy shall be canceled. The valuation is based on tier 2 of the hierarchy, for the determination of the fair value, as described above. The fair value is calculated using the discount cash flow method, taking into account the estimate on collectability of these amounts.The above valuation method is the same for the Solvency II and IFRS balance sheets.(VA14): The variance between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017, is mainly due to the fact of total decrease of receivables by 7.6%, analyzed as follows:

(Amounts in thous. €) 31/12/2018 31/12/2017Open Accounts 20,016 19,295Bills and receivable cheques 1,545 3,175Bad dept provision -7,229 -6,963Total 14,332 15,507

Table D.9: Analysis of Claims from Insurance and intermediaries receivables for years 2018- 2017 (amounts in thous. €)

Reinsurance receivables(A15): Any difference arising between the Solvency II and the IFRS balance sheets is due to the addition of the balance of the current account for reinsurance policies, which is valuated according to Solvency II Directive.This amount, valuated according to the IFRS, is presented in the account «Reinsurance Receivables».(VA15): The difference between the Solvency II Balance Sheets for year 2018 and 2017 is mainly due to the increase of the liabilities to Interpartner road assistance, due to the increase of written premiums in the Motor Sector (10.7%) and mainly to the Road Assistance Sector (8.4%).

Receivables (trade not insurance)(A16): The valuation is based on tier 2 of the hierarchy to determine fair value, as described above. The fair value is calculated using the discount cash flow method, taking into account the estimate on the collectability of these amounts.The deviation between the Solvency II and the IFRS balance sheets is due to the fact that the substitution amounts are taken into account for the best estimate of the reserves of the liabilities account. Therefore, they are not included in the assets. In addition, the accrued interest of bonds and time deposits are included in the relevant account of the balance sheet.(VA16): The variance between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017, is mainly due to changes in the balance sheets according to IFRS in years 2018 and 2017 of total value € 4,700 thous., analyzed as follows:

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31/12/2018 31/12/2017Prepaid expenses 2,554 1,701Advance Prepayment of taxes and other tax assets 100 2,138Advances and credit accounts 0 58Guarantees 2,975 1,969Claims from the Direct Payment System 802Related undertakings 485 352Other Receivables 847 601Receivables from income tax 3,769 0Total 11,532 6,819

Table D.10: Analysis of trade receivables according to IFRS for years 2018 -2017 (amounts in thous. €)

Cash and cash equivalents(A17): The account “Cash and cash equivalents” includes the cash and the current deposits invested in credit institutions and is measured at the nominal value.The above valuation method applies both for the Solvency II and IFRS balance sheets.(VA17): The variance between the Balance Sheets according to Solvency II in fiscal years 2018 and 2017 is mainly due to changes in the balance sheets according to IFRS in years 2018 and 2017 of total value of € 232 thous., as follows:

31/12/2018 31/12/2017Cash (Current deposits) 6,982 7,214

Table D.11 Variation of the Account of Cash Equivalents according to IFRS for years 2018 and 2017 (amounts in thous. €)

D.2 Technical Provisions

The technical provisions, according to the requirements of Solvency II Directive, are calculated as the sum of the best estimate of liabilities and the Risk Margin, the calculations of which are developed separately.At the comparison of the values of the Technical Provisions according to the requirements of Solvency II and IFRS, there were a few differences between them are due to the different valuation method used for the measurement of the best estimate according to Solvency II.More specifically:

Non-Life and NSLT Health Best Estimate (Non similar technical basis as Life Insurance)(L1), (L3): In Non-Life Underwriting (excluding Health NSLT) and Health Insurance (NSLT) the difference of € -19,633 thous. and € -2,004 thous., respectively, is mainly due to the fact that the following factors were taken into consideration:• The negative IBNR, as arising by the statistical method for the estimate of outstanding claims.• The procedure for the calculation of the best estimate of premium reserves, by using the combined loss ratio per

insurance sector.• Implementation of the time value of money (discount)(VL1), (VL3): The increase in Non-Life Insurance is due to the increase of outstanding claims and the increase of the premiums reserve. The decrease in Non-life Insurance Health (NSLT) is mainly due to the decrease of outstanding claims.

Health Best Estimate (on a similar technical basis to Life Insurance -SLT Health)(L5): In Health Insurance (SLT), the variance of € -8.618 thous. is due to the integration of the profitability through the combined ratio and the discounting benefit.(VL5): The increase in Health Insurance (SLT) by € 1,072 thous. derives from the increase of the best estimate of Other Additional coverages, due to the decrease of the lapse assumptions, deriving from a new experience study.

Life Insurance Best Estimate(L7): In Life Insurance, the difference of € - 5,472 thous. is due to the integration of the future profit.


(VL7): The increase of Life Insurance is mainly due to the increase of the credit balance of the Group Pension Funds (DAF) due to the increased contributions.

Insurance Best Estimate where the policyholder bears the investment risk(L9): The Unit Linked insurance presents a small deviation of € 158 thous., which is due to the increase of the guarantee obligation as a consequence of the decreased yield curve in Solvency II Directive.(VL9): The decrease of the Best Estimate is mainly due to decrease of the unit reserves, as a result of the decrease of the prices of the related capitals.Risk Margin(L2), (L4), (L6), (L8), (L10): The Risk Margin is a new concept according to Solvency II and in fiscal year 2017 it was calculated in accordance with the 3rd calculation approach, and in fiscal year 2018 according to the 2nd calculation approach, taking into consideration as an estimation factor for the future capital requirements the best estimate of the insurance liabilities (after the deduction of the receivables from reinsurers) assessed at the value of every future moment.(VL2), (VL4), (VL6), (VL8), (VL10): The variance of € - 10,045thous. of the overall Risk Margin is due to the change of the estimation methodology from the 3rd calculation approach used in 2017 to the 2nd calculation approach.Liabilities Best Estimate MethodThe Best estimate for the liabilities corresponds to the weighted average of future cash flows, taking into account the time value of money.The calculation methods are based on deterministic projections and techniques using the analytical formula and taking into account the uncertainties of cash flows.The future projections correspond to the estimated value of cash inflows and outflows required for the settlement of the insurance and reinsurance liabilities up to maturity. The estimates were based on updated and reliable information and realistic assumptions, using the appropriate actuarial and statistical methods.For the discount of cash flows, due to the Volatility Adjustment, we used the adjusted yield curve at valuation date, as calculated by EIOPA.The methodology implemented per group of risk underwriting is analyzed below.

Non-Life and NSLT Health InsuranceThe following methodology applies to Non-Life and NSLT Health underwriting per insurance sector and to group underwriting.For the Motor Third Party Liability Sector, the methodology is developed separately for cases of Bodily Injury and Property Damage.Best estimate of Premium ReserveThe premiums from Non-Life Insurance policies are recognized

as income (earned premiums) depending on the policy period. The amount of premiums that corresponds to the remaining period, from the reference date up to the maturity date for which the premiums have been registered, is included in the reserve of unearned premiums. The amounts of premiums are presented without the deduction of the corresponding commissions.To calculate the best estimate, we use the combined ratio of every insurance sector, which is the sum of the loss ratio and the expenses ratio. This ratio is applied to the calculated reserve of unearned premiums. For the calculation of the best estimate of premiums, we take into consideration the value of money and we use the assumption that the cash flows are realized in the middle of each year.Best Estimate of Outstanding Claims ReserveThe estimate of the Outstanding Claims Reserve was calculated by the Departments of Claim Settlement, based on the available data on the reference date, the existing experience, and the Company’s policy on direct settlement of claims. The Company has developed statistical methods for every insurance sector and processed historical data according to the analytical movements per loss case for every accident year since 2007 for motor insurance and for the other insurance scheme from 2008 to 2018.Regarding the Motor Third Party Liability Sector, the claims were classified in the Property Damage and Physical Injury categories, to permit analysis within homogeneous risk groups.For the calculation of the best estimate of outstanding claims, the method “Loss Development Triangle” was applied.The analysis was performed per insurance sector taking into consideration the homogeneity of the underlying risks. Moreover, the statistical method “Loss Development Triangle” was applied for the estimation of the recoverables arising from underwriting performance in the insurance sector of motor third party liability. For other insurance sectors, these amounts are projected simultaneously with the claims.For the calculation of the best estimate of Outstanding Claims, the time value of money is taken into consideration, while using the assumption that the cash flows are performed in the middle of each year.Health Underwriting (similar technical basis as Life Insurance SLT)The calculation of the best estimate is performed with the use of the projection method for cash flows. Since the Company may unilaterally amend future premiums, so that they fully reflect the covered risks, the Health Underwriting Boundary has been established up to the next anniversary of each policy since the valuation date. The Products for Accident insurance coverage are excluded, since their projection was calculated up to the maturity of the insurance policy. The calculations were made at insurance policy level.The key valuation parameters were calculated as follows:• Mortality rates: The mortality rates were based on the

appropriate published tables. There is no significant variation comparing to the previous valuation period.

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• Morbidity odds ratio: The estimate of morbidity odds ratio was based on the Company’s experience, as arising by the Company’s historical data. There is no important variation comparing to the previous valuation period.

• Lapse rates: The lapse rates were based on a statistical analysis of cancellations of the underwriting portfolio and are differentiated for every homogeneous group of products. There is no important variation comparing to the previous valuation period.

• Expenses: The assumptions for Expenses were based on the expenses- analysis performed by the Company for each group of products. There is no important variation comparing to the previous valuation period.

Other Additional Coverages of Individual Insurance Policies The Company has differentiated the Other Additional Coverages of Individual Insurance Policies per levels of provision (un- bundled).The best estimates were calculated using the cash flow projection method of cash flows on an annual basis, from the valuation date up to the maturity date of each policy. The calculations were performed at levels of provision.The key valuation parameters were calculated as follows:• Mortality rates: The mortality rates were based on the

appropriate published tables. There is no important variation comparing to the previous valuation period.

• Disability odds ratio: The calculation of disability odds ratio was based on the Company’s experience, as arising by the Company’s historical data, combined with the pricing list of reinsurance policies. There has not been any significant variation comparing to the previous valuation period.

• Lapse rates: The calculation of lapse rates is performed on a statistical analysis of cancellations for the underwriting portfolio and is different for every homogeneous group of products. There has been a decrease of the rates comparing to the previous valuation period.

• Expenses: The assumptions for expenses were based on the expenses- analysis performed by the Company for each group of products. There is no important variation comparing to the previous valuation period.

The outstanding claims reserve corresponds to the estimated forecasting performed by the claim settlement department, based on the data available up to the reference date the existing experience, and the Company’s policy for settlement of direct claims. The reserve of outstanding claims for which the waiver of premiums has been activated, corresponds to the estimated forecast, which is calculated with the projection of cash flows in combination with the available figures.For the calculation of the technical provisions, the outstanding claims reserve has been added to the best estimate.

Life InsuranceTraditional individual insurance plansThe best estimates were calculated using the cash flow projection method on an annual basis, from the valuation date up to the maturity date of each policy. The calculations are performed at policy level.The key valuation parameters were calculated as follows:• Mortality rates: The mortality rates were based on the

appropriate published tables. • There has not been any important variation comparing to

the previous valuation period.• Lapse rates: The calculation of lapse rates is

performed on a statistical analysis of the lapse rates of the underwriting portfolio and is different for every homogeneous group of products. The lapse rates increased from the 7th insurance year comparing to the previous valuation period, due to the increased acquisitions of the old portfolio. The Company included this variation in the behavior of the insured in the experience study of the current valuation period.

• Expenses: The assumptions of the expenses were based on the expenses’ analysis performed by the Company per group of products. Comparing to the previous period, we observed decrease of expenses, due to the improvement of the distribution method.

The Company calculates and includes the valuation of guarantees and options rights in the calculation of best estimates. The calculation was developed using the model based on which the time value is estimated with the analytical formula. The key parameter, the fluctuation, is estimated by the implied volatility of the swaptions market. The insurance policies are grouped based on the guaranteed technical interest rate and then they are compared with the performance of the investment portfolio.The outstanding claims reserve corresponds to the estimated forecasting made by the claim settlement department, based on figures available at the reference date, the existing experience, and the Company’s policy on direct settlement of claims.For the calculation of technical provisions, the outstanding claims reserve was added to the best estimate.Group Pension Fund Insurance SchemesThe Best estimates were calculated using the cash flow projection method on an annual basis, from the valuation date up to the maturity date of the guaranteed interest rate. The calculations are performed at policyholder level.The key valuation parameters were calculated as follows:• Mortality rates: The mortality rates were based on the


• Disability odds ratio: The calculation of disability odds ratio was based on the Company’s experience, as arising by the Company’s historical data, combined with the pricing list of the reinsurance policies. There has not been any significant variation comparing to the previous


valuation period.• Lapse rates: The estimation of lapse rates is based on a

statistical analysis of the lapse rates for the underwriting portfolio and is different for each homogeneous group of products.

• The lapse rates presented a decrease comparing to the previous valuation period, due to the decreased acquisitions. The Company too this variation into consideration for the behavior of the insured in the experience study of the current valuation period.

• Expenses: The assumptions of Expenses were based on the expenses’ analysis performed by the Company per group of benefits. We observed decrease of expenses comparing to the previous valuation period, due to the improvement of the distribution method.

The Company calculates and includes the valuation of guarantees and options rights in the calculation of the best estimates. The calculation was developed with the use of the Black model, based on which the time value is estimated with the analytical formula. The key parameter, the fluctuation, is estimated by the implied volatility of the swaptions market. Th insurance policies are grouped based on the guaranteed technical interest rate and then they are compared with the performance of the investment portfolio.The outstanding claims reserve corresponds to the estimated forecasting, performed by the claim settlement department, based on figures available at the reference date, the existing experience, and the Company’s policy on direct settlement of claims.For the formation of technical provisions, the reserve of outstanding claims was added to the best estimate.Unit-Linked insurance plans where the policyholder bears the investment riskThe best estimates were calculated using the cash flow projection method on an annual basis, from the valuation date until the maturity date of each policy. The calculations are performed at policy level.The key valuation parameters were calculated as follows:• Mortality rates: The mortality rates were based on the


• Lapse rates: The calculation of the lapse rates is performed on a statistical analysis of the lapse rates of the underwriting portfolio and is different for every homogeneous group of products. The lapse rates presented a decrease comparing to the previous valuation period, due to the decreased acquisitions. The Company included this variation in the behavior of the insured in the experience study of the current valuation period.

• Expenses: The assumptions of expenses were based on the expenses’ analysis performed by the Company per group of products. There is no important variation comparing to the previous valuation period.

• Future Investment Return Rate: The yield curve

corresponds to the discount curve of cash flows.The Company calculates and includes the valuation of guarantees and options in the best estimates. The calculation was developed with the use of a model, based on which the time value is estimated with the analytical formula. The key parameter, the fluctuation, is estimated by the implied volatility of the swaptions market. The insurance policies with guaranteed value at maturity are taken into consideration and then this value is compared to the return of this portfolio in related funds.The outstanding claims reserve is equal to the estimated forecasting made by the department of claims settlement, based on the figure available at the valuation date, the existing experience, and the Company’s policy on direct settlement of claims.For the calculation of technical provisions, the reserve of outstanding claims was also added to the best estimate.The Risk Margin is part of the technical provisions, in order to ensure that the value is equal to the amount that the insurance and reinsurance undertakings are expected to require, in order to undertake and meet the Company’s insurance and reinsurance liabilities.The Risk Margin is calculated by determining the cost of provision of an amount of eligible Own Funds, equal to the Solvency Capital Requirement (SCR) required to cover the Company’s insurance and reinsurance liabilities up to their maturity.The Risk Margin was calculated according to the 2nd approach (Simplification) of the technical provisions, according to appropriate guidelines, for the improvement of the implemented 3rd approach for fiscal year 2017. The Company calculates the Risk Margin separately for life and non-life insurance and allocates separately the results, using as liens the net best estimates from reinsurance recoverables, per line of business.Impact of long-term guarantees measure due to volatility adjustmentThe Company, at the measurement of the value of technical provisions, used for the discount of cash flows the volatility adjusted, risk-free yield curve at valuation date, as calculated by EIOPA. This measurement does not require approval by the supervisory authority and has a small impact on the Company’s results. The following table presents the impact of that measure:

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Line of Business (31/12/2017) Solvency II Without volatility adjustment

Variance

Non-Life (excluding Health) 176,924 177,147 224Best Estimate 164,847 165,035 188Risk Margin 12,076 12,112 36Health (non- similar technical basis as Life Insurance NSLT) 5,445 5,448 2Best Estimate 5,074 5,075 2Risk Margin 372 372 1Health (similar technical basis as Life Insurance SLT) 6,432 6,397 -35Best Estimate 3,684 3,668 -16Risk Margin 2,748 2,729 -19Life (excluding Health) 65,244 65,486 242Best Estimate 56,489 56,739 250Risk Margin 8,755 8,748 -7Unit-Linked 11,166 11,181 14Best Estimate 11,107 11,120 13Risk Margin 59 61 2Total Best Estimate 241,201 241,637 436Overall Risk Margin 24,010 24,022 12Total 265,211 265,659 448Line of Business (31/12/2018) Solvency II Without volatility

adjustmentVariance

Non-Life (excluding Health) 180,868 181,912 1,044Best Estimate 171,380 172,425 1,044Risk Margin 9,487 9,487 0Health (non- similar technical basis as Life Insurance NSLT) 5,278 5,286 8Best Estimate 4,829 4,838 8Risk Margin 448 448 0Health (similar technical basis as Life Insurance SLT) 5,044 4,988 -56Best Estimate 4,755 4,699 -56Risk Margin 288 288 0Life (excluding Health) 61,966 63,366 1,400Best Estimate 58,305 59,705 1,400Risk Margin 3,661 3,661 0Unit-Linked 10,945 11,049 104Best Estimate 10,864 10,968 104Risk Margin 81 81 0Total Best Estimate 250,134 252,635 2,501Overall Risk Margin 13,965 13,965 0Total 264,100 266,601 2,501

Table D.12: Technical Provisions with and without volatility adjustment, per line business for the years 2018 and 2017 (amounts in thous. €)

The calculation of the value of the technical provisions with a risk-free discount yield curve leads to an overall increase of the technical provisions by € 2,501 thous. The largest increase of the impact of the measure, comparing to the previous valuation period is mainly due to the increase of the volatility adjustment to zero. The quantitative impact of this on the Company’s finan-cial position, setting the variation of the volatility adjustment to zero, is as follows:• Basic Own Funds: Decrease by € 1,748 thous.• Eligible Own Funds for Minimum Capital Requirement: decrease by € 2,059 thous.• Eligible Own Funds for Solvency Capital Requirement: Decrease by € 1,748 thous.


• Solvency Capital Requirement: Increase by € 581 thous.• Minimum Capital Requirement: Increase by € 1,422 thous.Uncertainty Level The Company conducts experience analysis per sector of insurance (Actual vs Expected), between two successive submis-sions (at least annual), justifying changes, ensuring the credibility of the assumptions in which the calculation of best estimates was based, as described above.For the Motor Third Party Liability Sector, which consists the Company’s main line of business, both at technical provision and underwriting risk level, the Company develops alternative scenarios for statistical methods for the calculation of the best esti-mate of outstanding claims, to reduce the uncertainty of the selected method. The experience analysis is separately developed for each method.Sensitivity AnalysisThe Company performed a sensitivity analysis on the current value of cash flows for each one of the significant risks related to the Company’s liabilities. The results are presented in the following table.

Sensitivity Analysis of Liabilities 31/12/2018 Variance in Assumptions Impact on Liabilities

Non-Life and Health Insurance (non- similar technical basis as Life Insurance NSLT)

Expenses Rate +10% 6-10% -6

Health (similar technical basis as Life Insurance SLT) Discount Rate + 50 basis points 17

- 50 basis points -18Lapse Rates +10% 11

-10% -11Morbidity Rates + 5% 277

5% -278Life Insurance: Other Additional coverages Discount Rate + 50 basis points 129

- 50 basis points -137Lapse Rate: +10% 153

-10% -161Life Insurance: Traditional Coverages Discount Rate + 50 basis points -2,446 - 50 basis points

2,804 2,804

Lapse Rate: +10% -40-10% 38

Unit Linked Discount Rate + 50 basis points -259

- 50 basis points 200Lapse Rates +10% -86

-10% 13Employee’s Group Pension Schemes (DAF) Discount Rate + 50 basis points -332

- 50 basis points 364Lapse Rate: +10% -5

-10% 5

Table D.13: Sensitivity Analysis (amounts in thous. €)

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The scenarios for increase of the assumptions present increase of liabilities of short-term coverages and decrease of the long-term policies (Life Insurance Policies, Unit Linked, DAF).The largest sensitivity is observed in the Life Insurance Sector, traditional Coverages, in the scenarios of transmission of the yield curve. In case of increase of interest rates, the liability decreases as a result of the decrease of the mismatch of guaranteed interest rates of the portfolio with future discount interest rates.The following table presents the reinsurer’s rate per insurance sector.

Line of Business (31/12/2018) Gross Reinsurer’s RateNon-Life (excluding Health) 180,868 9,740Best Estimate 171,380 9,740Risk Margin 9,487 0Health (non- similar technical basis as Life Insurance NSLT) 5,278 183Best Estimate 4,829 183Risk Margin 448 0Health (similar technical basis as Life Insurance SLT) 5,044 76Best Estimate 4,755 76Risk Margin 288 0Life (excluding Health) 61,966 207Best Estimate 58,305 207Risk Margin 3,661 0Unit-Linked 10,945 1Best Estimate 10,864 1Risk Margin 81 0Total Best Estimate 250,134 10,207Total Risk Margin 13,965 0Total 264,100 10,207

Table D.14: Impact of reinsurance (amounts in thous. €)

The largest reinsurer’s rate is observed in the Company’s largest exposure, the Non-Life Sector. The Company selects Reinsur-ance companies with high credit rating and monitors them throughout the year.

D.3 Other Liabilities

Insurance and intermediaries’ payables(L11): These payables refer to liabilities to insurance agents, insurance brokers and sales agents and are valued according to the principles of the IFRS. The above valuation method is similar for the Solvency II and IFRS Balance Sheets according to the IFRS. (VL11): The difference between the Balance Sheets according to Solvency II for fiscal years 2018 and 2017 by € 858 thous., is mainly due to the direct payment of liabilities to agents and intermediaries within 2018.Reinsurers’ Payables(L12) (VL12): These liabilities refer to liabilities to reinsurers and are valued according to the principles of IFRS.The amount of the account, for purposes of presentation of the financial statements is presented in the Liabilities (Reinsurers’ Payables) and for Solvency II is presented in the Reinsurance Receivables (Recoverables from reinsurers), provided that it is included in the Best Estimate of Technical Reserves, according to Solvency II Directive.

Any other liabilities, not elsewhere shown(L13): This account refers to Other Liabilities, the projections and the current income tax and are valued according to the principles of IFRS.The above valuation method is similar for the Solvency II and IFRS balance sheets.(VL13): The difference between the Balance Sheets according to Solvency II between fiscal years 2018 and 2017, is mainly due


to changes in the Balance Sheets according to IFRS in years 2018 and 2017 of total value of € 702 thous., analyzed as follows:

31/12/2018 31/12/2017Creditors and suppliers 6,766 6,310Receivable Collaterals 82 82Duties and Taxes Payables 8,467 8,101Insurance Organizations 663 608Paid dividends 44 46Future fiscal years paid expenses and income 2,644 2,405Related undertakings 28 73Provisions 2,026 1,602Current Income Tax 0 2,195Total 20,721 21,422

Table D.15: 2017 and 2018 Analysis of Other Liabilities (amounts in thous. €)

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E.Capital Management

This section presents information relevant to the structure of Own Funds, the Mid-Term Fund Management Plan, results of the Sol-vency Capital Requirements and Minimum Capital Requirements on the reference date.Key elements of the Section:• Own Funds• Solvency Capital Requirements and

Minimum Capital Requirements


E.1 Own Funds

The Company has established procedures that ensure that the Own Fund items meet the requirements of the applicable capital sufficiency and the dividend distribution scheme, at their issuance date and after, and that they are properly classified, according to the applicable scheme.The Own Funds in the possession of the company may be analyzed in the following:A. Basic Own FundsThe Basic Own Funds consist of the following elements:i. The difference between the Assets and Liabilities aσ

these are valued according to the current applicable legislation.

ii. subordinated debt.The Basic Own Funds (additionally) are:• The paid-up share capital in cash• The paid-up share capital in kind (property etc.)• The variance from the shares premium account• The results brought forward• The Basic own funds (deductively) are:• The assets deducted from the Basic and Ancillary Own

Funds• Other intangible fixed assetsB. Ancillary Own FundsThe ancillary Own Funds are figures other than those comprising the Basic Own Funds. These funds may be used for loss absorbency.The Ancillary Own Funds are loans to agents and subordinated customers.Capital AdequacyThe Company’s Management applies reliable, effective and comprehensive Strategies and Procedures for the assessment and preservation of the amount on a constant basis, the composition and allocation of Own Funds that the Company considers appropriate to cover the nature and level of risks underwritten, as well as the future possible underwritten risks.The Company’s Policy is to maintain a strong capital basis, so that there are feelings of trust of the Insured, Investors and the Creditors are kept at high levels and also to support its future growth. The Management monitors the Own Funds, taken as a whole, excluding the minority interests, in order to retain a ratio of about 30/70 with the foreign capital.Mid-term Capital Management PlanThe Company, within the framework of its Business Plan, develops a Mid-term Capital Management Plan to cover the following issues:• The need to increase the Share Capital• Replacement of the Own Fund items that expire• Cover of the capital adequacy limits, as already defined,

in the case of new issuances, liquidations, payments and other variations in the valuation of the items of the Own

Funds.• Forward Looking Assessment of Own Risks (based on

the ORSA principles)• Assessment of the consequences due to maturity of the

period for use of the transitional measuresAny changes of the current business plan are reflected in the ORSA procedure and the Mid-term Own Funds Management Plan. Moreover, the annual or extraordinary budget reviews are reflected in the future available Own Funds for the following fiscal years, and the Company performs stress testing with alternative scenarios that reflect the negative consequences from unpredictable changes in the macroeconomic environment and the Company’s internal operations, in order to estimate the robustness of the future available capitals. There is a comparison of the results of the tests with the regulatory or internal solvency limits.The above plan is implemented mostly through the Cash Flow Statement as follows:• Calculation of cash flows from operating activities before

the changes in operating assets. For the calculation, the Company takes into consideration the financial results (profit and loss) after tax, the depreciation of fixed assets, the investment revenues, the debit interest, the insurance provisions and the operating allowances.

• Calculation of changes in operating assets, so that the net cash flows will emerge from operating activities.

• For the calculation, the Company takes into consideration the increase or decrease of the claims, the increase or decrease of the liabilities, the acquisitions and sales of financial instruments and the increase of investments for account of the Life Insurance policyholders who bear the investment risk (unit linked).

• Calculation of cash flows from investment activities, so that net cash flows will emerge. For the calculation, the Company takes into consideration the expenses for the acquisition and sale of tangible and intangible fixed assets, the acquisition and sales of financial instruments, the increase or decrease of the value of holdings and the investment revenues.

• The calculation of cash flows from financing activities such as a change in the amount of loans, capital increase, the amount of financial leases, dividends paid to minority shareholders and the expenses for acquisition of minority interests.

• Calculation of cash and cash equivalents in the end of the fiscal year, by adding up all of the above with the cash and cash equivalents in the beginning of the fiscal year. Based on this result, the management actions are performed.

The Company classifies the Basic and Ancillary Own Funds in three categories (Tiers), depending on the quality of the funds. The classification of these assets depends on whether they are Basic Own Funds or Ancillary own funds and to the degree of the following characteristics:1. The asset is available or may be claimable upon request,

for loss absorption on going concern, and in the case of

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liquidation (continuous availability)2. In case of liquidation, the total amount of the asset is available for loss absorbency and the asset is not returned to the

owner until all other liabilities, including the insurance and reinsurance liabilities to counterparties and beneficiaries of insurance and reinsurance coverage have been settled (dependency).

The table below includes the classification of Own Funds in 3 Categories (Tier 1, Tier 2, Tier 3) (amounts in thous. €):

Analysis of Own Funds

31/12/2018 31/12/2017

Total Tier 1 Un-restricted

Tier 1Restricted

Tier 2 Tier 3 Total Tier 1 Unre-stricted

Tier 1Restricted

Tier 2 Tier 3

Paid up capital of Common shares

17,327 17,327 0 0 0 17,327 17,327 0 0 0

Reserve of share premium account

18,841 18,841 0 0 0 18,841 18,841 0 0 0

Reconciliation reserve

77,226 77,226 0 0 0 64,647 64,647 0 0 0

Positive variance between assets and liabilities

116,970 107,705

Foreseeable dividends, distributions and charges

-3,575 -3,300

Other items of Basic Own Funds

-36,168 -39,758

Net deferred tax assets

0 3,590 0 0 0 3,590

Total basic own funds

113,395 113,395 0 0 0 104,405 100,815 0 0 3,590

Total ancillary own funds

0 0 0 0 0 0 0 0 0 0

Available and Eligible Own Funds

Available Own Funds for the coverage of SCR

113,395 113,395 0 0 0 104,405 100,815 0 0 3,590

Available Own Funds for the coverage of SMR

113,395 113,395 0 0 0 100,815 100,815 0 0 0

Eligible Own Funds for the coverage of SCR

113,395 113,395 0 0 0 104,405 100,815 0 0 3,590

Eligible Own Funds for the coverage of MCR

113,395 113,395 0 0 0 100,815 100,815 0 0 0

Table E.1: Own Funds Analysis per category in 2018 and 2017 (amounts in thous. €).


Variance in the Valuation of Own Funds based on the Solvency II and IFRS

Transition of Own Funds from IFRS Balance Sheet to Solvency II 31/12/2018 31/12/2017IFRS – Own Funds 116,488 116,064Assets -21,107 -16,497Deferred acquisition costs -17,591 -17,015Intangible Assets -1,389 -804Deferred tax assets 0 3,439Investments 3,125 1,312Reinsurance Recoverables -1,462 236Reinsurance Receivables 535 260Receivables (trade not insurance) -4,325 -3,924Liabilities 21,589 8,138Technical provisions – Non-Life 10,146 8,265Technical provisions – Health 9,886 8,203Technical provisions – Life 1,811 -8,869Technical Provisions - Index-linked and unit-linked -239 331Deferred tax liabilities -197 0Deposits from Reinsurers 0 0Reinsurance Payables 182 208Solvency II – Own Funds 116,970 107,705Foreseeable dividends, distributions and charges -3,575 -3,300Solvency II – Eligible Own Funds 113,395 104,405

Table E.2: Variance in the Valuation of Own Funds based on the Solvency II and IFRS (amounts in thous. €).

Ε.2 Solvency Capital Requirements and Minimum Capital Require-ments

The Solvency Capital Requirements and Minimum Capital Requirements were calculated within the Solvency II framework.The results on the reference date and the relevant Solvency Ratios are presented in the following table:

Capital Requirements 31/12/2018 31/12/2017Ratio of Eligible Own Funds for the Minimum Capital Require-ment (MCR ratio)

401.19% 347.01%

Minimum Capital Requirement (MCR) 28,265 29,053Ratio of Eligible Own Funds for the Solvency Capital Require-ment (SCR ratio)

159.81% 145.73%

Solvency Capital Requirement (SCR) 70,955 71,643Adjustment for Loss Absorbing Capacity (LAC) 0 0Operational risk 5,763 5,559Basic Solvency Capital Requirements 65,192 66,084Diversification -21,187 -25,387Total (Without Diversification) 86,379 91,472Market Risk 15,609 19,412Counterparty Default Risk 7,611 7,628Life Underwriting Risk 4,434 7,074

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Capital Requirements 31/12/2018 31/12/2017Health Underwriting Risk 4,908 5,497Non-Life Underwriting Risk 53,817 51,860

Table E.3: Solvency Capital Requirements (amounts in thous. €)

The results of Capital Adequacy Requirements of this Report are subject to evaluation by the Supervisors.The Minimum Capital Requirement ratio amounted to 401.19%, and the Solvency Capital Ratio amounted to 159,81% on 31/12/2018.The MCR Ratio increased comparing to the previous fiscal year, mainly due to the increase of the eligible own funds for the coverage of the Minimum Capital Requirements by 12.5%, as presented in the section above.The most significant impact in the increase of the Solvency Capital Requirements was the 9% increase of the Eligible Own Funds comparing to the end of 2017 and the 1.3% decrease of the Basic Solvency Capital Requirements.The decrease of the Market Risk had the most significant impact on the decrease of the Basic Capital Requirements, as pre-sented in detail in the previous section.More specifically, the variance in the capital requirements per type of risk is presented below.1. The Market Risk decreased, due to the decrease of the prices of equities in the Company’s portfolio and the decreased

exposure of the Company to corporate bonds for retaining the average credit rating of the portfolio at high levels.2. The Counterparty Default Risk presented a negative variation, mainly due to the decrease of the exposure to overdue

receivables from intermediaries and loans to individuals.3. The Life Underwriting Risk and the Health Underwriting Risk decreased mainly due to the decrease of the lapse rates

after the new experience study, that led to decrease of the best estimate and decrease of the capital requirement. More-over, the new allocation of expenses performed by the Company in 2018 had a significant impact on the variance of the Life Underwriting Risk.

4. The Non-Life Underwriting Risk presented an increase due to the variance of the total exposure and not the material differentiation between the risks that the Company undertakes in its gross and net portfolio. The total exposure had a positive variation from the simultaneous increase of the earned premiums and reserves.

It is noted that the Company did not used the Loss Absorbing Capacity of Deferred Taxes (LAC) in the current reference period.For the calculation of the Minimum Capital Requirement, the Company was based on the Standard Formula using the linear equation with minimum limit 25% and maximum limit 45% on the total Solvency Capital Requirements. Most specifically, the Company calculated the theoretical Minimum Capital Requirements, as required for the companies with multiple sectors, sepa-rately for the Non-Life and Life Sectors. The inflows for the calculation of theoretical Minimum Capital Requirement of the Non-Life Sector include technical provisions without the risk margin for insurance and reinsurance liabilities per line of business, after the deduction of the recoverables from reinsurance policies and net written premiums of the last 12 months per line of business. The Inflows for the calculation of the theoretical Minimum Capital Requirement for the Life Sector include the techni-cal provisions less the risk margin, after deducting the recoverables and the total capital at risk.For the calculation of the Solvency Capital Requirement, the Company was based on the standard formula, using simplifications for calculating the counterparty default risk. In particular, for exposures of Type 1, the Company estimated the risk mitigation ef-fect through reinsurance. This result was proportionately allocated to every reinsurer based on the reinsurance agreement and participation in the technical provisions. Moreover, the Company used the Measure on Equity, as required by the Law for shares purchased before 01/01/2016 and the volatility adjustment for the calculation of the best estimate on technical provisions.

Impact of the transitional measures on the Solvency Capital RequirementThe calculation of the Solvency Capital Requirements was based on the standard formula, using the following transitional mea-sures that do not require approval by the Supervisory Authority.• Measure for Long-term guarantees due to volatility (Volatility Adjustment).• Use of the lowest rate of the standard parameter, for equities that the Company purchased up to 01/01/2016.The Company has also estimated the Solvency Capital Requirements without the use of any of the above transitional measures and the results are presented in the table below:


Solvency Capital Requirements on 31/12/2018

With the use of transitional mea-sures

Without volatility adjustment

Without the use of transitional mea-sures of shares

Without transi-tional measures

Solvency Capital Requirement (SCR ratio)

159.81% 156.07% 159.27% 155.54%

Minimum Capital Requirement (MCR ratio)

401.19% 375.04% 381.97% 375.04%

Table E.4: Solvency Capital Requirements– Use of transitional measures

In conclusion, the impact of the transitional measures in the calculation of the Solvency Capital Requirements does not have an impact on the aforementioned results of the Company, in spite of the significant increase of the volatility adjustment. More specifically, the SCR ratio and the MCR ratio present a decrease by 4.3 and 26.2 percentage points respectively, without the use of transitional measures.

Ε.3 Use of the duration-based equity risk sub-module in the calcu-lation of Solvency Capital Requirements

The Company did not use a duration-based equity risk sub-module in the reporting period.

E.4 Differences between the standard formula and any internal model applied

The Company did not use any internal model to calculate capital requirements.

E.5 Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency Capital Requirement

There is no indication for non-compliance, since the Company has Sufficiency of Solvency Capitals on 31/12/2018.

F

F

F

F

F

F

F

F


F.Public Quantitative Reporting Templates on Solvency Financial Condition ReportThis section includes Quantitative templates, as provided by the Executive Law (EU) 2015/2452 and Act 105/12.12.2016 of the Executive Committee of the Bank of Greece:• Solvency II Balance Sheet (S.02.01.02)• Premiums, claims and expenses by line of

business (S.05.01.02)• Technical Provisions (S.12.01.02 and S.17.01.02)• Own Funds (S.23.01.01)• Other Information (S.19.01.21 and S.22.01.21)• Solvency Capital Requirement Calculation

(S.25.01.21)• Minimum Capital Requirement Calculation

(S.28.02.01)


Investor Relations274 Kifisias Avenue, 15232, Athens, Greecetel: +30210 8119655, fax: +30 2106841325e-mail: [email protected]

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