Annual Report - Liberty Seguros

Transcription

Annual Report
1
Contents
Annual Report 2010 Liberty Seguros
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Annual Report 2010
Financial
LibertyStatements
Seguros
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Financial Statements
The alignment of all with a simple strategy,
but one we aim to execute efficiently, based
on strong ethical principles, in which we all
take pride, allowed us to close 2010 with
the satisfaction of duty done
004
006
007
030
039
098
110
CEO’s Message
Company Officers
Board of Directors’ Report
Notes to the Balance Sheet and Profit & Loss Account
Annexes
Official Reports
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CEO’s Message
Good results despite
greater difficulties
Following 2009, which came to be
recorded in history as one of the most
difficult years in the history of mankind,
2010 was even more challenging and
problematic, and the effects of the
financial crisis, with its monumental
impacts on the ‘real economy’ became
even sharper.
In 2010 we witnessed an increase of the
difficulties of Portuguese companies and
households, with bankruptcies growing
to catastrophic levels, the jobless rate
rising to record levels with about 600,000
jobless – a significant part of whom
long-term – with a tragic reduction
of household disposable income, of
consumption and of household savings
levels, to which must be added the
dramatic increase of overall indebtedness.
We now have the lowest savings rate of
the past 50 years.
Public and foreign debt continued to
grow in proportion to the gross domestic
product to levels that had not been seen
for decades. And the end of 2010 came
to confirm the worst of the forecasts, the
start to a process of possible bankruptcy,
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with the international markets doubting
Portugal’s ability to meet its financial
obligations and to constantly revise
both the value of the sovereign debt
and its rating and interest rate or risk.
The situation that we have reached has
brought to light the ill consequences
of Portugal having lived for decades on
‘subsidy dependence’ and easy credit,
without the economy having developed
and responded in terms of productive,
sustainable growth.
Following decades of a somewhat modest
economic convergence with Europe, we
have again diverged from the European
average and are increasingly an economy
at the end of the road. We are thus
witnessing a new wave of emigration, not
only of the younger generations, but even
of families who, in the past, had already
sought a better economic life outside
Portugal. Over 100,000 Portuguese,
many of them youths of excellent
education, are leaving our country each
year. Had this not occurred over the past
decade, unemployment would now be
uncontrollable in Portugal, with social
consequences hard to predict.
It is therefore pressing that a strategic
growth model be defined for Portugal,
one that will allow our Economy to grow
on a sustained basis, focusing on those
sectors in which we have competitive
advantages, that will drive exports (and
replace imports), strengthen Portugal’s
image abroad, generate employment,
increase productivity and make a break
with these years on end of average growth
rates of less than 1%, one of the world’s
lowest figures. In 2012, according to the
OECD, Portugal will be the only country
in recession!
The insurance industry is naturally
a reflection of what happens in the
economy and, consequently, this
industry too has returned low growth,
particularly in the Real (Non-Life)
business lines. As a result of the present
situation of the economy, low growth,
lack of productive investment, growing
household debt, increasing unemployment
and the constant struggle between market
operators, Non-Life business taken as a
whole has returned a marginal growth of
just 0.7%. A contribution to this increase
was made by the increases of 0.4% in the
Motor insurance, 2.5% in Fire insurance
and 5.9% in Health insurance, the latter
reflecting the growing concern of the
Portuguese in the matter of access to
health care. It should be mentioned that
Workmen’s Compensation has again
declined in 2010 (4.6%), reflecting the
current situation in the business world,
with a growing number of bankruptcies,
while also mirroring the increasing jobless
rate, now standing around 12%.
Notwithstanding this slight growth
of Non-Life business, its weight as a
proportion of the gross domestic product
has fallen, in that, according to Bank
of Portugal figures, the GDP grew by
1.3% in 2010. Life business grew by
17.2%, largely the result of the increase
of life insurance (33.3%) as a result
of the increase of sales of guaranteed
capital and income contracts in line with
the commercial policies of the banking
institutions.
Against this difficult and unstable
background in which we live, Liberty
Seguros closed 2010 with numbers
that naturally fill us with pride and
satisfaction. We closed the year with
turnover standing at €200.1 million, up
6.2% over 2009. The Non-Life claims
rate was 68.8%, slightly higher than in
2009, driven by the storm that struck
the island of Madeira on the morning of
February 20th. The market share in NonLife has continued to grow, up from 4.0%
in 2009 to 4.3% in 2010. The solvency
margin increased from 233.1% in 2009 to
266.9% in 2010, thanks to the net profit
returned in 2010 in the sum of €9.376
million (2.9% more than the figure of
€9.111 million for 2009). The return
for equityholders was 9.2% considering
the total capital in Portugal (greater than
required to operate).
It was a year in which Liberty Seguros
was again outstanding for dozens of
CEO’s Message
solidarity institution that helps children
with cancer, through the delivery of
hardware during a visit to the Porto
Cancer Institute, with the presence of
Aurora Cunha, a famous athlete. Meeting
of about 60 Liberty Seguros volunteers for
the reafforestation of an area in Abrantes
that was affected by a major fire in 2007.
The Cleaning Portugal Movement,
Liberty Seguros having mobilised about
2,000 volunteers to form a Blue Brigade
comprising employees and partners from
the north to the south of the country,
the goal being to clean up beaches,
woods and forests, and garbage tips, thus
contributing to a cleaner environment.
There was also a considerable number of
other activities, support and initiatives
directed at sharing with the society of
which we form part and in which we carry
on our business the remarkable success
that we have achieved.
In closing I would obviously like to pay
tribute and extend thanks to our partners,
professional insurance intermediaries,
service providers and suppliers, as well
as to Liberty Seguros’s extraordinary
team of employees. The alignment of all
with a simple strategy, but one we aim
to execute efficiently, based on strong
ethical principles, in which we all take
pride, allowed us to close 2010 with
the satisfaction of duty done, in that it
was yet another memorable year, rich in
positive, exalting experiences, and with
very positive overall results.
‘
Against this difficult
and unstable
background in which
we live, Liberty
Seguros closed 2010
with numbers that
naturally fill us
with pride and
satisfaction.
‘
social-responsibility initiatives that
reflect a true, positive competitive
differentiation in our way of being and
operating in the marketplace. Once
again, they all fill us with pride, but
there are some that I would like to point
out in particular. Following the natural
disaster that struck Madeira in February
2010, Liberty Seguros was at the front
from the very first moment, supporting
both the population and its customers
through various solidarity measures. For
the second straight year, in association
with a Spanish NGO – AFAN – that
provides humanitarian aid to children
that suffered the terrible nuclear tragedy
that affected Chernobyl, Liberty Seguros
brought 16 children to Portugal to spend
the summer with various families of
Liberty employees, business partners and
customers, in a purer environment and
with good food, allowing them to recover
and go back to their country stronger
and more resistant. Having become, in
2008, Portugal’s first insurance company
to subscribe to the European Road Safety
Charter, Liberty Seguros joined up
with Prevenção Rodoviária Portuguesa
(Portuguese Highway Safety – PRP) ,
with a view to creating awareness of and
sensitivity among the public to highway
safety issues so as to encourage saferdriving habits. Support to pilgrims in
May 2010, on the occasion of the visit of
Pope Benedict XVI to Portugal, involving
the provision of 100,000 reflector jackets
and drums of water. Support to the
Acreditar Association, a private social
José António de Sousa
President & Chief Executive Officer
jose.de.sousa@libertyseguros.pt
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Company Officers
Company Officers
2009-2012
Chairman Dr. Frederico José de Melo Pereira Coutinho
Secretary Dra. Maria da Paz Vale e Azevedo Tierno Lopes
Board of Directors
President & Chief Executive Officer Dr. José António da Graça Duarte de Sousa
Member Sr. David H. Long
Member Sr. Christopher L. Peirce
Member Sr. Luís Bonell Goytisolo
Member Dra. Marta Sobreira Reis Alarcão Troni
Supervisory Board
President Dr. Pedro Manuel Travassos de Carvalho, R.O.C. n.º 634
Member Dra. Maria Filomena Lindeiro Esteves Salgado Oliveira
Member Dra. Ana Cristina Louro Ribeiro Doutor Simões, R.O.C. n.º 946
Alternate Dra. Ana Margarida Garrido Vaz Teixeira de Sousa Crespo de Carvalho
Statutory Auditor
Ernst & Young Audit & Associados - S.R.O.C., n.º 178
Represented by Dra. Ana Rosa Ribeiro Salcedas Montes Pinto, R.O.C. n.º 1230.
Company secretary
Full Dra. Maria da Paz Vale e Azevedo Tierno Lopes
Alternate Dr. Nuno Miguel da Silva Pimenta Madeira Rodrigues
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‘
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Board of the general meeting
Liberty Seguros directs its business at the
individuals, households and small and medium
enterprise segments, dealing in the Non-Life
segments, particularly Motor, Workmen’s
Compensation and Fire
Board of
Directors’ Report
To the Members of Liberty Seguros, SA,
Under the law and the articles of association the Board of Directors of Liberty Seguros, SA, is
pleased to submit its Management Report and Accounts for 2010
Introduction Liberty Seguros has
been in business in Portugal since May 23, 2003,
following the acquisition from the Swiss Crédit
Suisse group of the former Companhia Europeia
de Seguros, SA. The latter changed its name to
Liberty Seguros, SA, following a resolution to the
effect adopted on February 2, 2004.
In 2010 the portfolio of Génesis Seguros
Generales, Sociedad Anónima de Seguros y
Reaseguros, Sociedad Unipersonal Branch in
Portugal was incorporated into Liberty Seguros,
through an increase of the contributed capital
paid up in kind. The Génesis branch carries on its
business on the basis of a distribution agreement
involving multi-risk insurance linked with
mortgage loans.
With eight decades of experience, Liberty Seguros
relies on the dedication of each one of its 480
employees in a constant search for protection
solutions for Portuguese households, individuals
and micro, small and medium enterprises.
The Company has 27 commercial facilities
around the country known as Liberty Seguros
spaces, besides 7 offices that provide support to
the Insurance Agents’ offices, the strategic allies
of the Company through which an ample range
of products and services is provided, allowing
customers to enjoy a life that is safer and better
protected.
THE Liberty Mutual Group
Founded in 1912, the Liberty Mutual Group,
headquartered in Boston in the United States of
America, comprises a number of diversified international financial services companies. It is one of
the biggest insurance groups of the United States
of America.
With over 45,000 employees working at more
than 900 offices around the world, the Liberty
Mutual Group offers a large range of high-quality
products and services for individuals and companies.
Misson In Portugal, as in the rest of
the world Liberty Seguros finds values such as
Solidarity, Team Spirit, Dedication, Commitment
at Work and Responsibility to the Community,
which are perfectly in tune with its mission: For
The Protection of the Values of Life, seeking
> to understand and meet customer expectations, which it serves through innovative
security solutions that allow them to achieve
their objectives;
> to be the leader in those markets in which it
operates, creating value for its equityholders;
and
> to maintain the motivation and wellbeing
of its employees, providing them with fair
growth opportunities.
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Objectives Liberty Seguros directs
its business at the individuals, households and
small and medium enterprise segments, dealing
in the Non-Life segments, particularly Motor,
Workmen’s Compensation and Fire.
The main objectives of Liberty Seguros involve
putting the Company among the first five groups
operating in Portugal in the main Non-Life lines,
focusing the business on the Agents distribution
channel.
Strategic Iniciatives The
Company defends the Protection of Life’s Values
through quality services constantly suited to the
needs of the market, ensuring the satisfaction of
its customers and the Group’s sustained economic
growth especially through:
>d
eveloping products better suited to the
protection needs of each customer;
> increasing its geographic presence in the
major markets so as to come closer to the
customers;
> s trengthening Liberty Seguros’s position on
the basis of the Group’s values and those of
the Portuguese market;
> e nergising the use of the new technologies in
the service of the distribution channels, or
offer an innovative, more effective service;
> b eing recognised by the market as a socially
responsible company;
> c alling society’s attention to the subject of
highway safety.
Ethics and Compliance
Liberty Seguros has had a Code of Ethics and Professional Conduct applicable to all its employees
since May 1, 2005. It was revised and extended
in October 2008. This Code is an adaptation for
Portugal of the Liberty Mutual Group’s Code of
Ethics and Professional Conduct.
Taking into account the specifics of Portuguese
law, particularly with regard to labour law, it was
determined that some aspects and procedures
would have to be altered with a view to their easier
assimilation by its addressees and by their unions,
which were consulted throughout the process of
adaptation.
It therefore proved possible to adopt a code that is
now one of the most important components not
only of the in-house rules of Liberty Seguros but
also of the organisation’s culture itself.
In this aspect, too, Liberty Seguros was outstanding, the first insurer operating in Portugal to have
a code of conduct of this scope, which came to by
divulged via the public site in compliance with the
legislation in force that stipulated the insurance
companies’ duty of establishing and monitoring
codes of conduct.
The Code establishes important professional
conduct guidelines, clarifying what conduct is
allowed and what is not, as well as recommended
conduct, which Liberty Seguros considers to be
the adequate standard of conduct.
Liberty Seguros Offices and Spaces
Azores
1. Conflicts of interest: definition of what is understood by conflict of interest, with examples
of forbidden conduct;
2. Use of information: containing the rules
governing the use of professional information,
industrial property rights, professional secrets,
copyright and personal data;
Continental Portugal
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Madeira
3. Human Resources Policy, in which there is
reference to the responsibility of treatment with
dignity and respect;
4. Use of Liberty Seguros’s Means and Resources;
5. Compliance: this is the prime chapter, dealing
with the importance of complying with the
law, rules and regulations, the integrity of
financial controls and public reports, prohibited
commercial practices, compliance with anticompetition laws and prevention of crimes such
as money laundering;
6. Report on Violations of the Code of Ethics
and Professional Conduct, which explains the
procedure to be adopted in the event of possible
infringement of the rules of the Code.
Appended to the Code, and in keeping with the
procedure provided for therein, there is a Declaration and Term of Responsibility. It is distributed
every year to directors, managers, senior staff and
other employees occupying certain posts, recalling
the rules of the Code and providing employees
with an opportunity to identify potential conflicts
of interest.
Compliance at Liberty Seguros is entrusted to
the Legal & Compliance Office, whose duties
include those aspects more relevant to ensuring
that the entire organisation is in a position of legal
conformity:
> providing support and response to every
need for information and legal support
stemming from the pursuit of the Liberty
Seguros objectives, creating the conditions
required to observe and comply with every
imperative of a legal nature impacting of the
development of the business;
> providing legal consultancy to the Board and
the Divisions, making complete information
and clarification available and resolving all
issues of a legal nature; ensuring the disclosure of the legislative framework applicable
to the business of Liberty Seguros.
> e nsuring the technical correctness and
conformity with the interests of Liberty
Seguros of all contracts to which it is a party,
reviewing and writing the respective clauses
and providing support in their negotiation;
> s upervising and controlling the legal coherence of the clauses of all insurance contracts
marketed by Liberty Seguros, the wording
of the General, Special and Particular Conditions based on the text proposed by the
technical areas, and reviewing the respective
forms and supporting documents;
> e nsuring the technical legal legal correctness,
the legal conformity and the conformity
with the rules and directives of the Liberty
Mutual Group of all the in-house standards
and regulations of Liberty Seguros.
>p
erforming all the tasks allotted to the post
of Business Ethics Administrator, in accordance with the definition provided by the
Liberty Mutual Group.
> f orming part of the Risk-Management
Committee, with the duties set out in the
respective definition;
> f orming part of the Liberty Seguros Employee Pension Fund Monitoring Committee;
> c onceiving and executing training courses on
Compliance and Insurance Law matters for
Liberty Seguros employees and also for our
network of agents.
The importance of the means and instruments of
compliance with the rules is thus recognised and
ensured by Liberty Seguros, complying with what
is yet another aspect of internal control, under
the Insurance Supervisory Authority’s Regulatory
Standard 14/2005-R of November 29.
‘
Liberty Seguros has
had a Code of Ethics and
Professional Conduct
applicable to all its
employees since May 1, 2005
‘
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ment policy applies transversely to every one of the
Company’s areas. It formally defines the targets of
Liberty Seguros’s risk management, dealing with
the duties, responsibilities and authorisations that
underpin the process adopted by the Company
to meet its goals. Additionally, it provides the
Company with protection against the various risks
it incurs, while providing an overview and clear
knowledge of the risk management undertaken by
the Company for the various internal and external
parties involved and for the supervisory authority.
The Risk.Management Committee is the body
where matters transverse to the entire company
are discussed, related with Risk Management and
Internal Control. It is charged with definition of
the risk-management policy and with proposals
for its annual revision and updating.
Risk-management policy is subject to the approval
of the chairman of the Board of Directors and is
reviewed and updated at least annually. The chairman of the Board of Directors has final responsibility for the decision as to the adequacy of the
risk-management policy, based on the recommendations of the Risk-Management Committee.
The specific Insurance, Market, Liquidity, Credit
and Operational Risks have been reviewed by
Liberty Seguros and are divulged in the Notes to
the Accounts in Notes 4.2, 4.3 and 6.16.
During 2009, within the scope of its duties of
maintaining a system of internal control of financial reporting, efficacy and efficiency of operations
and compliance, the Internal Control area (SOX)
updated the documentation supporting a number
of processes whose processing circuit in respect of
information of an operational, financial or compliance nature had undergone alteration. It also
performed tests on the significant controls, drew
up recommendations for improvements and monitoring and tested their implementation. This list
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of updated processes, controls tested, inefficiencies
detected and improvements implemented is included in the annual report on the “Current Status of
the Risk-Management System”, a document that
forms part of the Risk-Management Policy.
Human Resources
Human Resources Policy
The Liberty Seguros Human Resources Policy is defined and oriented in the light of the
Company’s strategy. It consists of the planning,
organisation, co-ordination and control of
techniques lending support to and promoting the
performance of its employees, with a focus on the
ongoing development and professional growth of
its Human Capital.
This focus is of significant importance in the
troubled period that, in economic terms, has
destabilised financial markets around the world.
It is particularly important that Liberty Seguros
develop and consolidate skills, contributing in a
structured, cohesive manner to a culture governed by values of Honour, Excellence, Rigour,
Commitment and Team Spirit, focused especially
on the customers, as well as on the quality of the
services provided to them.
To provide employees with these skills is the prime aim of the policy and strategy of the Human
Resources Division: to develop and consolidate
specific customer-oriented skills, surpassing their
expectation and anticipating their needs.
Liberty Seguros knows it has potential in its Human Capital. To retain and develop this potential
is its main task, helping employees to manage their
expectations and careers, while promoting their
personal and professional wellbeing. and balance.
It is this proactive, customer-oriented attitude and
way of being, under pinned by strong leadership,
that makes it stand out in the insurance market.
Total
Headcount - Age Structure
Men
48.9%
Women
51.1%
> de 60 years
Men
21%
Women
79%
51-60 years
Men
72%
Women
28%
41-50 years
Men
51%
Women
49%
31-40 years
Men
49%
Women
51%
21-30 years
Men
21%
Women
79%
‘
51,1% of
Liberty Seguros
headcount are women
‘
Risk-Management
Control System and
Internal Control The risk-manage-
TRAINING
+To achieve its results in excellence Liberty Seguros focuses on the development of its employees
through internal and external course or other
activities:
> partnerships with institutes of higher education directed at the development of specific
skills through courses made-to-measure for
specific groups of employees;
> scholarships part-funded by Liberty Seguros;
> courses imported from the Liberty Mutual
Group;
> Liberty Academy: of the various activities of
the Liberty Academy, it’s worth underscoring the various training modules organised
by in-house colleagues that have shown
considerable willingness to organise them,
sharing their know-how and experience with
the others;
> Team-building measures that align actions
and conduct, strengthen the teams, bringing
them face-to-face with problems with which
they will have to deal and resolve, cultivating individual skills in a scenario appealing to everybody’s involvement. At heart,
everything that is experienced in day-to-day
life in business surroundings.
Liberty Seguros considers that training is an investment made by the Company in its employees,
as well as recognition of their work, for its believes
in their development potential.
PERFORMANCE ASSESSMENT SYSTEM
Liberty Seguros has, since 2004, implemented
a Performance Assessment system for all its
employees, involving three phases: Planning,
Monitoring and Evaluation, in which employees
and management are guided by 2 parameters –
Objectives (quantitative) and Skills (qualitative).
GREAT PLACE TO WORK
EXPERIENCE
In 2010, Liberty Seguros again took part in the
study performed by the Great Place to Work
Institute, standing 3rd in the ranking and 1st of
the financial institutions. This prize is yet another
cause for pride and an incentive for the Liberty
family, in the dedication always demonstrated,
taking into account the evaluation criteria underlying this study, of which factors are underscored
such as Credibility, Respect, Impartiality, Pride
and Comradeship, and the 20 years of experience
of the institution in performing studies of this
kind.
Participation in the study organised by GPTW
has provided Liberty with a challenging experience, for it has allowed very effective assessment
of the opinion of its employees as to the matters
addressed in the study, which confirms Liberty’s
efforts to provide excellent working conditions for
its employees.
SOCIAL
RESPONSIBILITY For Liberty
Seguros, social responsibility measures are of
extreme importance, for they generate value both
for its employees and for society as a whole. The
Company considers that, by incorporating social
responsibility into its business strategy, it benefits
from the link that it builds up with the community as a citizen company.
The following measures are underscored in 2010:
> “1st Baby of 2010” Project – For the 6th
straight year Liberty Seguros offered Life
Insurance to the year’s first baby; the insurance was offered to three babies this year.
Created in 2005, this project aims to help
people to live safer, more stable lives, making
a positive contribution to an improvement
of their daily lives, in perfect in tune with
the Company’s motto: “For the protection
of the values of life”.
> “Solidary with Madeira” – The natural
disaster that struck Madeira in February
2010 became a human and material tragedy
of awesome dimension. From the very first
moment Liberty Seguros was in the front
line, providing support both to the public in
general and to its customers. During 2010
Liberty Seguros organised several solidary
measures, the funds raised reverting to the
Madeira victims. Of these we would underscore the Liberty Seguros Solidary with Madeira BTT Outing in Leiria, the Bike Festival
BTT Marathon and the Marathon of the
Teams. These various initiatives raised a total
of €5,000 for the Desenvolvimento Comunitário do Monte Association. Liberty Seguros
also joined up with the Madeira Mountains
Forestation project organised by Funchal
City Council, contributing €10,000 towards
the purchase of trees and other plants.
‘
The Company considers that, by incorporating
social responsibility into its business strategy,
it benefits from the link that it builds up with the
community as a citizen company.
‘
In 2008, Liberty Seguros complemented this assessment through the introduction of a 360º return
system at skills level. There is now more than one
assessor (the person, who self-assesses himself, his
superior, his peers carrying on identical jobs, and
the team).
The aim of the assessment system is to be a
support tool for objective management, focused
on the business. For this reason the 360º has
strengthened the assessment of critical skills as well
developing all those who contribute to this goal.
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> Liberty Seguros supports Pilgrims - Every
year we hear about cases of pilgrims who are
run over on their way to the Fátima Shrine
during the pilgrimage. In May 2010, within
the scope of the visit to Portugal by pope
Benedict XVI, Liberty Seguros contributed
to the improvement of the safety conditions
of the thousands of pilgrims through the
offer and distribution of 100,000 reflector
jackets. This major operation relied on the
co-operation of our business partners and
of the Liberty Seguros Spaces, and was
implemented with the support of the Red
Cross. During the week before Benedict XV
I’s visit , Liberty Seguros was present at the
assistance stations strategically located by the
Red Cross around the country to provide
support to the many thousand pilgrims. At
these assistance stations the pilgrims received
Liberty Seguros caps and bottled water were
available. This action was directed at strengthening the Liberty Seguros highway-safety
and social-responsibility strategy.
> Adoption of two Institutions - In 2010
Liberty Seguros decide to adopt two social
solidarity institutions during a period of two
years. One of the institutions chosen was the
Campanhã Youth Centre, which takes in 90
boys and male youths as boarders. The other
choice was Ajuda de Mãe (Mother’s Help),
an institution that takes in pregnant women
and their children undergoing economic
and social difficulties. The aim is to provide
education and information in health matters
and to support the child-bearing women. in
their social and professional reinsertion. A
large part of the work undertaken by these
institutions is in the hands of volunteers,
with the contribution of all Liberty Seguros
employees.
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> “Chernobyl Children” project – For the
second straight year, and again in partnership with its Cultural, Recreational
and Solidarity Association (ACLIS) and
in co-operation with AFAN – a Spanish
humanitarian-aid NGO – Liberty Seguros promoted the programme of support
for children victims of Chernobyl. This
programme allowed 16 children to be
brought to Portugal who were taken in by
the families of Liberty Seguros employees,
business partners and customers. During
five weeks these children were able to live in
a purer environment, in comfort and with
obvious health benefits. The impact of this
project on the lives of these children and on
the families that generously welcomed them
was quite extraordinary.
> Solidary Mother’s and Father’s Days – Liberty Seguros decided to commemorate both
these days in a very special way. To celebrate
Father’s Day a donation was made in the
name of all Liberty’s Fathers to the Coronel
Sousa Tavares Child Centre in Beja, which
was severely damaged by a major fire in January, which destroyed a part of the facility.
On Mother’s Day, in the name of all the
Company’s mothers, Liberty Seguros offered
IT material and three sofas to the three tetraplegic children the institution supports.
> Support for Ajuda de Berço - To celebrate
World Food Day, Liberty Seguros decided
to put into motion a measure to collect food
and essential items, which reverted in full to
Ajuda de Berço (Cradle Help).. As has come
to be the custom, whenever appeals of this
sort are made in-house, a great many sign
up and the generosity of the Liberty Seguros
personnel is evident. This year, the quantities
of essential foodstuffs, nappies and detergents
collected outperformed all expectations.
This was certainly an excellent contribution
to a happier Christmas of all those who use
this association that takes in children either
abandoned or at risk, from the time of their
birth up to the age of three years.
> “World Human Rights Day” - In 2010
Liberty Seguros decided to celebrate the
World Human Rights Day on December
10, recalling the content of the International
Human Rights Charter. For the purpose, the
Company prepared posters based on a selection of key words taken from the Universal
Declaration of Human Rights; on them
pictures were placed of happy human faces,
with a positive attitude, personifying the
objective and the spirit of the declaration.
The visual effect recalled a jigsaw puzzle
under construction, for the message that was
passed on also spoke of values undergoing
permanent construction.
> Support for the Acreditar Association
– In 2010 Liberty Seguros supported the
solidarity campaign launched by Acreditar, a
private social solidarity institution that aims
to held children with cancer and their families to overcome the various problems with
which they are faced as from the moment
of diagnosis of the illness, contributing to
foster hope. The support provided by Liberty
Seguros comprised two measures, the offer
of 11 computers for the Acreditar facility in
Coimbra, and a visit to the paediatric unit of
the Porto Cancer Institute, accompanied by
the athlete Aurora Cunha and by the figure
Ruca who offered the children a collection of
didactic computer games.
> Liberty Seguros planted solidarity in
Baião: A Liberty Seguros team transformed
the grounds surrounding an Occupational
Activities Centre. Where there were weeds
and stones an orchard, a kitchen garden and
a garden were born. The ‘miracle’ occurred
on the land neighbouring on the Occupational Activities Centre building in the village
of Mesquinhata, a facility run by the Baião
Santa Casa da Misericórdia, which takes in
disabled youths. The ‘miracle workers’ were
about a hundred Liberty Seguros employees
and business partners. Spade and hoe and a
great deal of solidarity spirit radically changed the ground surrounding the Mesquinhata facility, where brambles and dead vines
gave way to the birth of a decorative and
useful garden where trees will flourish, as will
herbs and vegetables, while the greenhouse
will be of great utility to the very subsistence
of the institution, besides allowing the inclusion of gardening in the support activities for
the disabled youths.
> Liberty Seguros donates hardware - During
2010 Liberty Seguros donated about 100
computers to dozens of charity institutions,
which were thus able to replace their obsolete
equipment or obtain equipment where they
had none.
> Investment in the health of its employees:
Throughout 2010 Liberty Seguros undertook various activities directed at the health
and wellbeing of its employees, organising,
in particular, cholesterol and diabetes checks, blood collection and flu vaccination.
Defence of the
Environment
> Reafforestation in Abrantes – You plant
the future today - On November 10, a
group of some 60 Liberty Seguros volunteers
met at the Murteiras Estate in Mouriscas to
reafforest an area that had been consumed
by a major fire in 2007. During several
hours these volunteers planted around 400
of the 2,500 trees. This project was carried
out in partnership with ANEFA (National
Forestry, Agricultural and Environmental
Companies Association), the entity that over
the coming years will monitor the planted
area, ensuring that it is preserved.
‘
Up and down the
country, the Liberty
Seguros Blue Brigade
cleaned beaches,
woods, forests
and garbage tips,
contributing in this
way to a cleaner
environment.
‘
> Cleaning Portugal – In 2010 Liberty Seguros came to be associated with the civic ‘Cleaning Portugal’ movement. For the purpose
it mobilised come 2,000 volunteers as a Blue
Brigade comprising employees and business
partners. Up and down the country, the Liberty Seguros Blue Brigade cleaned beaches,
woods, forests and garbage tips, contributing
in this way to a cleaner environment.
13
14
> Liberty Seguros radio campaigns on
highway safety - Lending continuity to its
social responsibility policy, Liberty Seguros
has implemented new Highway Safety
Campaigns. The campaign was mainly
broadcast during times of heavier traffic,
such as summer, Christmas, Easter and
national holidays, calling attention to and
reminding drivers of the dangers of driving
without seatbelts, lack of use of child car
> Liberty Seguros organises the 2nd Works
and Highway Accidents Congress: Prevent
and Repair - Following the success of the
first congress held in 2008, Liberty Seguros,
in partnership with the National Forensic
Medicine Institute and the Portuguese
Personal Injury Assessment Association,
organised the 2nd Works and Highway
Accidents Congress: Prevent and Repair.
The meeting took place on November 18
and 19 at the Lisbon Congress Centre. Its
main objectives were to promote the debate
on prevention and repair in Works and
Traffic Accidents, to present the more recent
data on accidents and to draw up a balance
of two years of application of the Table of
Disabilities through Works Accidents and
Professional Illnesses and the National Table
for the Assessment of Permanent Disability
in Civil Law.
as
more economical, efficient, ecological,
sustainable and defensive driving style.
The course is divided into 3 programmes
and 3 major subjects. Defensive Driving,
Economical Driving and Driving practices.
The aim is to orient and to encourage car
drivers to drive in a preventive manner,
driving defensively and economically,
eliminating any flaws and avoiding
excessive, unnecessary wear and tear of the
machine and fuel consumption. These
courses will provide drivers with greater
knowledge of driving techniques, of the
procedures for economical driving, of
reaction times, of vehicle maintenance and
of the Highway Code.
m
Cicl
6648_sabado_205x137_AF1 10/29/10 5:57 PM Page 1
> Liberty Seguros strives for clean cycling Liberty Seguros and the Portuguese Cycling
Federation (FPC) came together in 2010
with a view to promoting and regulating
cycling and ethics and loyalty in the sport.
The initiative is a pioneering one in Portugal
and it aims to take a step forward in the
fight against doping in order to make
Portuguese cycling more professional,
putting it at European levels in cycling
demands and rigour. The protocol also calls
for support for the athletes of the National
Cycling Team who, in 2010, took part in
the Volta a Portugal race and are undergoing
preparation for the 2012 Olympic Games.
Furthermore, one of the most emblematic
measures for the elimination of doping in
cycling was the creation and implementation
of the ‘Liberty Seguros Medical
Booklet’, allowing the health
of the members of the
o
> Liberty Seguros Support Driver Refresher
Course - Continuing its focus on
Highway Safety, Liberty Seguros
supported the launch and production,
in 2010, of the Driver Refresher Course
– a series of three interactive audiovisual
educational training programmes designed
to create driver awareness of a safer,
seats, greater care when driving in rain
or fog, and checking the condition of the
vehicle, among other things.
Rec
> Liberty Seguros and Prevenção
Rodoviária Portuguesa (PRP) came
together in a Highway Safety Campaign
On June 20, 2008, Liberty Seguros became
Portugal’s first insurance company to
subscribe to the European Road Safety
Charter, undertaking to implement several
measures to create awareness and sensitivity
among the public of highway safety issues so
as to encourage safer-driving habits. The aim
was to reduce the number of deaths by at
least 50% by 2010.
Lending continuity to this great project and
to the focus on one of the main themes of its
communication strategy, Liberty Seguros is
to be associated with the PRP (Portuguese
Highway Safety) over the next three years
The aims of this partnership are to create
awareness among the general public of
specific highway safety matters and their
consequences, to encourage drivers to adopt
appropriate conduct and to promote a sense
of identity and commitment among citizens
in respect of the values of highway safety.
Sports Sponsorship
en d
el
o
Highway Safety
ad o p
National Cycling Team to be monitored.
The protocol entered into with the
Portuguese Cycling Federation is based on
principles of sports ethics and reflects the
continuation of Liberty Seguros’s focus on
cycling.
> Blue Anti-doping Wave in the 72nd
Volta a Portugal - Once again the Liberty
Seguros Blue wave hit the road to spread
a contagious wave of joy and enthusiasm
among cycling fans along every stage of
the Round Portugal Cycle Race, which has
Liberty Seguros as its Official Insurer. After
the end of the race and having drawn up a
balance sheet, the numbers are impressive:
More than 1,200 Liberty Seguros business
partners and employees were present during
the ten stages of the ‘Volta’. In this 2010
edition the intention was that the Blue
Wave be stronger than ever in supporting
the sport about which we are so passionate
and in getting across the serious anti-doping
message, promoting an active movement
encouraging good sport practices and a clean
sport.
> Sport São João de Ver Cycling Teams Liberty Seguros is the principal sponsor of
the Sport São João de Ver Cycling Teams
through a contract valid for four years. It
calls for the continuation of the struggle to
eliminate doping from Portuguese cycling.
The support is mainly directed at fostering
the sports growth of the athletes in clean
cycling, based on the principles of sports
ethics.Sport São João de Ver Cycling is a
great training school that works with the
athletes from a very young age and has
produced great talent in Portuguese cycling.
From early on the club instils in its athletes
values that are important in the sport, such
as seriousness, punctuality, team work and
regard for the adversary. Besides child,
beginner, youth, cadet, junior and under-23
cyclists coming to wear the Liberty Seguros
colours, they will undergo courses on health
problems caused by the use of dope and
prohibited substances.
> Handball - During the 2010-11 sports
season Liberty Seguros continued to support
the Liberty Seguros/São Bernardo Handball
Club which plays in the Professional
Handball League. This support once again
strengthens Liberty Seguros ‘s focus on
sport and on the defence of a health life
style based on values such as team spirit,
dedication and commitment.
> Water Polo - In the 2010-11 sports season
Liberty Seguros continues to support the
CDUP/ Liberty Seguros University of Porto
Sports Centre’s Water Polo Team.
> BTT - Liberty Seguros sponsors the young
Emanuel Pombo and the Liberty Seguros
Specialized Team. The 2010 season was
fantastic for the team’s athletes in sports
terms. Since 2003 the team has made it to
the podium on more than 100 occasions
and, in 2010, it organised a new project
involving the following athletes: Emanuel
and Daniel Pombo, competing in the Elite
category, and Patrick Talas in the Cadets
Category.
also the main sponsor of the “International
Pairs Golf Circuit. This year, the world’s
biggest golf competition, the International
Pairs olf Tournament, began in Portugal at
the Aroeira Golf Club on March 21. The
circuit is organised by VIQ Golf of Porto
and several qualifying events are held in
Portugal. The winners of the Portuguese
final, this year held on the island of Terceira
(Azores), represent Portugal at the World
Final at Loch Lomond in Scotland. Created
in the United Kingdom in 1998, this
Circuit is considered the world’s biggest
pairs competition involving over 200,000
players.
> Liberty Seguros Sponsors Matosinhos
ADSL BTT School - Sponsorhsip by
Liberty Seguros of the Matosinhos ADSL
BTT School, to provide training up to
Juniors level, forms part of the Company’s
strategy to encourage cycling in Portugal
and to support the younger racers, while
allowing the relaunch of BTT and of Cross
Country, an Olympic sport, in Portugal.
Liberty supported the team’s involvement in
> “5th Liberty Seguros Golf Trophy
Tournament” - This year the 5th Liberty
Seguros Golf Trophy Tournament was
held on June 12 at the Victoria Golf
Club in the Algarve. This event is now a
high-point in the sport’s calendar, which
the players invited look forward to with
great expectations. For Liberty Seguros
it is an opportunity to bring together its
customers and partners, and to provide
them with an afternoon of golf on one of
the country’s outstanding courses. wFor
the fourth straight year Liberty Seguros was
15
all the activities and events of the Portuguese
calendar and in national and international
tournaments held during the 2010 sports
season.
> Minho Regional BTT (DHI)
Championship – Liberty Seguros - Liberty
Seguros and ACM (Minho Cycling
Association) entered into a protocol for the
sponsorship in 2010 of the Minho Regional
BTT (DHI) Championship and of the
“Portugal Day One” Bike Tour. Liberty
Seguros officially designated the BTT (DHI)
Championship the Minho Regional BTT
(DHI) - Liberty Seguros Championship and
was the Principal Sponsor of the “Portugal
Day One” Bike Tour held on June 24,
2010, in Guimarães.
> Liberty Seguros Races & Tours - Liberty
Seguros and RunPorto.com continued
their strong partnership in 2010. In this
16
sponsorship, Liberty Seguros plays a
fundamental role in that it is the official
sponsor of most of the events. The aims, in
conjunction with RunPorto, are to increase
participation in the events even more – in
2009 more than 100,000 people took part
– to contribute to increasing considerably
its notoriety in the Greater Porto area, to
pass on the “Blue anti-doping wave for clean
sport” message and to contribute to social
causes in that all the events collect funds
(through the inscription fee) for donations
to solidarity institutions. This year, on July
11, the Liberty Seguros Races & Tours for
Clean Sport was held for the first time. The
initiative will continue in 2011 dit aims to
provide yet another warning as to the need to
keep the sport, both in top competition and
for the masses, free of noxious, prohibited
substances. The main objective of this first
“Races & Tours was to attract the biggest
number of inscriptions (€1 per participant)
and to ensure that many solidary athletes
take part in the event in that the enrolment
fee reverted in full to the Eng. Paulo Valada
Insertion Community, a facility of the Youth
Foundation that supports young mothers at
risk. Another edition of the prestigious St
Sylvester race was held on December 26, this
year named “Liberty Seguros St Sylvester City
of Porto”, known to be one of the oldest and
most traditional events.
> Liberty Seguros and Aurora Cunha The former Olympic athlete joined the
Company once again in 2010 in the
promotion of Clean and Healthy Sport.
This partnership, which has brought Liberty
Seguros and Aurora Cunha together since
2008, has been renewed for three years and
is the result of the sharing of objectives in
the matter of efforts to promote anti-doping
policies, of focusing on clean, healthy sport
for all and of awakening consciences to
the defence of sports ethics. The athlete
will support and be present at the most
varied social responsibility events organised
by Liberty Seguros, and will receive cooperation in those initiatives she undertakes
in support of young athletes and in the
promotion of athletics.
> “Inatel Football School / Liberty Seguros”
Protocol - A protocol was entered in on
August 4, 2009, at the 1º de Maio playing
grounds in Lisbon, for the creation of the
Inatel/Liberty Seguros Football School.
The new football school opened its doors in
September of that year to train youths and
to take part in the various tournaments and
events. As part of its social responsibility
policy, the support provided by Liberty
Seguros will allow children from needier
homes faced with economic difficulties to
take part in the project. The school will be
a leisure area where children and youths can
enjoy a game of football while they are given
appropriate education as sportsmen and
as future citizens, with healthy life styles,
simplifying their harmonious development.
The school’s main aim is to promote their
overall development through sport, creating
a habit of healthy occupation of their spare
time through football, understood as an
activity complementary to their school
activities. The end purpose is eminently
educational and social, with full regard for
the harmonious growth of the children and
youths involved.
‘
Institucional
Projects
> Liberty Seguros challenges the Portuguese
to train and to adopt positive attitudes - At a time when events in the global
economies over the past two years have
contributed to a negative sentiment among
the population in respect of the economy,
finance, the political class and society in
general, Known as “Positive Portugal”, this
project was based on the conviction that it’s
really worth while training positive attitudes
and winning dynamics. For the purpose,it
fell back on the supervision of the experienced Prof Jorge Araújo, a renowned basketball trainer who has studied and and worked
intensively in the area of training emotional
motivation applied to employees of companies. To meet this goal, Liberty Seguros
organised a ‘training session’ in each of the
country’s 18 districts, inviting outstanding
personalities of the region in question to
take part in each session. At every session
testimonial was provided by a local figure of
exemplary success and personal affirmation
under particularly adverse conditions The
“Positive Portugal” project, which is part
of the vast.diversified programme of social
responsibility actions developed by Liberty
Seguros, also seeks to reflect the Company’s
own operating philosophy, a Company that
came into Portugal in 2003 with a very
motivated team and a new attitude, which
allowed it an excellent performance in a
market subject to very difficult conditions.
Liberty Seguros
decided to launch an
initiative of national
scope, the main aim
of which is to foster a
positive, constructive,
dynamic, proactive
attitude, among both
the business fabric and
Portuguese society
‘
> LIBERTY Classics Team - Liberty Seguros
has two Classics Teams on the road which
divulge the Liberty Auto Classics, a special
motor insurance on the Portuguese market
that covers own damage to motor cars
classified as Classic cars. The Classics Teams
comprise the pair Rui Osório (driver)/
Armando Jorge (co-driver), competing at
the highest level in the 1995 Jaguar XK 140
Roadster, and the Liberty Classics Team
(driver: Eugénio Costa, Manager ELS Viseu)
who, in his red Alfa Romeo, is heavily
engaged in events and tours organised by
classic car clubs up and down the country.
> Liberty Seguros marks the National
Insurance Day - Liberty Seguros marked
the National Insurance Day (June 27) with
a number of initiatives that are intended to
increase the awareness of Portuguese society
in matters of prevention and safety. In one
of these initiatives Liberty Seguros challenged the Portuguese to present suggestions
that could contribute to the improvement of
the safety of persons and their property, thus
helping the Company in meeting the needs
and responding to the concerns of its customers in an increasingly effective manner.
Besides this ‘pastime’, Liberty Seguros also
17
celebrated the National Insurance Day with
street activities in which promotional material was distributed in the same 18 places in
which the Company has its own premises.
> Liberty Seguros supports the Practical
Insurance Brokerage Handbook - At the
beginning of 2010 a book entitled Practical
Insurance Brokerage Handbook, written
by Fernando Gilberto, was presented to
the public by Rogério Bicho, Commercial
Manager at Liberty Seguros. The Practical
Insurance Brokerage Handbook is intended
to help professionals who already work in
the industry to develop their activity further
and to help those starting out in this new
stage of their professional lives. Directed at
brokers and all national insurers that work
with brokers, students of technical-professional insurance courses and of post-graduate
courses, as well as socio-professional associations linked to the insurance industry,
the handbook sets out to pass on ideas and
suggestions as to how insurance-brokerage
activity can be managed from a standpoint
both of the broker and of the insurance
company itself.
> Liberty Seguros present at Seminar on
“Current Challenges in HR” - The Seminar on “Current Challenges in HR” organised by the American Chamber of Commerce
in Portugal took place early in 2010. The
target public of the Seminar on “Current
Challenges in HR” included Management,
Human Resources Managers of major companies and of SMEs and also companies and
organisations operating in this area, and issued were tabled such as executives’ compensation, flexible benefits, management, hiring
and retaining talent, performance assessment
and the labour Code, among other matters.
18
The major objective of this initiative was
to be a forum for discussion and for the
exchange of experiences in critical issues in
the HR area with which companies are faced
nowadays. During the two days, a series of
debates and round tables allowed consultants
and mangers of invited companies to address
several subjects and issues.
> Liberty Seguros was the Official Insurer
of the Conference on Leadership that
brought Benjamin Zander to Portugal On January 28, 2010, Benjamin Zander,
one of the world’s most reputed conductors,
was the guest speaker at the first edition of
the Leadership Grand Conference, organised
by EGP–University of Porto Business
School and by Win Productions, before a
full house at the Casa da Música in Porto.
Benjamin Zander, the charismatic English
conductor of the Boston Philharmonic Orchestra, used the analogy of an orchestra to
demonstrate how an organisation organisation can come together as a single team, able
to exploit all its potential to the limit. He
surprised and involved all the participants in
a lively manner, through stories, music and
concepts, presenting a whole new perspective of leadership and talent management. An
incredible experience of training and inspiration, in which Zander interacted with the
audience, projecting his vision of leadership
based on the world of possibilities in which
passion, creativity and a desire to contribute
are basis human instincts to be developed
and driven forward.
> Liberty Seguros marks the National Prevention and Safety Day - April 28, 2010,
was the National Prevention and Safety Day, a
date intended to involve and call the attention
of employers and workers to the prevention of
works accidents and of professional illnesses.
Since 2007 Liberty Seguros has organised
several initiatives with a view to divulging
the date and calling attention to the need to
promote a culture of safety and prevention,
particularly in the matter of works accidents. In
2010, besides other initiatives, we published a
leaflet addressed to workers, providing advice
and preventive and behavioural measures with
a view to preventing works accidents. This
leaflet is available at all the LIBERTY Spaces,
at our business partners and at out network of
clinics. In this connection, we would underscore the importance of worker training and
information, compliance with safety rules, the
use of adequate personal protection equipment, maintenance of the protection devices
of machines and equipment, and special care
in repair and maintenance operations. At
company level, we would underline the importance of organising a hygiene and safety service,
proper analysis and assessment of professional
hazards, organisation of emergency measures
and promotion of a safety culture, though
organisational measures and a great deal of
information and training.
> Liberty Seguros promoted the Business
Management Competition - The Talent
Universities Competition was a business
management competition, a training course
and and access to selection and recruiting for
employment, of international scope. Organised by Ensigest (IPAM+IADE+FEPAM–
Brazil) Talent Universities in partnership
with Liberty Seguros, its aim, through business management and marketing simulators,
was to reward talented new managers and,
at the same time, to train present and future
business managers wanting to improve their
skills in respect of operating in the competitive markets in which they have to act.
A LIBERTY SEGUROS
ASSEGURA A TUA
PARTICIPAÇÃO
LIBERTA O TEU
TALENTO
COMPETIÇÃO DE GESTÃO:
- GRATUITA
- INTERNACIONAL
- COM CRÉDITOS (ECTS)
Inscreve-te já em:
www.talentuniversities.com
SPONSORED BY:
PROMOTED BY:
EMPOWERED BY:
€ 10.000
em
prémios
Macroeconomic
Framework
Real GDP Growth
6.0
15%
Euribor (3 months)
5.0
10%
4.0
China
3.0
India
Emerging and
developing economies
Russia
5%
2.0
Brazil
1.0
Advanced
economies
0%
USA
Sep-10
UK
Nov-10
Jul-10
May-10
Jan-10
Mar-10
Sep-09
Nov-09
Jul-09
May-09
Jan-09
Mar-09
Sep-08
Nov-08
Jul-08
May-08
Jan-08
Mar-08
Sep-07
Nov-07
Jul-07
Also important was the intervention of the central
banks, which reacted quickly with exceptional
interest-rate cuts and unconventional measures to
inject liquidity and sustain credit.
May-07
Jan-07
0.0
Mar-07
World economy
Despite the profound global crisis stemming from
the turbulence on the financial markets, the global
economy performed quite well in 2010.
A contribution to this performance involved public intervention, begun in 2009, in many of the
advanced and emerging economies, which helped
to underpin demand through the launch of greater
fiscal stimulus programmes, while they supported
bank guarantees and injected capital. Together,
these measures reduced uncertainty and increased
confidence, therefore promoting an improvement
of the financial conditions.
Japan
-5%
Portugal
World
Source: Banco de Portugal
Euro Area
-10%
2007
2009
2008
2011
2010
Source: FMI 2010
1.7
Euro/Dolar
1.6
1.5
1.4
1.3
1.2
6.0
1.1
Euribor
1.0
5.0
0.9
4.0
0.8
3.0
1.0
Jan-10
Mar-10
Nov-09
Jul-09
Sep-09
May-09
Jan-09
Mar-09
Nov-08
Jul-08
Sep-08
May-08
Jan-08
Mar-08
Nov-07
Jul-07
Sep-07
0.0
May-07
2.0
Jan-07
0.7
Mar-07
For 2011 global growth is expected to stand at
around 4%. Growth will continue to be underpinned by the emerging economies, and there will
continue to be some financial uncertainty and uncertainty as to sustained economic growth among
the advanced economies. In the case of Europe, in
particular, the cases of sovereign-debt crisis that
have occurred since November 2010 will continue
to impose successive reassessments of the growth
prospects.
1.8
Jan-99
May-99
Sept-99
Jan-00
May-00
Sept-00
Jan-01
May-01
Sept-01
Jan-02
May-02
Sept-02
Jan-03
May-03
Sept-03
Jan-04
May-04
Sept-04
Jan-05
May-05
Sept-05
Jan-06
May-06
Sept-06
Jan-07
May-07
Sept-07
Jan-08
May-08
Sept-08
Jan-09
May-09
Sept-09
Jan-10
May-10
Sept-10
However, the good performance of the Asian
markets was determinant, that of China and India
and also of Brazil in particular, whose performance
was fundamental to the increase of global growth
in 2010 to an average of around 5%.
Source:
19
PORTUGUESE Economy
Macroeconomic Indicators
Real GDP Growth
Real Private Consuption Expenditure
Real Public Consuption Expenditure
Exports
Investment
Unenployment Rate
Consumer Price Index
2004
1,6%
2,7%
2,4%
4,1%
0,0%
6,7%
2,5%
2005
0,8%
1,7%
3,3%
0,2%
-0,5%
7,7%
2,1%
2006
1,4%
1,8%
-0,7%
11,6%
-1,3%
7,7%
3,0%
2007
2,4%
2,5%
0,5%
7,6%
2,6%
8,0%
2,4%
2008
0,0%
1,8%
0,8%
-0,3%
-1,8%
7,6%
2,7%
2009
-2,5%
-1,0%
2,9%
-11,8%
-11,9%
9,5%
-0,9%
2010
1,5%
1,9%
2,1%
8,4%
-4,1%
10,7%
1,4%
Fonte: OCDE (Outlook 88)
Gross Domestic Product (%)
1.7%
1.7%
1.6%
1.7%
1.6%
1.5%
1.6%
1.5%
1.4%
1.5%
1.4%
1.3%
1.4%
1.3%
1.2%
1.3%
1.2%
1.1%
1.2%
1.1%
1.0%
1.1%
1.0%
0.9%
1.0%
0.9%
0.8%
0.9%
0.8%
0.7%
0.8%
0.7%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0.7%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2010OCDE
2011
Source:
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: OCDE
Source: OCDE
5.0%
5.0%
4.0%
5.0%
4.0%
3.0%
4.0%
3.0%
2.0%
3.0%
2.0%
1.0%
2.0%
1.0%
0.0%
1.0%
0.0%
-1.0%
0.0%
-1.0%
-2.0%
-1.0%
-2.0%
-2.0%
Inflation Rate(%)
Inflation Rate(%)
Inflation Rate(%)
12,0%
10,0%
12,0%
10,0%
8,0%
10,0%
8,0%
6,0%
8,0%
6,0%
4,0%
6,0%
4,0%
2,0%
4,0%
2,0%
0,0%
2,0%
0,0%
0,0%
16.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2010OCDE
2011
Source:
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2010 2011
Source:
OCDE
14.000
12.000
Unemployment Rate (%)
10.000
8.000
6.000
4.000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source:
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2010OCDE
2011
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Source:
2010 2011
OCDE
Source: OCDE
20
PSI 20
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: OCDE
12,0%
Following the volatility seen in 2008, with falls of between 40% and 50% in
2009, there was a period of recovery, with growth of nearly all the world’s leading stock-market indices. However, there was again a period of some volatility
in 2010, with declines of the Euro-Stoxx, IBEX 35 and NIKKEI 225 indices
by 5.8%, 17.4% and 3.0% respectively, and increases of the NASDAQ, Dow
Jones, Dax Xetra and S&P 500 indices, up by 16.9%, 11.0%, 16.1% and 12.8%
The PSI 20 fell 10.3% compared to 2009.
2-Jan-07
31-Jan-07
1-Mar-07
30-Mar-07
2-Jan-07
1-Jun-07
2-Jul-07
31-Jul-07
29-Aug-07
27-Sep-07
26-Oct-07
26-Nov-07
27-Dez-07
28-Jan-08
26-Feb-08
28-Mar-08
28-Abr-08
28-May-08
26-Jun-08
25-Jul-08
25-Aug-08
23-Sep-08
22-Oct-08
20-Nov-08
19-Dez-08
21-Jan-09
19-Feb-09
20-Mar-09
20-Apr-09
19-May-09
17-Jun-09
16-Jul-09
14-Aug-09
14-Sep-09
13-Out-09
11-Nov-09
10-Dez-09
12-Jan-10
10-Feb-10
11-Mar-10
13-Apr-10
12-May-10
19-May-10
10-Jun-10
9-Jul-10
9-Aug-10
7-Sep-10
6-Oct-10
4-Nov-10
3-Dec-10
Over the past ten years the Portuguese economy
grew by an average of 1% a year, one of the
world’s lowest growth rates.
The Portuguese economy continues to suffer the
effects of the global economic and financial crisis,
but also the absence of structural reform and
sustained development and the resultant increase
of the competitiveness of the economy.
This situation of the economy during 2010 had
a negative impact on employment, on disposable
income, on consumption, on savings, on debt,
and on public debt and foreign debt, given that
they continue to grow as a proportion of the gross
domestic product.
For 2011 the estimates suggest a reduction of the
gross domestic product and to an increase of the
jobless rate. The negative growth expected for
2011 is also linked to the necessary and urgent
consolidation of the public finances.
In view of the present situation of the economy it
can be expected that measures will be taken during
2011 to stimulate and encourage the relaunch of
the economy, allowing ongoing recovery of the
confidence of consumers in general and of the
productive economic agents in particular, driving
growth and debt reduction.
PSI 20
16.000
Insurance Market
14.000
A contribution to this growth was made by the increases of 0.4% in Motor insurance, 2.5% in Fire
insurance and 5.9% in Health insurance, the latter
reflecting the growing concern of the Portuguese
in the matter of access to health care.
It should be mentioned that, having fallen in 2008
and 2009, Workmen’s Compensation has again
declined in 2010 (4.6%), reflecting the current
situation in the business world, with a growing
number of bankruptcies, while also mirroring the
increasing jobless rate, now standing around 11%.
The Business of
Liberty Seguros
The year under review, the seventh full year in
business in Portugal for Liberty Seguros, was
marked by real consolidation of the previous year’s
results. Liberty’s move into Portugal has been a
success not only in respect of the improvement
of the various management indicators but also,
consequently, of results. The year under review
was quite a productive one, returning a net profit
of €9.4 million, €0.3 million more than the figure
achieved in 2009. .
2-Jan-07
31-Jan-07
1-Mar-07
30-Mar-07
2-Jan-07
1-Jun-07
2-Jul-07
31-Jul-07
29-Aug-07
27-Sep-07
26-Oct-07
26-Nov-07
27-Dez-07
28-Jan-08
26-Feb-08
28-Mar-08
28-Abr-08
28-May-08
26-Jun-08
25-Jul-08
25-Aug-08
23-Sep-08
22-Oct-08
20-Nov-08
19-Dez-08
21-Jan-09
19-Feb-09
20-Mar-09
20-Apr-09
19-May-09
17-Jun-09
16-Jul-09
14-Aug-09
14-Sep-09
13-Out-09
11-Nov-09
10-Dez-09
12-Jan-10
10-Feb-10
11-Mar-10
13-Apr-10
12-May-10
19-May-10
10-Jun-10
9-Jul-10
9-Aug-10
7-Sep-10
6-Oct-10
4-Nov-10
3-Dec-10
Given that the insurance industry is a reflection of
12.000
what happens in the economy, this sector, too, has
seen a slowdown of business, further heightened
10.000
during 2009. Nevertheless, in 2010, in keeping
with
the growth of the Portuguese economy,
8.000
insurance business, too, returned a slight growth.
6.000
According
the the figures of the Insurance Supervisory Authority Non-Life business grew by 0.7%,
4.000Life business increased by 17.2%.
while
The total volume of direct insurance premiums,
according to ISP, grew by 12.5% to €16.3 billion.
For the growth of Life business (up 17.2%) a major contribution was made by the increase of life
insurance (33.3%) as a result of greater demand
for capital- and income-guaranteed contracts.
Nevertheless, there was a reduction of insurance
linked to investment funds (down 25.2%).
Following the decreases seen in 2008 and 2009,
Non-Life business grew by 0.7% in 2010.
Underscored is the performance of Liberty Seguros compared with the market, not only in 2010
but also since it moved into Portugal, returning
growth rates greater than the market.
Non-Life Direct Insurance Premiuns Growth
16.0 %
14.0 %
Liberty Seguros
12.0 %
Market
10.0 %
8.0 %
6.0 %
4.0 %
2.0 %
0.0 %
-2.0 %
-4.0 %
-6.0 %
2007
2008
2009
2010
Liberty Seguros Indicators
DWP
Non-Life
Life
Reinsurance Premium Assumed *
GWP *
Reinsurance Premiums Ceded *
Market Share (Non-Life)
GWP Growth Rate (Life + Non-Life)
GWP Growth Rate (Non-Life)
Loss Ratio (Non-Life) **
Net Income *
Net Income * / GWP *
Headcount
DWP by Headcount *
Policies in Force
Policies in Force by Headcount
Net Assets *
Total Investments *
Equity *
Technical Provisions *
Life Reserves *
Non-Life Reserves *
Gross Claims *
Net Claims *
Net Expenses *
RoE
Solvency Margin
2008
188 866
162 499
26 367
1 520
190 387
10 908
3,9%
2,0%
3,3%
68,1%
5 948
3,2%
439
436
626 540
1 447
660 132
606 406
58 471
543 412
256 181
227 168
156 279
155 279
64 252
10,2%
183,8%
2009
2010***
2010
186 480
197 260
197 260
160 261
172 049
172 049
26 218
25 210
25 210
1 925
2 810
2 810
188 404
200 070
200 070
12 102
15 124
15 124
4,0%
4,3%
4,3%
-1,0%
6,2%
6,2%
-1,1%
7,8%
7,8%
68,6%
68,8%
68,8%
9 111
9 376
9 376
4,8%
4,8%
4,8%
441
471
480
424
433
428
657 329
706 633
882 949
1 494
1 550
1 917
682 425
668 219
686 808
645 010
636 027
651 683
91 596
100 095
111 888
535 346
526 604
531 043
245 640
243 510
243 510
227 541
215 874
219 333
140 824
139 128
139 128
140 239
137 905
137 905
60 439
62 479
62 479
12,1%
9,8%
9,2%
233,1%
238,6%
266,9%
* Expressed in euros
** Rate calculated on the basis of the cost of claims net of reinsurance and net premiums earned
*** Excluding the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in Portugal into Liberty Seguros, undertaken through an increase
of the contributed capital paid up in kind.
21
-20.0%
-25.0%
2007
Production and Polices
In overall terms, Liberty Seguros achieved a gross
volume of premiums written in the sum of €200.1
million, an increase of 6.2% over the previous
year.
In terms of Non-Life business, the volume of gross
premiums written amounted to €174.9 million
and, in terms of Life business, the volume of gross
premiums written amounted to €25.2 million,
that is, a growth of 7.8% and a decrease of 3.8%
respectively, compared to the previous year.
Should Génesis Seguros Generales, Sociedad
Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in Portugal have been included as
of January 1, 2010, the total volume of premiums
would have amounted to €215.6 million.
2008
Workmen´s
Compensation
20.0%
2009
2010
Auto
Other
Life
Fire
Liberty Seguros – Direct Insurance Premiuns (Change)
15.0%
10.0%
5.0%
0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
2007
2008
Workmen´s
Compensation
2009
2010
Auto
Fire
Other
Life
Liberty Seguros (Life+Non-Life)
900,000
225,000
215,000
800,000
Direct Insurance Premiuns
13.9%
Policies
205,000
Liberty Seguros (Weight in the Portfolio)
700,000
15.1%
14.0%
5.1%
14.0%
9.6%
9.3%
195,000
13.6%
5.2%
14.1%
57.2%
2007
2008
5.1%
10.9%
10.6%
56.6%
13.5% 12.8%
5.2%
56.5%
57.1%
2009
2010
600,000
185,000
500,000
175,000
165,000
Euros
400,000
2005
2006
2007
2008
2009
2010
Auto
Fire
Policies
Life
Other
Liberty Seguros (Weight in the Portfolio)
Note: The 2010 figures do not include the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in
Portugal portfolio into Liberty Seguros
13.9%
22
Workmen’s
Compensation
9.3%
15.1%
5.1%
14.0%
9.6%
14.0%
5.2%
13.6%
10.6%
14.1%
5.2%
13.5% 12.8%
10.9%
5.1%
Policies per Worker
opertating costs
Total operating costs at Liberty Seguros amounted
to €62.5 million, an increase of 3.4% compared to
the sum of €60.4 spent the previous year. Acquisition costs increased €1.8 million.
The Company’s administrative costs amounted
to €16. million, up 2.5% (an increase of €0.4
million) when compared with the previous year.
1,600
1,550
1,550
1,500
1,495
Non-Life operating costs amounted to €53.7
million, up €2.4 million from the 2009 figure.
With regard to Life business, the operating ratio
stood at 35.0% of earned premiums net of reinsurance, maintaining the same ratio as in 2009.
1,450
1,447
1,423
1,400
1,350
Costs
1,300
2007
2008
2009
Net Operation Costs
Acquisition Costs
Administrative Costs
2010
Note: The 2010 figures do not include the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in Portugal portfolio into LIBERTY SEGUROS
% over Premiums
% over Premiums
% over Premiums
2008
31.6%
23.8%
8.7%
2009
34.0%
25.5%
8.7%
2010
32.4%
24.4%
8.4%
31.7%
24.0%
8.1%
REINSURANCE
‘
Liberty Seguros – Ceding Ratio
8.1%
7.6%
7.1%
6.6%
‘
In overall terms, Liberty Seguros achieved
a gross volume of premiums written in the sum of
€200.1 million, an increase of 6.2% over
the previous year.
2007
6.1%
5.6%
2007
2008
2009
2010
Evolution of the Ceded Reinsurance Ceding Ratio
The renegotiation of the reinsurance treaties and
the increase of the subscription of catastrophic
perils meant that the cession ratio increased from
5.7% in 2008 to 6.4% in 2009 and now to 7.6%
in 2010.
23
Investments
Investments
2008
2009
Bonds
Common Stock
Mutfund
Deposits
Other
Total Investments
Non-Life Portfolio
Life Portfolio
Free Portfolio
604 575 297
22 500
1 555 683
6 755 283
252 459
613 161 222
288 957 793
311 792 180
5 655 966
643 000 623
391 851
1 617 647
2 994 482
100
648 004 704
289 855 225
326 299 076
28 855 922
Investments
2008
2009
Common Stock
Government Bonds
Corporate Bonds
Mutfund
Other
Total Investments
22 500
182 760 377
421 814 920
1 555 683
252 459
606 405 939
391 851
197 939 568
445 061 055
1 617 647
100
645 010 222
Investments
Activity Sector
Government
Financial
Utilities
Communications
Consumer - Cyclical
Energy
Consumer - Non Cyclical
Industry
Basic Materials
Other
Technology
Total Investments
24
2010***
633 848 201
588 197
1 530 491
-323 655
60 300
635 703 534
286 303 185
324 792 476
24 931 528
2010***
588 197
178 401 806
455 446 395
1 530 491
60 300
636 027 189
(euros)
2010
649 504 110
588 197
1 530 491
978 344
60 300
652 661 442
301 959 093
324 792 476
24 931 528
(euros)
2010
588 197
183 078 107
466 426 003
1 530 491
60 300
651 683 098
(euros)
%
2010
183 078 107
169 658 178
95 329 404
61 494 893
38 678 377
20 858 227
20 078 088
28 630 318
19 757 468
14 120 039
0
651 683 098
28,1%
26,0%
14,6%
9,4%
5,9%
3,2%
3,1%
4,4%
3,0%
2,2%
0,0%
100,0%
(euros)
Investments
Rating
AAA to AA
AA- to ABBB+ to B
Other
Total Investments
2008
2009
181 029 932
301 973 015
118 926 425
4 476 567
606 405 939
191 745 480
283 236 230
168 018 913
2 009 599
645 010 222
2010***
184 489 013
270 607 225
178 751 963
2 178 988
636 027 189
2010
188 903 445
280 184 864
180 415 801
2 178 988
651 683 098
During 2010 Liberty Seguros recorded no impairment loss on its assets, nor did it realise significant
losses in overcoming the liquidity risks stemming
from the growth of the volume of surrenders.
(euros)
Investments
2008
2009
2010***
2010
Maturities
< 1 year
21 739 260
39 914 585
36 834 558
40 200 887
1 to 3 years
44 265 119
67 058 717
115 835 572
123 103 709
3 to 5 years
166 792 461
134 565 116
152 964 124
156 848 215
5 to 10 years
191 818 772
218 274 262
173 927 047
175 064 398
> 10 years
179 959 686
183 557 294
154 852 597
154 852 597
w/o maturity
1 830 642
1 640 247
1 613 291
1 613 291
Total Investments
606 405 940
645 010 222
636 027 189
651 683 098
*** Excludes the incorporation of Génesis Seguros Generales, Sociedad Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in Portugal into Liberty Seguros
The majority of Liberty Seguros’s financial assets
are classified as available-for-sale.
As in the case of the preceding year, 2010 also
came to an end with no securities valued using
Mark-to-Model. Nevertheless, we continue to
perform periodic analysis of the liquidity of the
securities in the portfolio.
Return of Investements
SOLVENCY MARGIN
Solvency Margin
6.0%
5.2%
Life Return of Investements
Non-Life
Total
Life
Non-Life
Total
5.2%
4.8%
4.8%
4.8%
4.8%
6.0%
5.5%
5.3%
5.5%
5.3%
5.0%
5.0%
4.5%
233.08%
183.78%
126.66%
2007
2008
2009
2010
2007
Return on Investments = Returns / Investments
4.0%
2007include the incorporation
2008
2010de Seguros
Note: The 2010 figures
of the Génesis Seguros 2009
Generales, Sociedad Anónima
y Reaseguros, Sociedad Unipersonal Branch in Portugal portfolio into Liberty Seguros
2008
Life
Non-Life
1109.7%
1098.6%
Technical
Life
Non-Life
1109.7%
1098.6%
‘
169.5%
169.5%
171.3%
168.7%
2007
2007
168.7%
Provisions
over Premiuns 1086.8%
Ratio
1066.1%
2008
2008
171.3%
1086.8%
1066.1%
158.8%
2009
2009
158.8%
2010
2010
Note: The 2010 figures include the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros
2010
Note: The 2010 figures include the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros y Reaseguros, Sociedad Unipersonal Branch in Portugal portfolio into Liberty Seguros
Technical Provisions over Premiuns Ratio
TECHNICAL PROVISIONS
2009
The solvency margin
rose to 266.86% in
2010.
‘
4.5%
4.0%
266.86%
The solvency margin rose to 266.86% in 2010.
Should the Génesis Seguros Generales, Sociedad
Anónima de Seguros y Reaseguros, Sociedad
Unipersonal Branch in Portugal portfolio not
have been incorporated into Liberty Seguros the
Liberty Seguros solvency margin would have stood
at 238.6%.
As at December 31, 2010, potential gains amount
to €7,821,344, €1,328,201 less than in 2009.
25
Corporate Governance
Structure and Practice
RESULTS
Result of the Non-Life and Life Technical
Account
The profits of Liberty Seguros’s Non-Life and
Life technical accounts amounted to €7,187.9k
and €5,138.7k respectively. This constitutes an
improvement over 2009 in the sum of €1,779.4k
and €612.0k respectively.
The Company follows the principles and recommendations on transparency and corporate
governance introduced through recent alterations
to the Companies Code enacted by Decree-Law
185/2009 of August 12, and by Insurance Advisory Authority Regulatory Standard 2/2010 of
April 1 and Circular 5/2009 of February 19.
Net profit
Liberty Seguros returned a net profit in the sum of
€9,376.2k. This profit was 2.9% higher than the
figure of €9,111.3k for the previous year.
Evolution of Profitability
14,0%
12,1%
12,0%
10,0%
10,2%
10,2%
9,2%
8,0%
6,0%
4,8%
4,8%
4,0%
3,2%
3,3%
2,0%
2007
1,4%
0,9%
1,0%
0,0%
2008
2009
1,4%
2010
Net Profit (NP) Equity
Net Profit/Gross Premium Written (GPW)
Net Profit/Net Assets (NA)
Note: The 2010 figures include the incorporation of the Génesis Seguros Generales, Sociedad Anónima de Seguros
26
Contributed Capital Structure
The contributed capital of Liberty Seguros is
represented by 506,937 shares each of a par value
of €52.37, not admitted to trading. There are no
different categories of shares and they all entail the
same duties and rights. There are no restrictions
to the transferability of shares or consent clauses
for their sale or limitations to their ownership.
The shares may be issue in the form of certificates
representing several shares.
Liberty Seguros’s contributed capital is held by
two equityholders – LIBERTY INSURANCE
GROUP, Compania de Seguros y Reaseguros, SA
(91.71%) and Genesis Seguros Generales SA, de
Seguros y Reaseguros (8,.29%), the former having
a qualified holding and, indirectly, holds the
whole of contributed capital. There are no holders
of special rights, nor do the workers have any
equityholding, and there are no restrictions in the
matter of voting rights.
There are no equityholders’ agreements known to
the company that could lead to restrictions in the
matter of transfer of securities or of voting rights
Governance Model
The management and supervision structure comprises the following bodies:
> General Meeting – the board of which
comprises a chairman and a secretary elected
for a re-eligible four-year term of office. It
must represent more than fifty per cent of
the contributed capital.
> Board of Directors – comprising 5
members elected by the General Meeting
for four-year terms of office, the General
Meeting designating its chairman, while the
management powers that may be delegated
under the terms of the law are granted to
two managing directors.
> Board of Auditors – comprising three full
members, one of whom the chairman, at
least one of the members to hold a degree
appropriate to the performance of his duties,
have knowledge of auditing or accounting,
and be independent under the terms of the
Companies Code.
> Official Auditor – a function entrusted to
a firm of official auditors at the proposal of
the Board of Auditors.
The General Meeting is the supreme body
of Liberty Seguros, its powers defined in the
Company’s articles of association, namely:
> to decide as to the annual reports of the
Board of Directors and of the Board of Auditors, as to the financial statements and as
to the appropriation of profits and reserves;
> to elect the members of the Board of Directors and of the Board of Auditors, and the
Official Auditor;
> to modify the Company’s articles of association;
> to adopt resolutions as to the merge, reunion
or winding up of the Company
The powers of the Board of Directors are also
described in the Company’s articles of association, and include the most ample powers for the
management and administration of the Company,
namely:
> o manage all the Company’s business, to
enter into contracts of any nature necessary
to the pursuit of the corporate objects and
to execute all operations relating to the
corporate object, with due observance of
prudential rules, of the directive issued by
the supervisory authorities and of the rules
of conduct of insurance companies;
> to draw up internal regulations for the
Company’s various services;
> to look after and defend the Company’s
goods and assets, taking such measures as it
may been necessary;
> o decide as to the placement of available
capital and as to the employment of the
reserves;
> to come to an understanding with the proper
authorities in all matters concerning the
entering into, execution or modification of
contracts;
> to decide the Company’s rights and interests
judicially or out-of-court, empowered in
particular to compromise and to settle in
arbitration;
> to organise the balance sheet and accounts
to be submitted to the General Meeting
and to draw up the respective report in the
Company’s economic situation, and proposing the appropriation of profit;
> to propose to the General Meeting drafts in
respect of the merger, reunion or winding
up of the Company, and of alterations of the
articles of association;
> to decide all matters of interest to the Company not expressly reserved to the General
Meeting.
The Board of Directors meets when convened by
its chairman whenever the interests of the Company so require.
The Board of Directors delegates the management of the Company’s routine business on one
Managing Director, the powers delegated and the
routine management powers being written into
the minutes
Policy Governing the Remuneration of Members
of the Management and
Supervisory Bodies
The Liberty Seguros remuneration policy follows
the provisions of Regulatory Standard 5/2010R of April 1, insofar as the duties of disclosure
of information are concerned, and of Circular
6/2010 of April 1 in the matter of governance
and of the content of the policy.
The Liberty Seguros remuneration policy applies:
> to the management and supervisory bodies
> to employees who earn variable remuneration and perform
> key functions, that is, functions that
are established within the scope of
risk-management and internal-control
management systems, in particular
the functions of Risk Management
& Security Officer, SOX Auditing &
Internal Control, Legal & Compliance,
and Internal Audit.
or
> other professional activity that could
materially impact on Liberty Seguros’s
risk profile – in this case employees
are included who have regular access
to privileged information and take
part in decisions as to the institution’s
management and business strategy, top
managers in particular
and seeks to align the remuneration
mechanisms with prudent, adequate
risk management and control. In this
way Liberty Seguros endeavours to
avoid excessive exposure to risk, to
prevent potential conflicts of interest
and to be coherent with its long-term
objectives, values and interests, in
particular its growth and sustainable
profitability prospects, and protection
of policyholders, insured, participants,
beneficiaries and contributors.
Policy governing the remuneration of members
of the management and supervisory bodies
a) Approval and annual assessment
The remuneration policy for members of the
management and supervisory bodies has to be approved by the Ordinary General Meeting and it is
assessed at least once a year by the Liberty Seguros
control bodies, namely Compliance, Risk Management, Internal Control and Internal Audit,
which act in conjunction for the purpose. Their
report is submitted to the Board of Directors and
to the Ordinary General Meeting. The report
includes the results of the appraisal in the light of
the recommendations of Circular 6/2010 of April
1, particularly with regard to the respective effects
on LIBERTYS SEGUROS’s risk and capital
management.
b) Disclosure
Those aspects of remuneration policy required
by law shall be disclosed on the official Internet
site and shall be included in the annual Report
and Accounts. Also in accordance with Regulatory Standard 5/2010-R, the Board of Directors
shall send to the Insurance Advisory Authority
a declaration as to the conformity of the Liberty
Seguros remuneration policy, included in the Risk
Management and Internal Control Report. The
complete document shall be subject to annual
review and shall be published in the Human
Resources Intranet site (DRH Intranet).
27
c) Remuneration policy
Executive members of the management bodies
may be entitled to variable remuneration in addition to the fixed remuneration. Members of the
Board of Auditors, the Official Auditor and the
members of the Board of the General Meeting are
not entitled to variable remuneration.
With regard to the remuneration of executive
directors, it can be seen that it is based on the
following:
> the fixed remuneration of the executive directors being established by the Ordinary
General Meeting
> balance between the variable and fixed
components of the remuneration, so as to
allow application of a fully flexible policy
in respect of the variable component of
the remuneration
> the relationship established between the
amount of the variable remuneration and
the pre-tax profits of Liberty Seguros.
> the variable remuneration results from
a Performance Assessment System that
involves individual goals and corporate
goals, both of which embracing quantitative and qualitative aspects
> the fact that the Liberty Seguros body
competent to approve the assessment of
the performance of the executive directors
is the Ordinary General Meeting
> payment of a part of the variable remuneration of the executive directors is deferred
for 3 years after the date of its award
> payment of the deferred variable component is subject to a condition of access so
that, in the event of relevant deterioration
of the performance of Liberty Seguros, the
payment is forfeit
> the fact that the complementary pension
schemes exist only for the chairman of
the Board of Directors and have been
approved by the Liberty Mutual Human
28
Resources Department, in Boston, at the
time he was taken on
> any alterations to this pension complement are subject to the approval by the
Body that authorised it
In its annual assessment of the members of the
management body the Ordinary General Meeting
shall consider compliance with the objectives,
the quantitative and qualitative results achieved
and their origin and nature, their sustainability or
occasionality, the risk associated with obtaining
them, compliance with rules and regulations,
the value added for the equityholders and the
way in which Liberty Seguros related with other
stakeholders.
The percentage of fulfilment of the objectives for
the purpose of calculation of the total amount of
the variable remuneration may not exceed a percentage of the year’s pre-tax profit, the percentage
to be defined by the Ordinary General meeting,
No member shall be awarded, in respect of a year
just ended, by way of variable remuneration, a
sum greater than a certain number of months of
his actual fixed monthly remuneration in force
at the end of that year, to be established by the
Ordinary General Meeting.
Liberty Seguros’s executive directors enjoy other
non-pecuniary benefits, namely pension-complement schemes, health insurance, life insurance and
widowhood and orphanity insurance.
In the event of privation of office of executive
members of the management body, Liberty
Seguros’s policy is to pay the compensations
provided for by law, though in each case a different sum may be negotiated as considered most
appropriate by both parties. The members of the
Board of Directors do not receive any additional
compensation by virtue of their standing, the same
criteria applying as for the other employees.
There are four Liberty Seguros directors who earn
no pecuniary remuneration within the scope of
their mandate, nor do they have any other nonpecuniary benefit. The members of the Board of
Auditors, the Official Auditor and the members
of the Board of the General Meetings earn only a
fixed remuneration.
Employee remuneration policy
a) Approval and annual assessment
The remuneration policy for employees of Liberty
Seguros has to be approved by the Board of
Directors and is assessed at least once a year by the
Liberty Seguros control bodies, namely Compliance, Risk Management, Internal Control and
Internal Audit, which act in conjunction for the
purpose. Their report is submitted to the Board of
Directors and to the Ordinary General Meeting.
The report includes the results of the appraisal
in the light of the recommendations of Circular
6/2010 of April 1, particularly with regard to the
respective effects on Liberty Seguros’s risk and
capital management
b) Divulgação
A política de remuneração será divulgada no sítio
oficial na internet, nos aspectos em que a lei assim
o obrigar, assim como constará do Relatório e
Contas do Exercício. Ainda de acordo com a Norma Regulamentar N.º 5/ 2010-R, de 1 de Abril o
Conselho de Administração enviará anualmente ao
Instituto de Seguros de Portugal uma declaração
sobre a conformidade da política de remunerações
da Liberty Seguros, integrada no Relatório da
Gestão de Riscos e Controlo Interno. O documento integral será sujeito a revisões anuais e
será publicado no sítio da intranet dos Recursos
Humanos (DRH Intranet).
b) Disclosure
Those aspects of remuneration policy required
by law shall be disclosed on the official Internet
site and it shall be included in the annual Report
and Accounts. Also in accordance with Regula-
tory Standard 5/2010-R, the Board of Directors
shall send to the Insurance Advisory Authority
a declaration as to the conformity of the Liberty
Seguros remuneration policy, included in the Risk
Management and Internal Control Report. The
complete document shall be subject to annual
review and shall be published in the Human
Resources Intranet site (DRH Intranet).
c) Remuneration policy
Liberty Seguros employees who earn a variable remuneration and exercise their professional activity
within the scope of key duties or exercise another
professional activity that could have a material
impact on Liberty Seguros’s risk, may benefit from
a variable remuneration in addition to the fixed
remuneration. This remuneration is based on the
following:
> balance between the variable and fixed
components of the remuneration, so as to
allow application of a fully flexible policy
in respect of the variable component of the
remuneration
> the relationship established between the
amount of the variable remuneration and
the pre-tax profits of Liberty Seguros.
> the fact that the variable remuneration results from a Performance Assessment System
that involves individual goals and corporate
goals, both of which embracing quantitative
and qualitative aspects
> the fact that the assessment of the performance of these employees is approved by
their direct superiors and is subsequently
reviewed by the Board of Directors
> the fact that a part of the variable remuneration of the employees who exercise
another professional activity that may have a
material impact on the Liberty Seguros risk
profile is deferred for three years after it is
awarded.
> the fact that payment of the deferred
variable component is subject to a condition
of access so that, in the event of relevant
deterioration of the performance of Liberty
Seguros, the payment is forfeit
> the fact that the complementary pension
scheme or early retirement is that defined in
the Collective Bargaining Agreement for the
insurance industry.
The percentage of fulfilment of the objectives for
the purpose of calculation of the total amount of
the variable remuneration may not exceed a percentage of the year’s pre-tax profit, the percentage
to be defined by the Ordinary General meeting,
No member shall be awarded, in respect of a year
just ended, by way of variable remuneration, a
sum greater than a certain number of months of
his actual fixed monthly remuneration in for at the
end of that year, to be established by the Ordinary
General Meeting.
The process of granting variable remuneration to
employees performing key duties shall take into
consideration, besides the annual performanceassessment process, observance of legislation and
other regulations, control of several risks inherent
in their duties and their relations with customers
(both external and internal). In this way, the individual objectives established for these employees
will be associated with their duties and depend on
the relevance of the latter, regardless of the performance of the areas under their control
The Outlook
Closing Remarks
In this seventh full year in business, the consistency of LIBERTY’S results has been in line with
the good performance achieved in recent years.
However, notwithstanding the national and international economic context, the expectations for
2011 and for the coming years are quite good, and
Liberty Seguros is set to continue to achieve profit
and portfolio-growth performance outperforming
the market.
The Board of Directors would like to express its
thanks to all those entities that have supported the
Company in carrying on its business, especially
the Insurance Supervisory Authority (ISP), the
Portuguese Insurers Association, our Shareholders
and the other Corporate Officers.
We would also express our gratitude to our Customers for their preference, and we promise to make
every effort to continue to come up to their needs
and expectations.
Lastly, we would like to thank all our Employees
and Distribution Networks for all their efforts.
.
Proposal for the
Appropriation of Results
Liberty Seguros, SA, returned a net profit for 2010
in the sum of €9,376,195.96, for which we propose the following appropriation: to Legal Reserve
the sum of €937,619.60 and to Retained Earnings
the sum of €8,438,576.36.
José António da Graça Duarte de Sousa
Chairman and Managing Director
David Henry Long
Member
Christopher Locke Peirce
Member
Luís Bonell Goytisolo
Member
Results
Net Income
Legal Reserve
Retained earnings
2008
2009
2010
5 947 904
9 111 331
9 376 196
594 790
911 133
937 620
5 353 114
8 200 198
8 438 576
Marta Sobreira Reis Alarcão Troni
Member
Lisbon, March 11, 2011
The Board of Directors
29
30
‘
‘
It was a year in which Liberty Seguros was again
outstanding for dozens of social-responsibility
initiatives that reflect a true, positive competitive
differentiation in our way of being and operating
in the marketplace
31
Balançe Sheet
Notes to the
Accounts
Gross value
Expressed in euros
Previous Period
Period
Impairment, depreciation,
amortisation or adjustments
Net value
ASSETS
3 1 a), 8 e 11 Cash & cash equivalents and sight deposits
3.1 b.1) e 11
3.1 b.1), 6 e 11
3.1 b.1)
11
3.1 c) e 9
3.1 c) e 10
3.1 d) e 12
3.1 e) e 4.1 e)
3.1 f) e 23
3.1 g) e 13
3.1 h) e 24
3.1 i)
32
Investments in affiliates, associates and joint ventures
Held-for-trading financial assets
Financial assets initially recognised at fair value through
profit & losss
Hedge derivatives
Available-for-sale assets
Loans and receivables
Deposits at cedent companies
Other deposits
Other loans granted
Receivables
Other
Investments held to maturity
Land & buildings
Premises
Land & buildings held for income
Other tangible assets
Inventories
Goodwill
Other intangible assets
Technical provisions for reinsurance ceded
Provisions for unearned premiums
Mathematical provision for life business
Provisions for claims
Provision for profit-sharing
Provision for rate commitments
Portfolio stabilisation provision
Other technical provisions
Assets for post-employment benefits & other long-term benefits
Other debtors for insurance & other operations
Receivables for direct insurance operations
Accounts receivable for other reinsurance operations
Accounts receivable for other operations
Tax assets
Current tax assets
Deferred tax assets
Accruals & deferrals
Other items of assets
Available-for-sale non current assets and discontinued operating units
TOTAL ASSETS
978 344
0
0
14 940 590
0
0
0
0
0
636 742 508
1 361 281
0
583 268
778 013
0
0
0
712 928
712 928
0
8 444 627
562 983
0
5 887 910
4 439 822
57 256
0
4 382 566
0
0
0
0
1 085 218
20 381 972
17 256 021
358 678
2 767 273
5 133 811
0
5 133 811
217 876
0
0
700 889 868
0
0
0
0
0
0
0
0
0
10 696
10 696
0
5 782 833
0
0
5 158 768
0
0
0
0
0
0
0
0
0
3 129 350
1 440 679
1 355 742
332 928
0
0
0
0
0
0
14 081 647
978 344
0
0
0
14 940 590
0
636 742 508
1 361 281
0
583 268
778 013
0
0
0
702 232
702 232
0
2 661 794
562 983
0
729 142
4 439 822
57 256
0
4 382 566
0
0
0
0
1 085 218
17 252 622
15 815 341
-997 063
2 434 344
5 133 811
0
5 133 811
217 876
0
0
686 808 221
2 994 483
0
0
16 343 709
0
628 666 512
1 543 136
0
583 268
959 867
0
0
0
642 995
642 995
0
1 535 707
342 647
0
839 577
5 807 056
77 490
0
5 729 565
0
0
0
0
3 539 334
14 778 336
12 560 111
-864 821
3 083 046
5 391 872
0
5 391 872
0
0
0
682 425 363
Expressed in euros
Notes to the
Accounts
Balançe Sheet
3.1 i) - l) e 3.3 e 4.1 e)
5
23
24
3.1 i)
13
LIABILITIES & EQUITY
LIABILITIES
Technical provisions
Provisions for unearned premiums
Mathematical provision for life business
for life insurance
for works’ accidents
for other businesses
Provision for rate commitments
Portfolio stabilisation provision
Provision for claims-rate deviations
Provision for risks in progress
Other technical provisions
Financial liabilities of the deposit component of
insurance contracts and of operations considered
for accounting purposes as investment contracts
Other financial liabilities
Hedge derivatives
Subordinated debt
Deposits received from reinsurers
Other
Liabilities for post-employment benefits and other
long-term benefits
Other creditors for insurance operations and
other operations
Accounts payable for direct insurance operations
Accounts payable for other reinsurance operations
Accounts payable for other operations
Tax liabilities
Current tax liabilities
Deferred tax liabilities
Accruals & deferrals
Other Provisions
Other Liabilities
Liabilities of a group for sale
classified as available-for-sale
TOTAL LIABILITIES
Period
Previous Period
531 043 498
50 099 774
243 510 105
219 332 736
8 554 521
90 453 054
120 325 160
5 815 590
0
0
3 922 341
8 362 951
0
535 345 630
45 194 042
245 639 503
227 541 365
8 813 668
89 005 685
129 722 012
6 310 449
0
0
3 483 467
7 176 803
0
16 100 075
18 753 196
506 353
0
0
506 353
0
635 857
0
0
635 857
0
776 234
3 212 822
12 900 473
10 100 699
9 312 240
7 826 992
2 588 262
2 096 166
999 972
3 844 804
2 306 668
1 538 136
8 904 047
844 411
0
177 541
13 037 012
10 581 078
2 455 934
8 566 502
1 177 474
0
0
574 919 896
0
590 829 193
Expressed in euros
Notes
to the
Accounts
25
26
24 e 26
26
Balançe Sheet
LIABILITIES & EQUITY
EQUITY
Contributed capital
(Treasury shares)
Other capital instruments
Revaluation reserves
For adjustments to the fair value of financial assets
For revaluation of land & premises
For revaluation of intangible assets
For revaluation of other tangible assets
For adjustments to the fair value of cash-flow
hedge instruments
For adjustments to the fair value of net investment
hedges in foreign currency
For currency translation differences
Deferred tax reserve
Other reserves
Retained earnings
Net profit/(loss) for the period
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY
Period
Previous Period
26 548 291
0
0
5 414 011
5 414 011
0
0
0
0
24 348 751
0
0
6 951 626
6 951 626
0
0
0
0
0
0
0
-1 749 371
29 429 608
42 869 591
9 376 196
111 888 325
686 808 221
0
-2 431 171
18 946 240
34 669 393
9 111 332
91 596 170
682 425 363
33
Expressed in euros
Notes to the
Profit & Loss Account
Accounts
14 Premiums earned net of reinsurance
Gross premiums written
Ceded reinsurance premium
Provisions for unearned premiums (change)
Provisions for unearned premiums, reinsurers’ part
(change)
Commissions on insurance contracts and operations
15.2
considered for accounting purposes as
investment contracts or as provision of services
contracts
4.1 e) & i) Costs of claims, net of reinsurance
Amounts paid
Gross amounts
Reinsurers’ part
Provision for claims (change)
Gross value
Reinsurers’ part
Other technical provisions, net of reinsurance
Mathematical provision of the Life line,
net of reinsurance
Gross value
Reinsurers’ part
Share of profits/(losses), net of reinsurance
21.1.1 Net operating costs & expenses
Acquisition costs
Deferred acquisition costs (change)
Administrative costs
Reinsurance commissions and profit sharing
16.2 Income
On interest on financial assets not carried at fair value
through profit & loss
On interest on financial liabilities not carried at fair
value through profit & loss
Other
16.2 Financial Costs
On interest on financial assets not carried at fair value
On interest on financial liabilities not carried at fair
value through profit & loss
21.1 Other
Net gains on financial assets & liabilities not carried
17
at fair value through profit & loss
On available-for-sale assets
34
Period
Technical Account - Life
24.469.063
25.210.104
-741.042
Technical
Account - Non-Life
155.973.206
174.859.469
-14.383.129
-4.482.899
Non technical
Total
Previous Period
180.442.269
200.069.573
-15.124.171
-4.482.899
176.297.682
188.404.322
-12.101.637
-50.708
-20.235
45.705
24.753
28.853
137.905.396
150.129.096
152.699.079
-2.569.983
-12.223.700
-13.570.700
1.346.999
1.625.022
140.238.779
141.444.185
142.123.351
-679.166
-1.205.407
-1.299.764
94.357
1.755.690
-5.929.411
-5.929.411
-8.963.507
-5.929.411
0
182.862
8.816.573
5.092.093
5.008
3.985.227
-265.755
16.215.632
0
53.662.244
42.271.082
-557.684
12.056.463
-107.617
13.407.604
1.219.117
-5.929.411
0
182.862
62.478.817
47.363.175
-552.676
16.041.691
-373.373
30.842.353
-8.963.507
0
607.037
60.438.808
45.579.707
-785.140
15.656.534
-12.293
35.516.901
14.664.517
12.723.303
1.126.877
28.514.697
28.471.471
126.394
0
0
126.394
147.845
1.424.721
1.654.500
684.301
1.280.941
92.240
681.708
2.201.262
3.617.148
6.897.585
3.453.356
986.356
678.387
637.051
2.301.794
1.529.635
27.219
0
0
27.219
22.661
640.925
602.554
44.656
1.288.135
1.901.060
30.512
1.530.306
-12.872
1.547.946
-3.508.448
86.559
1.530.306
-12.872
1.603.992
-3.411.491
-20.235
24.753
30.593.600
30.751.170
31.199.488
-448.318
-157.569
-287.073
129.504
0
107.311.795
119.377.926
121.499.592
-2.121.665
-12.066.131
-13.283.627
1.217.496
1.625.022
Expressed in euros
Notes to the
Accounts
Profit & Loss Account
On loans & receivables
On investments held to maturity
On financial liabilities carried at amortised cost
Other
Net gains on financial assets & liabilities not carried at
18
fair value through profit & loss
Net gains of financial assets & liabilities held for trading
Net gains on financial assets & liabilities classified in the
initial recognition at fair value
Currency translation differences
Net gains on the sale of non-financial assets not classified
as non-current assets
held for sale and discontinued operational units
Impairment losses (net of reversal)
On available-for-sale assets
On loans and receivables carried at amortised cost
On investments held to maturity
Other
Other technical income/costs, net of reinsurance
Other provisions (change)
Other income/expenses
Negative goodwill recognised immediately in profit &
loss
Gains & losses on associates and joint ventures carried
using the equity method
Gains & losses on non-current assets (or groups for sale)
classified as available-for-sale
NET PROFIT/(LOSS) BEFORE TAX
Income tax for the year - Current tax
Income tax for the year - Deferred tax
NET PROFIT/(LOSS) FOR THE PERIOD
Period
Technical Account - Life
0
0
0
-56.047
Technical
Account - Non-Life
0
0
0
-272.827
0
0
Non technical
Total
Previous Period
0
0
0
0
0
0
-56.047
0
0
0
-96.957
0
-272.827
874.222
0
0
0
0
0
0
0
0
0
272.827
0
0
0
0
0
272.827
0
874.222
0
0
0
0
0
0
0
0
0
-10.305
0
0
0
0
0
0
156.769
0
0
0
0
0
0
0
-169.973
-76.173
0
0
0
0
0
0
146.464
-169.973
-76.173
0
0
0
0
0
0
329.949
-841.408
-355.804
0
0
0
0
0
0
0
0
0
0
0
0
0
12.944.926
3.831.282
-262.552
9.376.196
0
12.494.599
2.346.430
1.036.837
9.111.332
5.138.705
7.187.883
0
618.337
3.831.282
-262.552
2.950.392
35
Expressed in Euros
Statement of Changes in Equity
Balance as at December 31, 2010
(opening balance sheet)
Error corrections (ias 8)
Accounting policy changes (ias 8)
Amended opening balance
Equity capital increases/reductions
Treasury share transaction
Net gains for adjustment to the fair value
of affiliates, associates and joint ventures
of available-for sale financial assets
Net gains for adjustment through revaluation
of land and premises
of tangible assets
of other tangible assets
Net gains for adjustment of hedges
in cash-flow hedging
Net gains for adjustment of hedge instruments
for net investments in foreign currency
Net gains through exchange-rate differences
Adjustments for recognition of deferred taxes
Increase of reserve through appropriation
of profit
Distribution of reserves
Appropriation of profits/losses
Alteration of accounting estimates
Other gains/losses recognised directly
in shareholders’ equity
Transfers between equity headings
not included in other lines
Total changes in equity
Net profit for the period
Interim dividend
36
Contributed
Capital
24.348.751
24.348.751
2.199.540
Revaluation Reserves
For adjustments
to the fair value of
available-for sale
financial assets
6.951.626
6.951.626
Other Reserves
Reserve
for deferred
taxes
-2.431.171
-2.431.171
Legal reserve
5.577.206
5.577.206
Issue premiums
Other reserves
0
0
9.594.097
13.369.034
13.369.034
Retained
earnings
34.669.393
34.669.393
Net profit/
(loss)
for the period
Total
9.111.332
91.596.170
9.111.332
0
0
91.596.170
11.793.637
0
0
-1.537.615
-1.537.615
0
0
0
0
0
0
681.799
681.799
0
911.133
8.200.198
-9.111.332
-21.863
0
0
0
-21.863
0
2.199.540
-1.537.615
681.799
911.133
9.594.097
-21.863
8.200.198
-9.111.332
9.376.196
26.548.291
5.414.011
-1.749.371
6.488.340
9.594.097
13.347.171
42.869.591
9.376.196
10.915.959
9.376.196
0
111.888.325
Expressed in Euros
Statement of Changes in Equity
(opening balance sheet)
Error corrections (ias 8)
Accounting policy changes (ias 8)
Amended opening balance
Equity capital increases/reductions
Treasury share transaction
of affiliates, associates and joint ventures
of available-for sale financial assets
Net gains for adjustment through
revaluation of land and premises
revaluation of tangible assets
revaluation of other tangible assets
Net gains for adjustment of hedges
in cash-flow hedging
Net gains for adjustment of hedge
instruments for net investments in foreign currency
Net gains through exchange-rate differences
Adjustments for recognition of deferred taxes
Increase of reserve through appropriation of profit
Distribution of reserves
Appropriation of profits/losses
Alteration of accounting estimates
Other gains/losses recognised directly
in shareholders’ equity
Transfers between equity headings
not included in other lines
Total changes in equity
Net profit for the period
Interim dividend
Revaluation Reserves
Reserve
For adjustments to the for deferred
fair value of availabletaxes
for sale financial assets
Contributed
Capital
24 348 751
24 348 751
-26 071 498
-26 071 498
4 261 630
4 261 630
Other Reserves
Legal
reserve
4 982 416
4 982 416
Issue
premiums
0
0
Other
reserves
12 928 278
12 928 278
Retained
earnings
32 073 856
32 073 856
Net profit/
(loss)
for the
period
Total
5 947 904
58 471 337
5 947 904
0
0
58 471 337
0
0
0
33 023 124
33 023 124
0
0
0
0
0
-9 450 377
594 790
5 353 113
-5 947 904
440 756
2 757 576
0
-9 450 377
0
0
0
0
440 756
-2 757 576
0
0
33 023 124
-6 692 801
594 790
0
440 756
2 595 537
-5 947 904
9 111 332
24 348 751
6 951 626
-2 431 171
5 577 206
0
13 369 034
34 669 393
9 111 332
24 013 502
9 111 332
0
91 596 170
37
a
b
c
d
Comprehensive Income Statement
Net profit for the year
Available-for-sale financial assets - Net gains
Reclassification of gains & loss in profit & loss for the period - Sale
Deferred & current taxes
Other gains and losses recognised directly in equity
Total comprehensive income
2010
2010
9 376 196
-179 972
-1 357 643
681 799
-21 863
8 498 517
2009
9 111 331
28 514 389
4 508 735
-9 450 377
440 756
33 124 834
a - Corresponds to the amount of Revaluation Reserves resulting from the net adjustment (potential gains) to the
fair value of the portfolio of financial assets classified as available.for-sale
b - Corresponds to the amount of Revaluation Reserves that are transferred to profit & loss for the period resulting
from sales of financial assets classified as available-for sale furing the period
c - Current tax 2010: €315,.064 Potential gains on Securities with profit-sharing Life
Deferred tax Pension Fund 2010: €6,270
Deferred tax 2010: €360,465 Potential gains on securities profit-sharing exceptlLife
d - Free reserves
38
2009
a - Corresponds to the amount of Revaluation Reserves resulting from the net adjustment (potential gains) to the
fair value of the portfolio of financial assets classified as available.for-sale
b - Corresponds to the amount of Revaluation Reserves that are transferred to profit & loss for the period resulting
from sales of financial assets classified as available-for sale furing the period
c - Current tax 2009: - €4,502,449 Potential gains on with-profit Life securities
Deferred tax Pension Fund 2009: €116,800
Deferred tax 2009: €4,831,127 Potential gains on with-profits securities except life
d - Free reserves
Notes to the Balance Sheet and Profit & Loss Account Notes
Notes to the Balance Sheet
and Profit & Loss Account
as at December 31, 2010
39
Contents
1. General information
41
2. Information by segments
41
77
14.3. Non-life business insurance contract premiums:
77
15. Insurance contract commissions received
77
2.1. Types of products and services by geographic segment and business segment
41
15.1. Accounting policies adopted for recognition of commissions
77
2.2. Report by geographic segments and by business segments
42
15.2. Commissions received by type of contract
77
3. Basis of preparation of the financial statements and accounting policies
45
16. Investment income / revenue
78
3.1. Measurement bases and accounting policies used in the preparation of the financial statements
45
16.1. Accounting policies adopted for recognition of income
78
3.2. Nature, impact and justification of alterations to accounting policies
52
16.2. Breakdown of income by investment category
78
3.3. Main accounting estimates and relevant judgements used in the preparation of the financial statements
52
17. Gains & losses realised on investments
79
54
18. Gains & losses stemming from adjustments to the fair value of investments
79
19. Profits and losses on currency translation differences
80
21. Sundry gains by function and nature
80
4. Nature and extent of the headings and of the risks resulting from insurance contracts
and reinsurance assets
4.1. Information on insurance contracts
54
4.2. Information on the nature and extent of the specific insurance risks
56
4.3. Market risk, credit risk, liquidity risk and operational risk
60
4.4. Amount of impairment losses recognised and written back during the period in respect
of reinsurance assets
64
4.5. Adequacy of premiums and provisions
64
22.1. Average number of workers in service during the year
82
4.6. Information on the main ratios without deduction of reinsurance ceded
65
22.2. Amount of staff costs for the year:
82
4.7. Reimbursements & salvage property
65
21.1. Expenses by function
80
21.2. Expenses using a classification based on their nature
82
22. Staff costs
23. Obligations involving employee benefits
82
82
5. Liabilities for investment contracts
66
23.1. Surviving relative and orphan annuities plan (long-term employee benefits)
83
6. Financial instruments
67
23.2. Retirement pension liabilities in respect of employees and pensioners
(collective bargaining agreement)
83
23.3. The retirement and pre-retirement pension plan
(collective bargaining agreement for the insurance industry) - dnnuities payable,
dating from before the constitution of the liberty seguros employees pension fund
87
23.4. Additional pension complement
88
6.1. Holdings and financial instruments
67
6.4. Portfolio reclassifications and transfers
67
6.11. Fair value
67
6.16. & 6.17 Nature and extent of risks resulting from financial instruments
68
24. Income tax
89
8. Cash, cash equivalents & sight deposits
72
9. Land & buildings
72
24.1 Tax estimate
90
9.1. Valuation model
72
24.2 Cost/income components of taxes
90
9.2. Criteria used to differentiate land and buildings held for income and those used as premises.
72
24.3 Income tax reported under reserves
91
9.6. Measurement criteria, methods and depreciation rates used.
72
24.4 Detail of the variations of deferred taxes (assets and liabilities) recognised in the balance sheet
91
9.7. & 9.8. Gross carrying cost and accumulated depreciation at the start and end of the period
72
24.5 Reconciliation between nominal and effective rates
91
9.20. Indication and quantification of restrictions to ownership and assets given to secure liabilities
72
25. Contributed capital
92
73
26. Reserves
92
10. Other tangible fixed assets (except land & buildings)
10.1. Tangible asset management criteria
10.2. Movement under acquisitions, transfers, write-offs, disposals and depreciation
73
26.1 Nature and purpose of the reserves within equity
92
73
26.2 Movement under reserves under equity
92
73
27. Earnings per share
93
74
28. Dividend per share
93
75
29. Transactions between related parties
93
76
30. Cash-flow statements
94
13.1. Breakdown of the adjustments and other provisions accounts by the respect sub-accounts
76
31. Commitments
94
13.2. Description of the nature of the obligation
76
32. Contingent liabilities
94
77
34. Off-balance sheet elements
94
77
36. Events after the balance sheet date not described in the foregoing points
95
37. Other information
95
10.3. Reconciliation of tangible assets at the start and end of the period
11. Allocation of investments and other assets
12. Intangible assets
13. Other provisions and adjustments to asset accounts
14. Insurance contract premiums
14.1. Premiums recognised resulting from insurance contracts
40
14.2. Life business insurance contract premiums
1. General Information
In keeping with a resolution adopted by the
General Meeting held on February 2, 2004,
and subsequent authorisation by the Insurance
Supervisory Authority (ISP), the Company altered
its name to Liberty Seguros, SA, and amended its
articles of association accordingly.
On December 28, 2005, the 464,937 shares
representing the whole of the equity capital of
Liberty Seguros, SA, were transferred by Liberty
International Iberia, SL, Sociedad Comanditaria
Simple, to Liberty Insurance Group, Compañia
de Seguros y Reaseguros, SA. This transaction
had been appraised by the Insurance Supervisory
Authority.
Additionally, on December 29, 2010, the
contributed capital was increased by means
of payment in kind totalling €11,793,637.39
through the incorporation of all the assets and
liabilities of the branch in Portugal of Genesis
Seguros Generales SA de Seguros y Reaseguros,
which were thus transferred to the Company (see
Note 25).
The Company’s registered office is situate at Av.
Fontes Pereira de Melo, 6, 11º Dto, 1069-001
Lisbon, Portugal.
The Company is engaged in insurance and
reinsurance business for all the technical lines
for which it has obtained authorisation from the
Insurance Supervisory Authority (ISP). By volume
of direct premiums, the technical lines of greater
significance are Motor and Accidents & Health.
At present, the Company operates through 31
spaces and 5 offices located in various parts of the
country.
In points 13 to 15 of its Management Report
Liberty Seguros makes a brief presentation of the
macroeconomic climate in which it operates, as
well as of the recent market trend.
The following notes follow the numbers defined
in the Plan of Accounts for Insurance Companies
approved by Regulatory Standard 4/2007 as
amended by Regulatory Standard 20/2007, both
issued by the Insurance Supervisory Authority.
Several notes are not mentioned because they are
not applicable or because the figures or situations
to be reported are irrelevant.
Liberty Seguros’s financial statements as at
December 31, 2010, were approved by the Board
of Directors on March 11, 2011.
The management report and financial statements
will be submitted to the Annual General Meeting
on March 23, 2011.
2. Information
by segments
2.1. Types of products and services by Geographic Segment and
Business Segment
In keeping with IFRS 8 - Operating Segments, an
entity must disclose information allowing users
of its financial statements to assess the nature and
financial effects of the business activities in which
it is engaged and the economic environments in
which it operates.
An operating segment is a component of an
enterprise in respect of which segregated financial
information is available for regular assessment by
managers in deciding how to allocate resources
and measure performance.
A geographic segment is a set of specific assets and
income located in a specific economic environment subject to risks and income that differ from
those of other segments operating in other economic environments.
All contracts are concluded in Portugal and there
is therefore just one geographic segment.
A business segment is a set of assets and operations that are subject to specific risks and income
different from those of other segments.
The Company’s structure involves the following
business segments:
> Life Insurance and Pensions
- Capitalisation Products
- Savings Products
> Non-Life Insurance
- Accidents & Health
- Fire & other damage
- Motor
- Sundry
41
2.2. Report by Geographic
Segments and by Business
Segments
Geographic Segment
In accordance with Note 2.1 there is just one
segment and there would therefore be no sense in
performing an analysis by geographic segments.
Results by segment as at December 31, 2010
Headings
Vida
(Expressed in euros)
25 210 104
Reinsurance Premium Ceded
-741 042
Provision for unearned premiums - Change
0
Result of investments
0
Other Income
290 381
Total Gains
24 759 444
Costs of claims, net of reinsurance
30 593 600
Operating costs, net of reinsurance
9 082 328
Other Costs
-5 736 372
Total Costs
33 939 556
Investment Contracts
-215 576
Operating Profit
-9 395 688
14 534 393
Profit/(loss) before tax
5 138 705
Tax
0
Technical profit
5 138 705
Results by segment as at December 31, 2009
Headings
Vida
26 218 241
Reinsurance Premium Ceded
-750 592
Provision for unearned premiums - Change
0
0
Other Income
71 769
Total Gains
25 539 418
Costs of claims, net of reinsurance
36 709 936
Operating costs, net of reinsurance
9 171 501
Other Costs
-8 356 491
Total Costs
37 524 947
Investment Contracts
180 657
Operating Profit
-11 804 873
15 164 176
3 359 303
Tax
0
Technical profit
3 359 303
42
Não Vida
174 859 469
-14 383 129
-4 503 133
0
264 386
156 237 593
107 311 795
53 769 862
1 625 022
162 706 679
0
-6 469 086
13 656 970
7 187 883
0
7 187 883
Não Vida
162 186 081
-11 351 045
-5 003
0
299 305
151 129 338
103 528 842
51 279 599
1 755 690
156 564 132
0
-5 434 794
12 010 655
6 575 861
0
6 575 861
Business Segment
The following tables present the results
by segment for 2010 and 2009.
Acidentes
e Doença
32 768 455
-1 370 189
-291 124
0
81 665
31 188 808
22 653 448
8 897 168
1 080 380
32 630 996
0
-1 442 189
5 187 338
3 745 150
0
3 745 150
Incêndio e
Outros Danos
23 938 112
-4 991 164
-615 574
0
5 398
18 336 772
12 574 718
8 469 958
-18 055
21 026 621
0
-2 689 849
776 284
-1 913 565
0
-1 913 565
Acidentes
e Doença
30 405 783
-628 827
-203 228
0
6 813
29 580 541
19 614 833
8 995 579
-1 212 586
27 397 827
0
2 182 715
4 622 315
6 805 030
0
6 805 030
Incêndio e
Outros Danos
21 276 840
-3 630 814
-752 261
0
5 312
16 899 077
12 462 195
7 381 158
2 804 798
22 648 151
0
-5 749 074
344 303
-5 404 771
0
-5 404 771
Automóvel
102 277 782
-799 812
-3 088 172
0
156 765
98 546 563
69 706 488
32 537 550
258 421
102 502 459
0
-3 955 897
7 122 146
3 166 250
0
3 166 250
Automóvel
95 900 652
-712 086
1 074 156
0
287 008
96 549 729
68 418 484
31 357 823
145 421
99 921 728
0
-3 371 999
6 515 050
3 143 051
0
3 143 051
The Company uses Technical Provisions as a
criterion for allocation of the Balance Sheet and
Income Statement headings not specifically
allocated to a business area.
Outros
15 875 119
-7 221 965
-508 263
0
20 559
8 165 450
2 377 141
3 865 186
304 276
6 546 603
0
1 618 848
571 201
2 190 049
0
2 190 049
Outros
14 602 806
-6 379 318
-123 669
0
171
8 099 991
3 033 330
3 545 039
18 057
6 596 426
0
1 503 565
528 987
2 032 551
0
2 032 551
Não Afectos
0
0
0
0
508 955
508 955
0
0
415 155
415 155
0
93 800
524 537
618 337
-3 568 730
-2 950 392
Não Afectos
0
0
0
0
600 044
600 044
0
0
114 440
114 440
0
485 604
2 073 830
2 559 434
-3 383 267
-823 833
Total
200 069 573
-15 124 171
-4 503 133
0
1 063 722
181 505 992
137 905 396
62 852 190
-3 696 196
197 061 390
-215 576
-15 770 974
28 715 900
12 944 926
-3 568 730
9 376 196
Total
188 404 322
-12 101 637
-5 003
0
971 118
177 268 800
140 238 779
60 451 101
-6 486 361
194 203 519
180 657
-16 754 062
29 248 661
12 494 598
-3 383 267
9 111 331
Assets and liabilities by segment as at December 31, 2010
Headings
Life
Accidents &
Health
Non-life
Fire &
Other Damage
Motr
Other
Not allocated
Financial Instruments
Land & buildings
Technical provisions for reinsurance
ceded
Assets for post-employment benefits
& other long-term benefits
Other debtors for insurance operations
and other operations
Tax assets
Total Assets
324 792 476
341 011
1 292 595
354 079
301 959 093
361 221
1 369 199
375 063
107 064 010
128 076
485 470
132 984
26 040 913
31 152
118 080
32 345
155 127 179
185 572
703 407
192 683
13 726 992
16 421
62 243
17 050
506 353
3 933 468
1 673 571
641 106
77 177
1 541 614
526 993
558 225
197 927
48 141
286 780
25 377
8 378 052
8 874 570
3 146 609
765 342
4 559 184
403 436
2 493 032
1 515 339
340 199 929
2 640 779
1 605 144
321 676 763
936 327
569 127
114 334 100
227 740
138 427
28 043 247
1 356 663
824 620
163 313 264
Financial liabilities of the deposit
component of insurance contracts and
of insurance contracts and transactions
considered investment contracts for
accounting purposes
Liabilities for post-employment benefits
and other long-term benefits
Other creditors for insurance operations
Tax liabilities
Other Liabilities
Total Liabilities
257 880 217
273 163 281
96 854 034
23 557 566
16 100 075
0
0
245 890
260 463
376 947
Total
24 931 528
0
0
0
0
651 683 098
702 232
2 661 794
729 142
4 439 822
0
1 085 218
0
17 252 622
120 049
72 969
15 986 153
0
0
24 931 528
5 133 811
3 120 483
686 808 221
140 333 741
12 417 941
0
0
531 043 498
16 100 075
0
0
0
92 351
22 462
133 809
11 841
399 287
141 573
34 434
205 128
18 151
0
0
506 353
776 234
6 264 603
6 635 870
2 352 845
572 277
3 409 084
301 665
0
12 900 473
1 867 077
4 733 952
287 468 762
1 977 727
5 014 506
287 451 134
701 232
1 777 966
101 920 001
170 559
432 450
24 789 748
1 016 029
2 576 131
147 673 921
89 907
227 958
13 067 463
0
0
0
3 844 804
9 748 458
574 919 896
43
Assets and liabilities by segment as at December 31, 2009
Headings
44
Life
Non-life
Accidents &
Health
Fire &
Other Damage
Motr
Other
Not allocated
Total
Land & buildings
Technical provisions for reinsurance
ceded
Assets for post-employment benefits
& other long-term benefits
Other debtors for insurance operations
Tax assets
Total Assets
326 299 075
313 199
748 033
408 953
635 857
289 855 225
329 796
787 673
430 624
5 171 198
99 680 668
113 416
270 879
148 091
3 314 914
22 609 953
25 726
61 442
33 591
139 630
154 544 999
175 841
419 972
229 600
204 738
13 019 605
14 814
35 380
19 343
1 511 916
28 855 922
0
0
0
0
645 010 221
642 995
1 535 707
839 577
5 807 056
3 405 082
134 252
46 169
10 472
71 580
6 030
0
3 539 334
7 198 438
7 579 898
2 606 713
591 265
4 041 450
340 471
0
14 778 336
2 626 348
2 083 971
343 718 957
2 765 524
2 796 294
309 850 484
951 058
961 640
108 093 549
215 723
218 123
23 905 924
1 474 522
1 490 928
162 653 630
124 221
125 603
15 197 382
0
0
28 855 922
5 391 872
4 880 265
682 425 363
Financial liabilities of the deposit
component of insurance contracts and
of insurance contracts and transactions
considered investment contracts for
accounting purposes
Other creditors for insurance operations
Tax liabilities
Other Liabilities
Total Liabilities
260 763 620
18 753 196
274 582 009
0
94 428 238
0
21 418 577
0
146 401 626
0
12 333 568
0
0
0
535 345 630
18 753 196
309 722
1 564 946
326 135
1 647 876
112 157
566 701
25 440
128 541
173 889
878 614
14 649
74 019
0
0
635 857
3 212 822
4 919 989
5 180 710
1 781 636
404 118
2 762 251
232 705
0
10 100 699
6 350 250
4 746 232
297 407 956
6 686 762
4 997 744
293 421 237
2 299 565
1 718 715
100 907 013
521 596
389 846
22 888 117
3 565 248
2 664 697
156 446 325
300 353
224 487
13 179 781
0
0
0
13 037 012
9 743 976
590 829 193
3. 3. Basis of preparation
of the Financial
Statements and
Accounting Policies
3.1. Measurement Bases and
Accounting Policies used
in the preparation of
the Financial Statements
Measurement Bases
The Company’s financial statements now presented refer to fiscal years ended December 31, 2010
& 2009, and have been prepared for the first
time in accordance with the accounting standards (PCES) established by Regulatory Standard
4/2007 of April 27, as amended by Regulatory
Standard 20/2007-R of December 31, applicable
to insurance companies subject to supervision
by the Insurance Supervisory Authority. These
standards have, in general, taken into account the
International Financial Reporting Standards (IAS/
IFRS) as adopted by the European Union, in the
wake of Regulation (EC) 1606/2002 of the European Parliament and Council of July 19, transposed to Portuguese law by Decree-Law 35/2005,
with the exception of IFRS 4, of which only the
principles of classification of the type of contracts
concluded by insurance companies were adopted,
the principles established in the specific prudential
legislation and regulations in force continuing to
apply to recognition and measurement of liabilities associated with insurance contracts.
The financial statements are stated in euros.
They have been prepared in accordance with the
historic cost principle, with the exception of assets
and liabilities carried at fair value, particularly
financial assets and liabilities at fair value through
profit & loss, and available-for-sale financial
assets. Other financial assets and liabilities as well
as non-financial assets and liabilities are carried at
amortised cost or historic cost.
Preparation of the financial statements requires
the Company to make judgements and estimates
and use assumptions that affect the application
of the accounting policies and the amounts of
income, costs, assets and liabilities. The estimates and assumptions used are based on the most
recent information available, acting as support for
judgements on the value of assets and liabilities
valued solely using these sources of information.
Alteration of these assumptions or any differences
thereof when compared to reality may impact on
the actual estimates and judgements.
Those areas that involve greater level of judgement
or complexity or in which significant assumptions
and estimates are used in the preparation of the
financial statements are reviewed in Note 3.3.
The accounting policies described hereunder have
been applied consistently for all periods presented
in the financial statements.
Accounting Policies
The main accounting principles used in the preparation of the financial statements are as follows:
a. Cash & cash equivalents and Sight Deposits
For cash-flow statement purposes, cash & cash
equivalents include amounts carried in the balance
sheet having a maturity of less than three months
of the balance sheet date, promptly convertible
into cash with little risk of alteration of the value
carried as cash and balances at credit institutions.
b. Financial Instruments
b.1. Classification
The Company classifies its financial assets at the
time of their acquisition, taking into account
the underlying intention, in accordance with the
following categories:
> Available-for-Sale Financial Assets
Available-for-sale assets are non-derivative financial instruments that:
(i) Liberty intends to keep for an indeterminate period of time;
(ii) are designated as available-for-sale at
the time of their initial recognition;
(iii) do not fall within the under-noted
categories:
> I nvestments at Fair Value through
Profit & Loss
This category includes:
(i) held-for-trading financial assets, which are those acquired with the main
objective of being traded in the short
term;
(ii) financial assets designated at the
time of their initial recognition at
fair value, with variations recognised
in profit & loss.
On their initial recognition the Company designates certain financial assets at fair value through
profit & loss where:
(i) such financial assets are managed,
valued and analysed in-house on the
basis of their fair value (U/nit Linked
portfolios).
> Loans and Receivables
These are non-derivative financial assets with
payments that are fixed or can be determined,
which are not quoted on an active market and are
not classified as trading or available-for-sale. This
category includes, in particular, other deposits at
credit institutions allocated to insurance contracts
and mortgage loans granted.
45
46
b.2. Recognition, Initial Measurement and
Derecognition
loss is determined on the basis of the interest rate
used to measure the impairment loss.
are transferred to a dividends attributable account
in that part belonging to the policyholder.
Financial assets
Acquisitions and disposals of financial assets are
recognised on the trade date, that is, on the date
on which the Company undertakes to acquire or
sell the asset. Financial assets are initially recognised at their fair value plus trading costs, except
when classified as financial assets at fair value
though profit & loss, in which case these costs are
recognised in profit & loss for the year.
The effective interest rate is the rate used to
update the estimated future payments or receipts
expected during the expected life of the financial instrument or, where appropriate, a shorter
period, for the net present book value of the
financial asset or liability.
Financial assets are derecognised when:
(i) the Company’s contractual rights
expire on receipt of their cash flows;
(ii) the Company has substantially
transferred all the risks and benefits
in holding them; or
(iii) despite holding a part, but not
substantially all, the risks and
benefits associated with holding
them. the Company has transferred
control over the assets.
Loans and receivables have been initially recognised at their fair value, which is normally their
nominal value.
Loans and receivables are derecognised when the
contractual right to the cash flow resulting from
the financial asset expires or when the financial
asset is transferred and the transfer falls within the
derecognition criteria applicable to assets of this
type, in keeping with the criteria defined in IAS
29.
With regard to available-for-sale financial assets,
the adjustment to the book value involves separation between:
(i) amortisation in accordance with the
effective rate – with a contra-entry in
profit & loss for the year;
(ii) currency variations (if denominated
in a foreign currency and if a monetary item) – with a contra-entry in
profit & loss;
(iii) variations of fair value (except
exchange-rate risk) – as described
in the preceding paragraph - with a
contra-entry under reserves.
The results in respect of interest on financial
instruments classified as available-for-sale and
on financial instruments classified at fair-value
through profit & loss are recognised in the income
statement for the year using the effective interest
rate method.
In calculating the effective interest rate future cash
flows are estimated considering all the contract
terms of the financial instrument (e.g., put options), though possible future credit losses are not
considered. The calculation includes commissions
constituting an integral part of the effective interest rate, transaction costs and all premiums and
discounts related with the transaction.
In the case of similar financial assets or groups of
financial assets for which impairment losses have
been recognised, the interest recorded in profit &
b.3. Subsequent Measurement
Returns on capital instruments (dividends) are
recognised as and when attributed.
Financial assets
Following initial recognition, financial assets at
fair value through profit & loss are carried at their
fair value, and variations are recognised in profit
& loss
Available-for-sale financial assets are carried at fair
value, though any variations are recognised under
reserves, in that part belonging to the shareholder,
until such time as the investments are derecognised, that is, an impairment loss is recognised,
when the accumulated amount of the potential
gains and losses is recorded under reserves and
transferred to gains & losses. In the case of
with-profits products, variations of fair value are
initially recognised under reserves and, if positive,
The fair value of quoted financial assets is their
current bid price. In the absence of a quotation
the Company estimates the fair value using valuation methods (see Note 6.11).
Loans and receivables are measured at cost or
amortised cost depending on their nature.
b.4. Reclassification
In keeping with the requirements of IAS 39,
Liberty does not reclassify financial instruments
to and from the category of financial assets at fair
value through profit & loss.
b.5. Transfer between Portfolios
In transferring portfolios the Company complies
with all the requirements of Circular 3/2008 of
May 15, to ensure that policyholders or other
contract beneficiaries are treated equitably:
(i) transfers of assets between portfolios
are undertaken at market value;
(ii) transfers of assets between portfolios
do not imply reclassification of the
financial instruments;
(iii) readjustments to the value of the
transferred asset occurring up to
the transfer date are allocated to the
portfolio giving rise thereto;
(iv)readjustments to the value of the
transferred asset after the transfer
date are allocated to the portfolio
receiving the asset;
(v)at the time of sale of availablefor-sale financial assets transferred
between with-profit portfolios, the
corresponding gain or loss is split
between the portfolios in accordance
with the amount of the adjustments
to fair value recognised prior to the
sale.
b.6. Provision for Profit-Sharing to be Attributed (Shadow accounting)
In accordance with the rules set out in ISP Circular 3/2008 of May 15, the provision for profit
sharing to be set aside takes into account each
year the estimated part to be attributed to the
policyholder or contract beneficiary, determined
under the terms of the profit-sharing plan defined
by the insurance company, and it is constituted
with a contra-entry under costs or, in that part applicable, by the appropriate Revaluation Reserves
for Adjustment to Fair Value.
The Provision for Attributed Profit Sharing is
constituted with a contra-entry under the appropriate Revaluation Reserves for Adjustment to Fair
Value.
The estimate of the amounts to be attributed in
the form of profit sharing in each type or group
of types is calculated on the basis of an adequate
plan, applied in a consistent manner, which takes
into account the profit-sharing plan and the assets
allocated
On the sale of an investment classified as availablefor-sale allocated to profit-sharing products, the
corresponding direct transfers to the Provision for
Profit Sharing to be Allocated are annulled.
Over the life of the contracts of each type or group
of types, the balance of the respective Provision
for Profit Sharing to be Attributed is fully used to
compensate negative adjustments of the fair value
of the investments and to be transferred to the
Provision for Profit Sharing to be Allocated, so
that the profit sharing is attributed to the contracts
to the extent that they have contributed to the
profits in question.
b.7. Impairment
Liberty Seguros regularly assesses the existence of
any objective proof that a financial asset or group
of financial assets is impaired. In the light of such
evidence, the respective recoverable value is determined and impairment losses are recorded with a
contra-entry in profit & loss.
The Company considers that, in accordance with
IAS 39, a financial asset or group of financial assets is impaired in the event that, following initial
recognition, there is objective evidence of:
(i) for fixed-income securities, a financial asset or group of financial assets
is impaired and impairment losses
are incurred if, and only if, there is
objective proof of impairment, that
is, there are observable data calling
the asset holders’ attention to the
following loss events:
1) significant financial difficulty of the
issuer or obligee;
2) breach of contract, such as non-fulfilment or default in payments of interest
or principal;
3)the lender, for economic or legal
reasons related with the borrower’s
financial difficulties, offers the borrower
a concession that the lender would not
otherwise consider;
4) it becomes probable that the borrower will undergo bankruptcy or other
financial reorganisation proceedings;
5) disappearance of an active market
for the financial asset owing to financial
difficulties; or
6)observable data indicating the
existence of a measurable decrease of
the estimated future cash flows of the
group of financial assets since the initial
recognition of the assets in question,
even though the decrease cannot yet be
identified with the individual financial
assets of the group, including:
a. adverse alteration of the payment
status of group’s borrowers ;
b. national or local economic conditions related with non-fulfilment in
respect of the group’s assets.
(ii) For capital instruments, besides the
events referred to for fixed-income
securities, the following situations
are considered:
a. significant alterations causing an
adverse effect, that occurred in the
technological, market, economic or
legal environment in which the issuer
operates;
b. a significant or lengthy decline of
fair value to below its cost.
The Company therefore evaluates quoted floatingrate securities using the following quantitative
criteria: an impairment is recorded in the event of
continuous devaluation over at least six months, or
significant fall of the quoted price of at least 20%
of the acquisition cost.
Where there is evidence of impairment of
available-for-sale financial assets, the potential loss
accumulated in reserves, less an impairment loss
previously recognised in profit & loss, is transferred to profit & loss.
In the case of debt instruments, if, during a period
subsequent to the recognition of the impairment
loss, the fair value of the asset increases, such an
increase being objectively related with an event
occurring after the recognition of the impairment
loss, then it should be reversed, with a contraentry in profit & loss.
Impairment losses in respect of capital instruments
are not reversed through profit & loss. In the
event of recognition of impairments subsequent
devaluations are recognised directly in profit &
loss. In the event of appreciations subsequent to
the recording of the impairment the respective
potential gains are recorded under reserves.
In the event of an impairment loss, in keeping
with the events referred to in (i) and applicable to
the Loans & receivables heading, measured as the
amortised cost, the amount of the loss is determined by the difference between the book value of
the asset and the present value of the estimated
future cash flows discounted at the original effective interest rate of the financial asset, the value
of the asset being reduced and the loss recognised
in profit & loss. If, in a subsequent period, there
is objective proof of reduction of the value of the
impairment determined, the impairment loss
previously recognised will be written back as an
increase of the value of the asset and the gain is
recorded in profit & loss. The amount written
back cannot lead to an asset value greater than that
the asset should have at amortised cost had the
impairment not existed.
c. Land & Buildings
and Other Tangible Assets
Land & Buildings
The buildings the company uses to carry on its
business are classified as ‘premises’.
The cost of these premises buildings is recognised
in accordance with the criteria defined in IAS
16. They are considered an asset to the extent
that economic benefits accrue to the Company,
associated with these properties, and the cost can
be adequately measured.
Premises buildings are initially measured at their
acquisition cost, including the non-reimbursable
taxes on the purchase and the costs directly allocated to put the assets in working condition.
The amount at which a premises building is carried after deduction of accumulated depreciation
and impairment losses is derecognised when it is
sold or when no future economic benefit can be
expected from its use or sale. The derecognition
gain or loss is determined by the difference between the net income on the sale, if any, and the book
value of the item. This gain or loss is recognised in
profit & loss.
The buildings are valued using the cost model,
and therefore the value of the asset corresponds to
the acquisition cost less accumulated depreciation
and any impairment losses.
The amount of impairment is determined for each
building by comparison of the book value with the
market valued attributed by certified independent
valuers.
Maintenance and repair costs and other costs
incurred following acquisition are recognised as
costs for the year in which they are incurred, are
recognised as an increase of the asset only when it
is probable that there will be an economic benefit
associated therewith.
Depreciation of buildings begins when the asset
is available for use. The depreciation method
selected is the straight-line method over the
estimated useful life of 50 years. The value of the
asset subject to depreciation is equal to 75% of the
acquisition cost of the land and building, the remaining 25% be considered the estimated value of
the land. The depreciation charge for each period
is recognised in profit & loss.
47
On initial recognition of the values of other
tangible fixed assets the Company capitalises the
acquisition cost and adds any costs required for
the proper working of that asset, in accordance
with IAS 16. In subsequent measurement, Liberty
opts to establish a useful life that will reflect the
estimated time required to obtain economic benefits, writing down the assets over this period.
The Company derecognises a tangible fixed asset
on its disposal or when no future economic benefits are expected to be generated by its use or sale.
The derecognition gain or loss is determined by
the difference between the net income on the sale,
if any, and the book value of the item. This gain
or loss is recognised in profit & loss.
With regard to depreciation, the Company uses
the straight-line method since it is the one that
best reflects the expected pattern of consumption
of the economic benefits of the asset. This method
is applied consistently over the whole class of
assets.
The estimated number of years of useful life for
each category of tangible assets is as follows:
Where there is objective evidence that the book
value of the tangible fixed assets exceeds their realisable value, an impairment loss is recognised for
the difference in accordance with the methodology
proposed by IAS 36 in conjunction with IAS 16.
The realisable value is determined as the higher of
its net selling price and its value in use, the latter
calculated on the basis of the present value of the
expected future cash flows that are expected to be
obtained from ongoing use of the asset and from
its sale at the end of its useful life.
d. Other Intangible Assets
Costs incurred with the acquisition of software are
capitalised, as are the additional expenses borne
by the Company required to implement it. These
costs are written down using the straight-line
method over the expected useful lives of these
48
Office equipment
Machines & tools
Hardware
Fixtures & fittings
Transport equipment
Hospital equipment
Other equipment
Years
4-8
5-8
3-4
5-8
4
7
4-8
assets (3 years).
Software maintenance costs are recognised as costs
as and when incurred.
The Company derecognises an intangible fixed
asset on its disposal or when no future economic
benefits are expected to be generated by its use or
sale. The derecognition gain or loss is determined
by the difference between the net income on the
sale, if any, and the book value of the item. This
gain or loss is recognised in profit & loss.
The Company performs impairment loss analyses
of its intangible assets in keeping with the methodology proposed in IAS 36 , in conjunction with
IAS 38. Impairment losses are recognised in the
statement for assets carried at cost.
e. Technical Provisions for Reinsurance Ceded
The provisions for unearned premiums and for
ceded reinsurance claims correspond to the reinsurers’ share of the Company’s total liabilities. They
are calculated in accordance with contracts in
force as far as cession percentages and other clauses
are concerned, and also in accordance with the
accrual percentages in respect of direct insurance.
f. Employee Benefits
Employee benefits granted by the Company take
the form of:
(i) post-employment benefits –
retirement pension liabilities;
(ii) - short-term benefits;
(iii) - long-term benefits.
(i) Post-employment Benefits –
Retirement Pension Liabilities
In accordance with the Collective Bargaining
Agreement for the Insurance Industry, the Company has entered into a commitment to grant
its employees, under an employment contract
in force as of June 22, 1995, who were taken
on in insurance business by that date, pecuniary
payments by way of pension complement, which
are also payable to those who, by virtue of their individual employment contracts, have been granted
a like benefit.
The Company has therefore adopted the Defined Benefits Plan established in the Collective
Bargaining Agreement in force for the Insurance
Industry.
The Company has set up a Pension Fund and has
acquired Annuity Insurance designed to cover the
liabilities inherent in the plan mentioned in the
preceding paragraph. During 2010, liabilities for
pensions payable financed by the Annuities insurance were transferred in full to the Pension Fund.
The contributions to the Fund and updates of
the premiums are determined in accordance with
the respective actuarial plan, which is reviewed
annually and is adjusted in the light of the pension
updates, of the evolution of the participants and of
the liabilities to be covered.
Additionally, at the end of the 2008 the Company set up capitalisation insurance to meet the
contractual pension complement. The complement consists of a defined-benefits plan in that
there is a legal and constructive obligation of the
Company to settle the liability on the employee’s
retirement and to make additional contributions
to make good alterations to the criteria underlying
the calculation of the liability. As in the case of
the annuity policies, this policy, too, is not eligible
under IAS 19, and therefore the treatment of the
assets and liabilities is identical
As far as the pension fund is concerned, the
balance sheet shows the net result of the assets and
liabilities that make it up.
Gains and losses stemming from differences between the actuarial and financial assumptions used
and the real figures in respect of the liabilities and
the expected return on the policies, as well as the
results of alterations to the actuarial assumptions
are recognised each year under a specific heading
of Equity, through application of the SORIE method. The cost for the year of retirement pensions,
including the the cost of current services and the
interest costs, less the expected income, is reflected
under the year’s gains and losses.
(ii) Short-term Benefits
Short-term benefits (falling due within twelve
months) are carried, in accordance with the accrual accounting principle, under appropriate profit
& loss headings for the period to which they refer.
The medical assistance benefit and bonuses granted fall within the scope of short-term benefits.
>Medical Assistance
The Company has granted a medical assistance benefit to employees in service.
The costs incurred with the insurance
are recorded as a cost for the year.
> Granting of Bonuses
Employees’ variable remuneration is recorded in the income statement for the
year to which it refers, is the result of
performance evaluation and is granted
to all employees.
(iii) Long-term Benefits
Surviving relative benefits are provided in the
event of the decease of an employee.
g. Claims Reimbursement
Claims reimbursements are generated whenever
the Company has adopted a formal position as to
its right of recourse and when the reimbursable
expenses of claims have been liquidated. All claims
processes managed under the Claims Regularisation Conventions fall within this sphere, the
reimbursement amount being estimated in the light of the number of processes under management
multiplied by the average cost reimbursable.
h. Income Tax
Income taxes include current tax and deferred tax.
Income taxes are recognised in profit & loss except
where they are related with items that are directly
recognised under equity, in which case they are
also recorded with a contra-entry under Tax
reserve. Deferred taxes recognised under reserves
stemming from the revaluation of available-forsale investments and of the SORIE reserve are
subsequently recognised in profit & loss at the
time the gains and losses that gave rise to them are
recognised.
Current taxes are those that are expected to be
paid on the basis of the taxable income determined in accordance with tax rules in force, using
the tax rate approved or substantially approved in
each jurisdiction.
Deferred taxes are calculated on the temporary
differences between the book values of the assets
and liabilities and their tax basis, using the tax rate
approved or substantially approved on the balance
sheet date that are expected to be applied when
the temporary differences are written back.
Deferred tax liabilities are recognised for all
taxable temporary differences, with the exception
of differences resulting from the initial recognition
of assets and liabilities that affect neither the book
nor the taxable profit and of differences related
with investments in subsidiaries, to the extent that
they will probably not be reversed in the future
(permanent differences).
Deferred tax assets are recognised for all deductible temporary differences only to the extent that it
can be expected that there will be taxable profits in
the future able to absorb these differences.
i. Accruals & Deferrals
Direct insurance premiums are recognised as
income on the date of issue or renovation of the
respective policy, and claims are recognised when
they are lodged.
The income on shares in the portfolio is recorded
only on receipt of the dividends attributed.
The other costs and the income are booked during
the year to which they refer, regardless of their
date of payment or collection.
The provision for holiday pay and holiday bonus
is included under accruals and deferrals under
liabilities. It corresponds to about 2 months of
remuneration and respective charges, based on the
figures for the year in question, and it is intended
to recognise legal liabilities towards employees at
the end of each year for services provided till then,
to be settled at a later date.
j. Technical provisions - Direct Insurance
j.1. Provisions for unearned premiums
The provision for direct insurance unearned premiums is based on the determination of premiums
written before the end of the year that are in force
after that date.
This provision is designed to cover risks assumed and the resultant charges during the period
between the end of the year and the maturity date
of each insurance contract.
In accordance with ISP Rules 19/94-R, 3/96-R
and 4/98-R, the Company has calculated this provision by applying the pro rata temporis method
contract by contract. The provision carried in the
Balance Sheet has been reduced by the deferred
acquisition costs in the proportion of the premiums, up to a limit of 20% of the amount of the
deferred premiums, for each business line.
j.2. Acquisition Costs
Acquisition costs directly or indirectly related with
the sale of insurance contracts are capitalised and
deferred over the life of the contracts, taking into
account the limits imposed by the regulations of
the Insurance Supervisory Authority.
j.3. Provisions for Claims
Where there are claims provoked or against the
policyholders that fall within the clauses of the
contracts, any sum paid or that is believed likely to
be payable by the Company is recognised as a loss
in the income statement, through provisions set
aside for payment of claims arising from insurance
contracts.
The provision for claims corresponds to the present estimated cost to be borne by the Company
to settle all claims occurring up to December 31,
2010, reported or otherwise, following deduction
of any amounts paid in respect of theses claims.
Provisions for claims in every business line of
Liberty Seguros, SA, are actuarially assessed by
internationally accepted statistical methods based
on the best estimate and duly separating the types
of claim into homogeneous groups.
The provisions are regularly reviewed through an
ongoing process as an when additional information is received and the liabilities come to be
liquidated.
The Company sets aside provisions for claims
incurred up to December 31, 2010 but not yet
reported as of that date – IBNR – for all business
lines, on the basis of actuarial projections based on
the Chain Ladder method.
Additionally, a provision is set aside tor future
expenses involving management of claims incurred
by December 31, 2010, a figure estimated on
the basis of the real costs imputed to the claims
function.
The Company has included the following estimates in the amount carried as a provision for
Workmen’s Compensation Claims
> Life-long Assistance
In the particular case of the provision for LifeLong Assistance within the scope of Workmen’s
Compensation Insurance, Liberty calculates:
(i) for each known case, the present value of future medical costs, considering
future medical inflation;
(ii) an IBNR provision for Life-long
Assistance considering the number of
cases expected multiplied by the average
cost.
This study also includes permanent disabilities and
death in the Workmen’s Compensation business
line. The amount of this provision is adjusted
monthly in the light of the increase or reduction
of the portfolio.
> Workmen’s Compensation Mathematical Provision
The mathematical provision for Workmen’s
Compensation records the Company’s liabilities
for claims involving payment of pensions or
remissions as decided by the Labour Court or by a
finalised conciliation agreement, as well as estimated liabilities for pensions in respect of permanent
disability, for claims already made but await final
agreement.
The assumptions used as the basis of calculation
of the mathematical reserves for workmen’s compensation, for those cases of mandatory remission
under Article 56.1 of Decree-Law 143/99 and of
the other cases are described in point a.2 of Note
3.3
The aim of this provision is to meet pension
liabilities relating to the potential disabilities of the
injured.
> Provisions for FAT
Liability in respect of the annual increase of
annuities as a result of inflation lies with the FAT
(Works Accidents Fund), a fund managed by the
ISP. Its revenues comprise those contributions
49
made by the insurance companies and by policyholders in Workmen’s Compensation business.
The Company pays the pensions in full and is
subsequently reimbursed in respect of that part for
which the FAT is liable.
To meet future annual contributions to the FAT
in respect of present beneficiaries, Liberty Seguros,
SA, sets aside a provision on the basis of a percentage, of about 6.8%, of the total of the Mathematical Reserve.
j.4. Mathematical Provision for Life Business
The mathematical provision for Life business
corresponds to the estimated actuarial value of the
Company’s future liabilities in respect of policies
written. Calculation of this provision is performed
on the basis of actuarial methods fully within the
scope of the rules of the Insurance Supervisory
Authority.
The mathematical provisions for Life Business
are calculated contract-by-contract in keeping
with the prospective actuarial method, taking into
account both the guaranteed payments and the
profits already distributed.
In Universal Life policies the mathematical provisions in respect of savings have been calculated
policy-by-policy through daily capitalisation of
each Savings Account, taking into consideration
both the technical interest and the profit sharing.
j.5. Provision for Risks in Progress
The provision for risks in progress corresponds to
the sum required to cover probable indemnities
and costs to be borne following the year-end in
excess of the amount of unearned premiums and
of enforceable premiums in respect of contracts in
force.
The provision was calculated by application of the
requirements of Rule 24/2002-R of November 13.
As stipulated by the ISP, the provision for risks
in progress is set aside or increased where the sum
of the claims, expenditure and cession ratios, wei-
50
ghted by the rate of return, is greater than 1. The
amount of the provision is equal to the product
of the sum of the premiums written imputable to
future years and of enforceable premiums not yet
processed in respect of contracts in force multiplied by the sum of the ratios minus 1.
j.6. Provision for Profit Sharing in Life Business
The provision for profit sharing includes the sums
accruing to the Policyholders or beneficiaries of
with-profits contracts, provided the sums in question have not already been distributed.
The profit-sharing provision is allocated each year
a sum based on the Profit & Loss Account of those types of insurance that call for profit sharing. It
is calculated in accordance with the profit-sharing
plan for each type.
With-profits policies are assigned, as established in
the general conditions of the policy, a share of the
profits at the end of each calendar year in respect
of contacts in force.
The share of the profits is distributed every year
on December 31 or on the anniversary date of
the policy, depending on the type of policy. Note
4.1(e)ii details the movement during the year for
several of theses types.
The accounting policy applicable to the Provision
for Attributed Profit Sharing (Shadow accounting)
is described in indent b.6) of this note.
j.7. Provision for Claims-rate Deviations
The claims-rate deviation provision is intended to
cover exceptionally high claims rates in those lines
of business which, for their nature, are expected
have greater oscillations.
The provision was calculated by application of the
requirements of Rule 3/1996 of January 18. It is
calculated on the basis of the specific rates established by the ISP and is applied to the underwriting
profit of the Guarantee and Atomic-Risk Businesses (Reinsurance Accepted). It is also calculated for
Earthquake Phenomena, through application of a
risk factor defined by the ISP for each seismic zone
to the capital withheld by the Company.
k. Financial Liabilities
An instrument is classified as a financial liability
where there is a contractual obligation for its
settlement to be made by paying cash or another
financial asset, regardless of its legal form.
Non-derivative financial liabilities include investment contract liabilities, borrowings, creditors
for direct insurance and reinsurance operations
and other liabilities. These financial liabilities are
initially recorded at their fair value less transaction
costs incurred and subsequently at amortised cost,
on the basis of the effective-rate method, with
the exception of investment contract liabilities
in which the investment risk is borne by the
policyholder, which are carried at fair value. (Unit
Linked portfolio).
l. Non-technical Provisions
provisions are recognised when:
(i) the Company has a present, legal or
constructive obligation resulting from
past events;
(ii) it is probable that its payment will
come to be demanded;
(iii) when a reliable estimate can be
made of the value of the obligation. The
constitution and de-constitution of this
provision is taken to profit & loss.
If a future expenditure of resources is not probable, it is classified in accordance with IAS 37 as a
contingent liability. Contingent liabilities are merely the subject to disclosure, unless the possibility
of their realisation is remote.
“Other provisions” includes provisions for possible
tax contingencies and works on rented buildings.
The amount of the provision corresponds to the
best estimate of the amount to be disbursed to
settle the liability on the balance sheet date.
m. Adjustments of Receipts Pending Collection
and Adjustments of Doubtful Debt
In respect of the adjustments of receipts pending
collection there has to be a specific treatment that
takes into account the legal framework surrounding the contractual relations between insurance
companies and the insured.
Insurance-premium payments are governed by
the insurance contract law enacted by Decree-Law
72/2008 of April 16 (which essentially retains the
previous legislation under Decree-Law 142/2000
of July 15). With a few exceptions, it establishes
that lack of payment of the initial premium or of
the first instalment thereof, by the maturity date,
determines the automatic termination of the contract as from the date of its close, and that lack of
payment of the subsequent years’ premiums or of
the first instalment thereof, by the maturity date,
prevents the prorogation of the contract.
The decree-law further establishes that lack of
payment determines automatic termination of the
contract on the maturity date of:
(i) an instalment of the premium during
a year;
(ii) a premium adjustment or part of a
variable-amount premium;
(iii) an additional premium resulting
from a modification of the contract on
the basis of a supervenient aggravation
of the risk.
In accounting terms, a particular consequence of
this legal mechanism is the cancellation of nonlife premiums on the date when the insurance
company determines that the premium was not
collected. This is the policy that the Company
adopts and, consequently, there is no need for
impairment assessment that could lead to a need
to adjust receipts pending collection.
The understanding of the Insurance Supervisory
Authority according to Circular 2/2008, is that:
1. insurance companies must determine
whether, as of the date of each balance
sheet, there is any objective evidence
that receivables are impaired, and must
recognise impairment losses under IAS
39;
2. this reduction of value may be recorded directly or indirectly, in the latter
case through write-off accounts known
in the PCES as “Adjustments for doubtful debt” and “Adjustments for receipts
pending collection”.
3. In the case of adjustments for
receipts pending collection, insurance
companies must assess whether there is
objective evidence of impairment, on an
individual basis, for those receipts issued
that are individually significant, and on
an individual or collective basis for those that are not individually significant.
With regard to Life business receipts pending collection as well as other direct insurance operations,
the Company performs a case-by-case analysis
of receivables for direct insurance operations, for
reinsurance operations and for other operations in
order to determine the existence or otherwise of
impairment. In those cases in which impairment
is determined, a reduction is made to the whole
of the amount receivable, through adjustments of
doubtful debt, with a contra entry in profit & loss.
n. Insurance and Investment Contracts
> Classification
The Company issues contracts that include
insurance risk, financial risk or a combination of
insurance and financial risks. A contract in which
the Company accepts a significant insurance risk
from another party, agreeing to compensate the
insured in the case of a specific uncertain future
event adversely affecting the insured is classified as
an insurance contract.
A contract issued by the Company where the
transferred insurance risk is not significant, but in
which there is a component of participation in the
discretionary results, is considered an investment
contract and is recognised and measured in accordance with the accounting policies applicable to
insurance contracts. A contract issued by the Company in which there is only a transfer of financial
risk, with no participation in the discretionary
results, is classified as a financial instrument.
> Recognition and Measurement
For contracts classified as insurance contracts the
premiums are recognised as income when owed by
the policyholder. The benefits and other costs are
recognised simultaneously with recognition of the
income over the life of the contracts. This deferral
is undertaken by setting aside the mathematical
provision (in Life business) and the Provision for
unearned premiums (in Non-life business).
> Life business Insurance Contracts
The liabilities expressed in the Mathematical
Life Provision correspond to the present value of
the future benefits payable, net of administrative
costs directly associated with the contracts, less
the theoretical technical premiums that would be
required to comply with the established benefits
and the respective expenses. The liabilities are
determined on the basis of mortality assumptions
and management of investment expenses on the
date of the valuation.
With regard to contracts whose payment period is
significantly shorter that the period of the benefit,
the premiums are deferred proportionately and
recognised in profit & loss in proportion to the
duration of the cover of the risk.
> Non-Life Business Insurance
Contracts
With regard to short-duration contracts, particularly non-life business contracts, the premiums
are recorded when they are issued. The premium
is recognised as earned income on a pro rata basis
over the life of the contract. The provision for
unearned premiums represents the amount of the
premiums issued, less the associated costs, relating
to the outstanding risks.
> Investment Contracts
Life contracts in which the investment risk is
borne by the policyholder (unit linked) have been
classified as investment contracts and accounted as
financial instruments.
The liabilities correspond to the value of the
unit, less management commissions, redemption
commissions and any penalties, and are classified
as financial liabilities at fair value through profit
& loss.
The fair value of the liabilities depends on the
fair value of the assets included in the unit-linked
collective investment fund. The fair value of the
financial liability is determined through the units,
which reflect the fair value of the assets that make
up the investment fund, multiplied by the number
of units attributable to each policyholder on the
balance sheet date.
The Company holds a pure capitalisation product
without risk transfer and without discretionary
profit sharing, which has been reclassified to investment contract on transition to the new PCES.
o. Recognition of Gains & Losses on Insurance
Contracts
Insurance contract premiums and commissions
are recognised when issued, which is also the case
of ceded reinsurance premiums and commissions.
Through the Provision for Unearned Premiums
the initial recognition criterion is adjusted to be
reflected over the period of risk of the contracts.
Direct insurance and reinsurance claims costs are
recognised in profit & loss on the date of occurrence of the claims, of the determination of the
provisions and of the financial settlement of the
claims or issue of the reimbursements.
p. Allocation of Expenses by Functions and
Segments
The Company allocates expenditure by functions
(acquisition, administrative, investments and claims) and by segments (Life, Non-Life, Non-Technical) through a matrix of cost-sharing keys in the
light of the employees in each area, financial ratios
and economic indicators in order to reflect a real
distribution of costs among the various segments.
q. Transactions in Foreign Currency
In accordance with IAS 21, on the date of preparation of the Financial Statements monetary items
in foreign currency are translated using the closing
exchange rate, non-monetary items measured in
terms of historic costs in a foreign currency are
translated using the exchange rate ruling on the
transaction date and non-monetary items measured at fair value in a foreign currency are translated
using the exchange rate ruling on the date the fair
value was determined.
Determination of currency translation differences
resulting from the liquidation of monetary items
or from the translation of monetary items translated in the initial recognition during the period or
in previous financial statements are recognised in
profit & loss for the period in which they occur.
r. Brokerage Commissions
Brokerage commission is the remuneration allocated to the brokers for the insurance business they
generate. The commissions agreed with agents and
brokers are recorded as a cost when the respective
premium receipts are issued. These commissions
are capitalised and deferred over the life of the
contracts
51
3.2. Nature, impact and justification of alterations to accounting policies
During 2010, there were no voluntary alterations
to the accounting policies when compared to those considered in the preparation of the financial
information on the preceding year, provided for
comparison purposes.
As a result of the endorsement by the European
Union (EU), there were the following issues,
revisions, alterations and improvements with effect
as from January 1, 2010, though with no impact
on the Company’s financial statements. Note 36
summarises the new standards and interpretations
applicable in 2010.
3.3. Main accounting estimates
and relevant judgements used
in the preparation of the financial statements
The International Financial Reporting Standards
(IAS/IFRS) transposed by Standards R4/2007and /2007 establish a series of accounting
treatments and require the Board to make judgements and estimates to decide the most adequate
accounting treatment. The main accounting
estimates and judgements used by the Company
in the application of the accounting principles are
discussed in this note with a view to improving the
understanding of how their application affects the
Company’s reported results and their disclosure. A
more detailed description of the main accounting
principles used by the Company is provided in
Note 3.1.
Considering that in many situations there are
alternatives to the accounting treatment adopted
by the Board of Directors, the results reported by
the Company could be different had a different
treatment been chosen. The Board of Directors
considers that the choices made are appropriate
and the financial statements adequately present
52
the Company’s financial situation and the results
of its operations in all materially relevant aspects.
a. Technical Provisions
Technical provisions correspond to future liabilities stemming from the contracts, and include:
1. Life mathematical provision;
2. Workmen’s compensation mathematical provision;
3. Provision for claims in other NonLife businesses;
4. Provision for claims incurred by not
reported (IBNR);
5. Provision for claims settlement costs;
6. Provision for profit-sharing in Life;
7. Provisions for unearned premiums;
8. Provision for risks in progress;
9. Provision for claims-rate deviations
The provisions are periodically reviewed by
qualified actuaries. The provisions for claims do
not represent an exact calculation of the amount
of the liabilities, rather an estimate resulting from
application of actuarial valuation techniques.
These estimated provisions correspond to the
Company’s expectation of the total cost of settling
claims based on an evaluation of the facts and
circumstances known at the time, on a review of
the historic settlement patterns, on an estimate of
trends in terms of claims frequency, on theories on
liability and other factors.
Variables in the determination of the estimate of
the provisions may be affected by internal and/or
external events, especially alterations to claims management processes, inflation and legal alterations.
Many of these events are not directly quantifiable,
particularly on a prospective basis.
a.1. Life Contracts Mathematical
Provision
The mathematical provisions for Life Business
are calculated contract-by-contract in keeping
with the prospective actuarial method, taking into
account both the guaranteed payments and the
profits already distributed.
In Universal Life policies the mathematical provisions in respect of savings have been calculated
policy-by-policy through daily capitalisation of
each Savings Account, taking into consideration
both the technical interest and the profit sharing.
The calculation is performed in accordance with
the current technical bases, legislation and ISP
Standards.
The Life business mathematical provisions are
calculated using actuarial assumptions defined by
types of insurance, which are summarised in the
following table:
Insurance in case of death
Insurance in case of life
Annuities
Other
Mortality Table
AF, PM 60/64, (70% to 100%) GKM 80
Technical interest rate
2.75%; 3.5%; 4.0%
PF 60/64, TV 73/77, GRM/GRF 95
RF, PF 60/64, GKF 80, GRM/GRF 95
2.75%; 4.0%; 6.0%
2.75%, 3.0%, 3.25%,3.5%,
4.0%, 70% 12-month Euribor
rate, rate announced annually
with a minimum of 1%
For the products currently marketed the tables
applied are the most recent ones and the technical
interest rate is defined each year.
a.2. Workmen’s Compensation Mathematical Provision
The mathematical provision for Workmen’s
Compensation records the Company’s liabilities
for claims involving payment of pensions or
remissions as decided by the Labour Court or by a
finalised conciliation agreement, as well as estimated liabilities for pensions in respect of permanent
disability, for claims already made but await final
agreement.
The aim of this provision is also to meet pension
liabilities relating to the potential disabilities of the
injured and it is calculated as follows:
(i) For cases of mandatory remission, under Article
56.1 of Decree-Law 143/99:
Tablet of Mortality
Interest Rate: 5,25%
Management Rate:
TD 88/90
5,25%
0%
(ii) Other cases:
Tablet of Mortality
Interest Rate: 5,25%
Management Rate:
GRM/F (95)
3%
4%
Liability in respect of the annual increase of
annuities as a result of inflation lies with the FAT
(Works Accidents Fund), a fund managed by the
ISP. Its revenues comprise those contributions
made by the insurance companies and by policyholders in Workmen’s Compensation business.
The Company pays the pensions in full and is
subsequently reimbursed in respect of that part for
which the FAT is liable.
To meet future annual contributions to the FAT
in respect of present beneficiaries, in accordance
with Circular 8/2010, Liberty Seguros, SA, sets
aside a provision equal to about 6.8% of total
Mathematical Provisions.
Liberty calculates an IBNR mathematical provision, estimating the number of claims incurred
but not yet reported for permanent disabilities and
deaths, as well as their average cost. The IBNR
provision is obtained by multiplying the expected
number of IBNR claims by the average cost.
court, third-party bodily injury under €100,000,
third-party bodily injury over €100,000,
third-party bodily injury through the courts, own
damage, occupants, legal protection). For each of
these groups a best estimate is determined.
Similar treatment is given to Workmen’s Compensation, in which Liberty separates Medical
Expenses without Life-Long Assistance, Temporary Disability pay, other claims’ indemnities
and life-long assistance. In the particular case of
the provision for Life-Long Assistance within the
scope of Workmen’s Compensation Insurance,
Liberty calculates:
(i) for each known case, the present value of future medical costs, considering
future medical inflation;
(ii) an IBNR provision for Life-long
Assistance considering the number of
cases expected multiplied by the average
cost.
a.3. Life, Accident and Sickness Technical
Provisions
Technical provisions in respect of traditional life
products, annuities and accidents, and illness have
been determined on the basis of various assumptions, namely, mortality, longevity and interest
rate, applicable to each cover, including a risk
and uncertainty margin. The assumptions used
were based on the past experience of the Company and of the market. These assumptions may
be reviewed in the event that future experience
confirms their inadequacy.
Additionally the Company calculates;
a.4.1 Provision for IBNR
This is estimated monthly on the basis of the
claims management situation and of the evolution
of the Company’s portfolio.
With regard to claims in 2010 for the whole of the
Non-Life area, the IBNR provision as at December 31, 2009, corresponds to 4.2% of the cost
of claims for the year (6.5% in 2009). The total
provision for IBNR in the Liberty Seguros balance
sheet accounts for 8% of Non-Life premiums earned in 2010 (15% in 2009), and for 6% of total
provisions for claims (9% in 2009).
a.4. Provision for Claims in other Non-Life
Business Lines
The provisions for claims in Non-Life businesses
are calculated using the Chain Ladder method
applied to the amounts paid or to the total cost, as
most appropriate to each business.
For Motor business, claims are segregated into homogeneous groups (third-party property out-of-
a.4.2 Provision for Future Claims Management Expenses
Liberty calculates this provision taking into
account the longevity of the management of
each type of claim and all costs inherent in this
management, including staff costs, physical space,
information technology, telecommunications, wa-
ter, electricity, accounts and valuation, imagining
a scenario of run-off of the claims portfolio.
The provision for future management expenses
for claims occurring up to December 31, 2010,
for the whole of the Non-life area corresponds to
1.1% of the costs of claims for the year (1% in
2009). The total provision for future management
expenses in the Liberty Seguros balance sheet
accounts for 3.4% of Non-Life premiums earned
in 2010 (3.7% in 2009), and for 2.8% of the total
provision for claims (2.5% in 2009).
In view of their nature, the determination of the
provisions for claims and other liabilities for insurance contracts involves a degree of subjectivity.
Nevertheless, the Company considers that the liabilities determined on the basis of the established
methodologies adequately reflect the best estimate
of the liabilities to which it is bound.
b. Impairment of Available-for-sale Financial
Assets
The Company determines that there is impairment of its available-for-sale assets where there is
an ongoing or significant devaluation of their fair
value. Determination of an ongoing or significant
devaluation requires judgement. In the judgement
made the Company assesses the factors referred to
in Note 3.1.b.7.
Alternative methodologies and the use of different
assumptions and estimates could lead to a different level of impairment losses recognised, with a
consequent impact on the Company’s results.
Additionally, the figures recorded in the accounts
could differ as a result of the methodology applied.
Alterations to these assumptions could have a
significant impact on the figures determined.
The assumptions and methodology used in
calculating pension liabilities and other employee
benefits are divulged in Note 23.2(p).
d. Income Tax
Determination of income tax requires certain
interpretations and estimates.
Other interpretations and estimates could result
in a different amount of income taxes, current and
deferred, recognised during the year.
In keeping with current tax legislation the Tax
Authorities are entitled to review the calculation of
the taxable income made by the Company during
a period of four years. Therefore, there may be
corrections to the taxable income as a result, mainly, of differing interpretations of the tax legislation
in respect of 2009 and 2010, given that the tax
authorities have already reviewed 2007 and 2008.
Nevertheless, the Company’s Board of Directors is
convinced that there will be no significant corrections to the income tax recorded in the financial
statements.
c. Pensions & other Employee Benefits
Determination of pension liabilities requires the
uses of assumptions and estimates, including the
use of actuarial projections, estimated returns on
investments and other factors that can impact on
the costs and liabilities of the pension plan.
53
4. Nature and extent
of the headings and
of the risks resulting
from insurance contracts
and reinsurance assets
4.1. Information on insurance
contracts
a) Accounting policies adopted in respect of
insurance contracts corresponding to assets,
liabilities, income and related costs or expenses
The accounting policies are described in Note 3.1
of the notes to the accounts.
b) Assumptions used in the measurement and
estimate calculation methodologies
1. Claims pending settlement
Claims reports are valued on a case-by-case basis,
on the basis of information obtained and on past
experience with similar claims.
In the case of property damage claims processes
in Motor insurance, there are independent claims
for the IDS (Direct Indemnity of the Insured)
Creditor and the IDS debtor.
The reimbursement amounts stemming from
the liabilities assumed by the Company but
imputed to third parties are accounted only where
there is concrete evidence that the amounts are
recoverable.
2. Deviations of claims incurred but not enough reported (IBNER) and claims incurred but
not reported (IBNR)
See description included in Note 3.3 of the Notes
to the Accounts.
3. Liabilities for life-long assistance
See description included in Note 3.3 of the Notes
to the Accounts.
54
c) Methodologies of calculation of the
estimates of the amounts to be attributed to
policyholders and of the amounts actually
attributed by way of profit-sharing.
The criteria employed in calculating profitsharing in those types of insurance to which it
applies are based on technical and financial profit
& loss drawn up by types or groups of types as
established in the Profit-Sharing Plan.
> The amount of the profit-sharing is calculated
monthly in the light of the evolution of the results
of the various types, the definitive amount being
determined at the end of each year and credited to
the profit-sharing provision.
>The profit-sharing criteria have regard for the
conditions of the insurance contracts and of the
Profit-Sharing Plan.
d) Effect of alterations of the assumptions used
in measuring assets and liabilities per insurance
contract
The Company did not implement any alterations
in 2009 and 2010 in respect of the methodologies
and assumptions used in the measurement of its
technical provisions. There were no alterations to
the assumptions as far as the assets are concerned.
e) Reconciliation of insurance contract
liabilities with reinsurance contract assets
The following tables provide the reconciliation
of the technical provisions (direct insurance,
reinsurance accepted, reinsurance ceded) in
respect of 2010 and 2009:
Reconciliation of Direct Insurance and Reinsurance Accepted
2010
Opening
Balance
45 194 042
245 639 503
Technical provisions Direct Insurance
Provisions for Unearned Premiums
Life Mathematical Provision
Provisions for Claims
- Life
- Workmen’s Compensation
- Other Insurance
Direct Insurance
Reinsurance accepted
Sub-total provision for claims
Provision for loss deviations
Direct Insurance
Total:
8 813 668
89 005 685
129 722 012
129 620 014
101 998
227 541 365
6 310 449
7 176 803
3 483 467
3 478 386
5 081
535 345 630
2009
Opening
Balance
45 935 014
256 181 291
Technical provisions Direct Insurance
Provisions for Claims
- Life
- Workmen’s Compensation
- Other Insurance
Direct Insurance
Provision for loss deviations
Direct Insurance
Total:
7 937 891
88 887 092
130 342 564
130 240 550
102 014
227 167 547
5 223 838
5 832 469
3 072 111
3 067 030
5 081
543 412 270
Reconciliation of Reinsurance Ceded
2010
Reclassification
3 925 215
980 518
-2 129 398
Change
-259 147
1 447 368
-12 889 192
-12 888 731
-460
-11 700 970
-494 859
1 186 148
438 874
438 874
0
-8 774 990
3 492 341
3 492 341
3 492 341
0
0
0
0
4 472 858
Reclassification
-740 972
0
-7 428 376
-3 113 412
Change
903 703
118 593
-620 552
-620 536
-16
401 745
1 093 331
1 344 334
411 356
411 356
0
-4 918 582
-27 926
0
0
0
0
-27 926
-6 720
0
0
0
0
-3 148 058
Balance
50 099 774
243 510 105
8 554 521
90 453 054
120 325 161
120 223 623
101 538
219 332 736
5 815 590
8 362 951
3 922 341
3 917 260
5 081
531 043 498
Balance
45 194 042
245 639 503
8 813 668
89 005 685
129 722 012
129 620 014
101 998
227 541 365
6 310 449
7 176 803
3 483 467
3 478 386
5 081
535 345 630
Technical provisions Reinsurance Ceded
Loss Provision
- Life
- Workmen's Compensation
- Other Insurance
Opening balance
Total:
Change
Closing balance
77 490
0
-20 234
0
635 857
2 961 991
2 131 717
5 729 565
-129 504
-1 434 935
217 440
-1 346 999
57 256
0
0
506 353
1 527 056
2 349 157
4 382 566
5 807 056
-1 367 234
4 439 822
2009
Technical provisions Reinsurance Ceded
Loss Provision
- Life
- Workmen's Compensation
- Other Insurance
Opening balance
Total:
Change
Closing balance
31 785
0
45 705
0
77 490
0
121 000
3 033 357
2 669 565
5 823 923
514 857
-71 366
-537 848
-94 357
635 857
2 961 991
2 131 717
5 729 565
5 855 708
-48 652
5 807 056
The amounts carried in 2010 in the transfer
column of the above table have to do with the
transfer of all the technical provisions of the Genesis Seguros Generales SA de Seguros y Reaseguros
branch in Portugal (see Note 25).
55
4.2. Information on the nature
and extent of the specific insurance risks
i. Readjustments and details of costs
of claims
The information in respect of readjustments of
claims prior to 2010 is reflected in Annex 2 of
these Notes to the Balance Sheet and Profit &
Loss Account. Additionally, the costs of claims are
detailed in Annex 3. All movements stem from the
day-to-day management of the claims, and they
are not significant in the light of the provisions set
aside.
There follows a breakdown of the costs of claims,
net of reinsurance, in 2010 & 2009:
a) Objectives, policies and management processes for risks resulting from insurance contracts
and methods used to manage these risks
The risk inherent in each insurance contract is
the possibility that the insured event will occur
and the underlying uncertainty of the amount of
indemnity payable (insurance risk). Therefore,
the main risk an issuer faces corresponds to the
insufficiency of the liabilities set aside to cover the
indemnities Risk factors:
Direct Insurance
Amounts paid
Costs imputed to the claims function
Variation of provision for claims
Sub-total
Reinsurance ceded
Amounts paid
Variation of provision for claims
Sub-total
Total:
2010
2009
146 046 617
6 652 462
-13 570 700
139 128 380
136 209 774
5 913 577
-1 299 764
140 823 588
-2 569 983
1 346 999
-1 222 984
137 905 396
-679 166
94 357
-584 809
140 238 779
ii. Movements under the
Profit-Sharing Provision
The movements during the year are detailed
hereunder:
Provision for Profit Sharing attributed at the start of the year
Profit distributed without Profit Sharing on 31/12
Profit distributed on 31/12
Profit-sharing Attributed
Provision for Profit Sharing attributed at the year-end
Provision for Profit-Sharing for the year to be Attributed
Provision for Profit Sharing at the year-end
Reclassification for post-employment benefits
Closing balance
56
2010
4 119 250
-504 372
-389 483
182 862
3 408 257
2 407 333
5 815 590
2009
5 223 838
-519 352
-1 192 273
607 037
4 119 250
2 197 919
6 317 169
-
-6 720
5 815 590
6 310 449
a. Frequency and severity of claims
The frequency and severity of the actual claims
compared to the estimated claims can be a factor
compromising the stability of an insurer. The insured events are random and their level varies from
year to year when compared to the estimated levels
(using statistical techniques). Forms of mitigating
this risk:
> Non-Life Segment “Subscription” Policy.
Liberty Seguros has subscription policies for all
products. Besides the risks that are excluded , these
policies list the conditioned-acceptance risks, the
conditions of acceptance of the best risks and the
limits to acceptance of non-target risks, as well as
the general level of commercial discounts. Each
month sales are reviewed by risk segment and by
sales manager. This review allows an analysis to
be made of the segments sold and of the discount
levels. Portfolio profiles are prepared quarterly for
the main businesses (motor, workmen’s compensation, household, commerce, industry, personal
accident and condominium) detailing earned
premiums, risk exposures, average premiums, expected number of claims, frequency, average cost
of claims, claims rate, among others.
> Life Segment “Subscription” Policy.
Within the scope of life risk insurance and for the
more frequent covers (Death and Disability), there
are medical-formality grilles for insurance with
and without mortgage creditors. In the former
case the subscription is a little more flexible in that
the anti-selection risk is lower.
These grilles, which are periodically discussed
and revised in conjunction with our reinsurers,
are structured in two dimensions (age group and
capital-insured rung) and are more demanding as
age and capital increase.
> For some more specific complementary covers
in which our portfolio is small and/or our experience is not yet significant (e.g., Serious Illness
Diagnosis, Acute Myocardial Infarction) there
are also additional specific medical formalities
grilles that are required where the subscription is
intended.
> Non-Life Segment Pricing
The Liberty Seguros price lists are selective, in
the sense that they have good prices for lower-risk
segments and prices that are normally abovemarket for the worse risks. Both the price lists and
the subscription rules are approved jointly by the
Technical Manager, the Sales Manager and the
Actuarial Manager.
> Life Segment Pricing
Within the scope of the Death cover, mortality
tables considered appropriate by the Actuary
Services have been used. Within the scope of
the complementary covers, where there are no
internal or national statistics, use is normally
made of the services of the reinsurers and of their
experience and statistics about this matter. There
is some flexibility from a commercial viewpoint,
with adjustment of the level of commissions (and
subscription charges), in the light of the option
of the Agent and/or Distribution Channel, which
can influence the price of the respective contracts
to some extent.
> Commercial Incentives Non-Life and Life
Segments
The commercial incentives are closely tied to the
profitability of the agent’s portfolio, a factor that
contributes to the formation of healthy portfolios.
> Non-Life Reinsurance Treaties
Liberty Seguros has non-proportional claims
surplus treaties (XL) and claims surplus for catastrophes (CAT XL). In Multi-risks, the maximum
capacity of the XL Treaty is €10 million and the
protection in the event of catastrophe is €210
million.
> Life Reinsurance Treaties
The normal types of reinsurance treaty used
are proportional, with a retention by Liberty of
€100,000 per person insured. This applies to
the more-frequent subscription covers, namely
Death and Health. This retention by Liberty
has grown gradually, in step with the growth of
the respective portfolio. In some complementary
covers less frequently subscribed in which we have
less experience, such as Serious Illness and Acute
Myocardial Infarction Diagnosis, the reinsurance
policy is more prudent and Liberty’s retention is
just €12,500.
In complementary terms and also to prevent
catastrophic risks/ accidents, there is a specific
reinsurance treaty for the purpose. It acts within
the “space” of our retention up to a maximum
of €4,000,000, provided that there are at least 3
claims within the scope of the same event.
> Non-Life Segment Claims Management
Claims management is centralised, with teams
specialised for each business line and in fraud
prevention and detection. Review of the processes
complies with specific rules so that no process
stays more than 45 days without being reviewed.
> Life Segment Claims Management
Life Risk claims management is dealt with by
specialised personnel experienced in the matter.
Furthermore, within the scope of management
of the processes, they are always analysed and
approved by their superiors competent to take the
respective decisions. The issue of the respective
payment orders is always subject to double validation / “IT signature”, particularly by the persons
creating/ managing the process and authorising
the payment.
There is also quarterly quality control (on a test
basis) to check the adequacy of the settlement of
the processes in the various areas, namely covers
subscribed, capital insured, clinical opinion, claim
covered and payment deadlines.
> Política de Solvência
A Companhia monitoriza a solvência numa óptica
mensal. O cálculo da margem de solvência é realizado de acordo com a Norma Regulamentar nº
6/2007-R de 27 de Abril e a Norma Regulamentar
12/2008-R de 30 de Outubro do Instituto de Seguros de Portugal, sendo baseada em informação
financeira estatutária.
> Solvency Policy
The Company monitors solvency on a monthly
basis. Calculation of the solvency margin is performed in accordance with Insurance Supervisory
Authority (ISP) Regulatory Standards 6/2007-R
of April 27 and 12/2008-R of October 3, and is
based on statutory financial information.
As of December 31, 2010 & 2009, the solvency
margin contained the following components:
Although 2010 was not a good year in finanContributed capital
Reserves
Retained Earnings
Net Profit/(Loss)
Distribution of net profit for the year
Total Equity ( I )
Intangible Assets
Subordinated loans with no fixed term
Adjustment of Retirement Pensions and obligations
Future Profits - Life
Total ( 2 )
Solvency Margin Available ( 1 ) + ( 2 )
Solvency Margin Required
Surplus / (Shortfall)
Solvency Ratio
cial markets terms, the Company benefited in
solvency terms from the transfer of the whole
of the assents and liabilities of the branch in
Portugal of Genesis Seguros Generales SA de
Seguros y Reaseguros (see Note 25).
b. Sources of uncertainty in setting aside Provisions
Setting aside provisions for claims is a process
involving some uncertainty. Each month, using
statistical methods, Liberty Seguros calculates
the amounts of the provision for claims incurred
but not reported, the provision for the surplus/
shortfall of the case-by-case reserve, the provision
for future claims-management expenses and the
provisions to meet future liabilities with the FAT.
There is a complete quarterly actuarial evaluation,
duly segmented by business line and by type of
claim within each line. In this way, the provisions
that are recorded keep in step with the evolution
of the portfolio and of the claims. The monthly
performance of these analyses allows fast identification of abnormalities. According to the Senior
2010
26 548 291
33 094 248
42 869 591
9 376 196
2009
24 348 751
23 466 696
34 669 393
9 111 331
111 888 325
-729 142
0
0
0
-729 142
111 159 182
41 769 916
69 389 266
266%
91 596 170
-839 577
0
0
1 287 675
448 098
92 044 268
39 489 727
52 554 541
233%
Actuary’s report, Liberty Seguros’s provisions are
both adequate and robust.
In Life business the creation of the provision for
claims is calculated by policy and corresponds to
the value of the capital payable in the event of a
claim, maturity or surrender, and no uncertainty is
therefore associated with this provision.
The provision for life claims incurred but not
reported is a process that, like the non-life business
lines, involves some uncertainty. Each year Liberty
Seguros calculates this provision using statistical
methods and it monitors its adequacy monthly.
The assumptions employed by the Company are
described in Note 3.3.
c. Alteration of assumptions in calculating
provisions
Adjustments of assumptions – quite normal in actuarial techniques, at all times to improve the
estimate for each segment – have not affected
the overall amounts of provisions, and they
have therefore remained stable.
57
d. Impacts stemming from regulatory alterations
The main regulatory alteration faced by the Portuguese market involves the new table of indemnities
for personal injury in motor business. Like the rest
of the market, the Company has not yet been able
to fully estimate its impact.
b) Sensitivity analyses performed, risk concentrations and actual claims
b.1. Risk Concentrations
Risk concentration in Non-Life business
In 2010 the concentration of Liberty Seguros’s
claims provisions by business line is as follows:
As shown by the chart, 91% of the provisions
for claims are concentrated on the Motor and
Workmen’s Compensation lines.
The following table reflects the deviations from
the estimates made in January 2009 for the year,
compared with the December 2009 real, in terms
of Frequency, Average Cost and Risk Premium
(Frequency x Average Costs) for the main business
lines.
Loss provision as at
31/12/2010
Non-life
Accidents and Health
Workmen's Compensation
Personal accidents and persons transported
Health
Fire & Other Damage
Motor
Third-party Liability
Other covers
Marine & Transports
Air
Carriage of Goods
General Third-party Liability
Credit & Performance Bonds
Legal protection
Assistance
Sundry
Total:
Frequency
(Dec2010/
Jan2010)
Average Cost
(Dec2010/
Jan2010)
Frequency x
Average cost
%
92 508 746,42
90 453 053,73
1 843 053,70
212 638,99
9 576 050,74
101 449 791,44
94 541 603,55
6 908 187,89
2 570 763,02
0,00
1 050 557,93
2 951 614,20
142 372,72
409 018,50
119 299,47
0,00
210 778 214,44
Frequency
(Dec2009/
Jan2009)
43,9%
42,9%
0,9%
0,1%
4,5%
48,1%
44,9%
3,3%
1,2%
0,0%
0,5%
1,4%
0,1%
0,2%
0,1%
0,0%
100,0%
Average cost
(Dec2009/
Jan2009)
Frequency x
Average cost
Motor
Material Third-party Liability
Bodily Third-party Liability
Own Damage
Workmen’s Compensation
Medical Expenses
Temporary Disabilities
Partial Permanent Disabilities < 30%
Partial Permanent Disabilities >= 30%
Permanent Absolute Disabilities
for Customary Work
Death
Life-long Assistance
58
1,0278
0,9459
1,0400
0,9518
0,9864
1,0070
0,9783
0,9330
1,0473
1,012
0,98
1,008
1,01
0,9
1,05
1,022
0,882
1,058
0,98
0,98
1,21
1
0,95
1,0378
1,0043
0,7965
1
0,9981
1,0142
0,9815
0,9638
1,0000
0,9482
0,95
0,95
0,967
0,92
0,77
0,95
0,96
0,97
0,97
0,97
0,903
0,912
0,938
0,892
0,747
0,96
2
1,0292
1
0,9880
2
0,91
1
0,97
1
0,883
1
In Motor business there was an increase of
material-damage claims and a reduction of the
frequency of personal injury claims. The combination of frequency and average cost led to a
reduction of the cost of third-party claims and to
an increase to that of own damage.
In Workmen’s Compensation there was an increase of the cost of medical expenses and of life-long
assistance, the latter very volatile.
The other business lines are not material to the
analysis.
Liberty’s reinsurance programme is analysed each
year by reinsurance brokers and is placed with
Liberty Mutual.
Though its weight as a proportion of the
Company’s provisions is not significant, the Fire
& other damage line has an optional cover that
involves one of the biggest perils that the Portuguese insurance market faces, that is, earthquakes.
Exposure to the earthquake peril is normally
assessed in terms of dispersal across the country
(both in number of risks and in capital insured),
in that the risk of occurrence of an event of this
nature is greater in certain zones, such as Lisbon
and the Algarve.
The following map shows Liberty’s exposure
to Seismic Phenomena on the basis of capital
insured.
Risk concentration in Life business
With regard to Life business, the concentration of
the Company’s risks by type is as follows:
Individual
Annuities
Whole life
Deferred capital
Mixed
Temporary
Universal Life
PPR, PPR/E
Other
Complementary
Group
Annuities
Deferred capital
TAR
Complementary
Balance
Closing balance
In accordance with the data presented, the Life
portfolio is concentrated on capitalisation products.
b.2. Sensitivity Analyses
The Company performed sensitivity analyses for
Life and Non-Life.
Life Business Sensitivity Analysis
The following table provides the sensitivity analysis performed in the present value of the future
Life profits.
It represents the impact of several risk factors
(mortality, expenses, total surrenders, cancellations
and interest rates) on the base scenario.
2010
238 745 080
1 511 854
42 208
1 632 518
6 363 760
1 286 424
142 977 910
84 614 820
0
315 587
4 765 025
0
2 460 456
2 302 890
1 678
243 510 105
-
2009
240 958 609
1 494 824
42 093
678 859
6 854 583
1 316 581
145 134 507
85 078 031
360
358 772
7 794 306
2 512 832
3 422 347
1 857 337
1 790
248 752 915
-3 113 412
243 510 105
245 639 503
2010
Increase of the Rate of Return of the Life Portfolio (+0.5 p.p.)
Reduction of the Rate of Return of the Life Portfolio (+0.5 p.p.)
10% growth of Costs (without commissions)
10% growth of the mortality table
10% growth of total surrenders and cancellations
10% decrease of total surrenders and cancellations
The base scenario was calculated for a number of
products that account for 93% of the Life mathematical provisions in 2010.
In this scenario, the calculation hypotheses for
mortality, surrender rates, cancellations and cost
growth were as follows:
4,8
-5,3
-1,7
-1,3
-0,6
0,7
Million Euros
2009
6,2
-6,6
-2
-1,4
-0,5
0,7
Mortality:
55% of the GKM 80 table for types of insurance in case of death;
45% of the GKM 80 for the other products
modelled.
Redemption and cancellation rates: Experience
of each product
Cost growth: 2% 2%
59
Non-Life Business Sensitivity Analysis
For Non-Life business, the risks that can make the
real cost of claims differ from the best estimates are:
(i) variations of the cost of claims as a
result of alterations to legislation or any
other reason;
(ii) variation of medical inflation rates;
(iii) variation of the discount rates of the
mathematical provisions and provisions
for life-long assistance in Workmen’s
Compensation.
4.3. Market risk, credit risk,
liquidity risk and operational
risk
Market Risk
Risk of adverse movements in the value of the insurance company’s assets related with fluctuations
of the capital markets, currency markets, interest
rates, property markets and spread risk. Market
risk also includes risks associated with the uses of
financial instruments incorporating derivatives and
structured products of characteristics identical to
derivatives. Within the scope of market-risk management, the risk of mismatching between assets
and liabilities must also be taken into account.
Market-risk management at Liberty Seguros is
essentially undertaken within the scope of the
investment management policy in force, which
includes the following objectives:
> maximisation of the return on the
investment portfolio, complying with the restrictions ordered by the supervisory entity and with
maturity structures reflecting the organisational
comportment of the Company;
> optimisation of the adjusted risk/
return ratio after the effect of taxes, so as to obtain
a long-term growth of income and profits and to
strengthen the Company’s competitive position,
financial ratings and the growth potential.
60
Motor
Impact on
Impact on ClaiBalance Sheet
ms in 2010
Claims
Assumptions
Average cost +10%
Average cost -10%
Average cost +10%
Average cost -10%
Discount rate in the calculation
of the present value +1pp
Discount rate in the calculation
of the present value -1pp
Workmen's compensation
Impact on
ms in 2010
Claims
Other lines
Impact on
ms in 2010
Claims
9 694 852
-8 412 143
0
0
4 505 665
-3 992 864
0
0
11 525 343
-10 963 682
7 420 379
-5 936 304
1 179 361
-1 153 338
339 478
-271 582
1 021 281
-934 264
0
0
586 453
-566 579
0
0
0
0
-8 339 993
-840 113
0
0
0
0
11 372 718
1 145 609
0
0
The following table shows the breakdown of assets
allocated to insurance contracts and to insurance
contracts and operations considered to be investment contracts for accounting purposes.
Floating-rate securities
Fixed-income securities
Financial assets classified in the
Funds
Total:
December 31, 2010
Life
Unit-Linked
Non-life
309 851 886
0
301 959 093
22 500
0
0
309 829 386
0
301 959 093
0
14 940 590
0
Total
611 810 979
22 500
611 788 479
14 940 590
December 31, 2009
Life
Unit-Linked
Não Vida
309 955 366
0
289 855 225
22 500
0
0
309 932 866
0
289 855 225
0
16 343 709
0
Total
599 810 591
22 500
599 788 091
16 343 709
0
0
13 410 099
1 530 491
0
0
13 410 099
1 530 491
0
0
14 726 062
1 617 647
0
0
14 726 062
1 617 647
309 851 886
14 940 590
301 959 093
626 751 569
309 955 366
16 343 709
289 855 225
616 154 300
The investment portfolio allocated as at December
31, 2010, almost all consists of bonds (99.75%),
with no change from the previous year, when
securities of this nature accounted for a similar
99.73% of the whole of the allocated portfolio,
As at December 31, 2010, Liberty Seguros had the
following structure of financial assets allocated to
insurance contract and to insurance contracts and
operations considered to be investment contracts
for accounting purposes by industry sector:
26.3%
28.7%
3.0%
18%
4.0%
4.3%
9.3%
2.8%
3.0%
2.0%
0.2%
6.0%
rial
ry
As a result of the adverse market conditions
during 2010, securities purchase and sale
transactions during the year were monitored with
a view to ensuring a lesser impact on results and
to maintaining the risk/return policy. As a result
of this strategy, there were no very significant
alterations to the sectoral structure, with just a
three percentage point reduction of assets held in
the energy, finance and government sectors, which
account for 58% of the total in 2010 and for
61% in 2009. The three percentage point increase
involved the cyclic and non-cyclic consumption
sectors and utilities, which came to account for
23% of the total in 2010 compared to 20% in
2009.
The breakdown of the risk by country issuing the
financial assets referred to above is as follows as at
December 31, 2010 & 2009:
2010
%
8.8%
16%
2010
14%
2009
12%
14.7%
10%
Basic
Cyclic & non-cyclic
Utilities
As at Decemberconsumption
31, 2009,
2009the breakdown was as
Materials
8%
4%
Tecnology and
Comunications
Energy
Financial
2009
9.2%
1.9%
9.2%
9.3%
14.0%
14.0%
Funds
Funds
Sundry
2.0%
0.2%
3.0%
2.0%
0.2%
6.0%
0.2%
Government
Industrial
Government
4.0%
4.3%
2.8%
consumption
Tecnology and
Comunications
Sundry
GB
IT
LU
MX
NL
PT
SN
USA Several
<2%
8.8%
14.7%
8.8%
14.7%
Basic Industrial
Cyclic & non-cyclic
Materials
FR
3.0%
28.7%
6.0%
3.0%
0.2%
9.3%
2.8%
26.3%
ES
4.0%
4.3%
29.6%
DE
28.7%
3.0%
2010
28.3%
BEL CAN
26.3%
29.6%
3.6%
1.9%
2%
0%
28.3%
3.6%
2010
6%
follows:
An appraisal by issuer country shows that, as in
2009, there is diversification by issuer country,
with France, the Netherlands, the United
States and Germany accounting as the most
representative, accounting for about 53% in 2010
compared to 55% in 2009. The assets mirrored
here are traded in euros, and there is therefore no
exposure to the exchange-rate risk.
The interest-rate sensitivity analysis using
modified duration, which measures the sensitivity
of the market value of the portfolio to interest-rate
alterations, is 5.56% in 2010, which means that it
is assumed that if interest rates rise 1 p.p. then the
value of the above portfolio will fall by 5.56%.
In 2009 the modified duration was 5.97%,
meaning that the Company is now less exposed to
interest-rate variations.
Value at Risk (VaR) is a measure used to
determine the market risk. It takes into account
historic variations of the prices of securities and
assumes that they will have the same distribution
during the following year, in order to estimate the
impact of the present market value over a given
time horizon. Considering a time horizon of one
year and a confidence level of 99%, we obtain
a VaR for the above portfolio as at December
31, 2010, of 6.76%, which means there is a 1%
probability of incurring losses on our portfolio
greater than 6,76% of its present value. The same
analysis performed with reference to December
31, 2009, provided a VaR of 10.77%. This
indicator has also fallen, meaning that there has
been a reduction of the Company’s market-risk
exposure.
Energy
Basic
Utilities
Materials
Cyclic & non-cyclic
consumption
Utilities
Financial
Tecnology and
Comunications
Energy
Financial
61
Credit Risk
Risk of non-compliance or of alteration to the
creditworthiness of the issuers of securities to
which the insurance company is exposed, as well
as of the debtors, service providers, brokers, policy
holders and reinsurers with which it is related.
nature, though their weight in the portfolio is insignificant, standing at about 3%, a figure similar
to that for the previous year.
b. Policyholders and brokers
Liberty Seguros has applicational controls in
accordance with the insurance premium payment scheme in force during 2010, allowing it to
mitigate the credit risk resulting from failure by
policyholders to pay the insurance premiums.
The impact of the brokers’ credit risk is minimised
by the Company through a number of analysis
procedures instituted and of applicational controls
implemented, particularly blockage of access to
the provision of accounts system in the event of
failure to meet payment deadlines, and the automatic policy-cancellation circuit.
a. Financial assets
Essentially, the credit risk is managed on the basis
of the investment management policy in force at
the Company.
As at December 31, 2010 & 2009, Liberty
Seguros had the following structure of financial
assets allocated to insurance contracts and to
insurance contracts and operations considered for
accounting purposes to be investment contracts by
credit-risk sector, in accordance with the Standard
& Poor’s ratings:
40%
35%
20%
15%
10%
5%
AAA
AA
A
The credit risk of the Liberty Seguros asset
portfolio is adequately controlled, and 23% of
the portfolio consist of assets of the highest credit
quality (AAA).
The asset portfolio as at December 31, 2010, was
practically unchanged from December 31, 2009.
Assets having a rating equal to or better than “A”
account for 71% of the portfolio, compared to
72% the previous year. Portfolio assets in 2010
having a rating of “BB” or less are considered
high-risk since they are of a more speculative
62
With regard to Non-Life reinsurance, Liberty Seguros, in 2010 and 2009, distributed the
risks mainly to the Group’s reinsurer “Liberty
Mutual Insurance Company” whose ratings are
A (A.M.Best) and A- (S&P), unchanged from
the previous year. Within the scope of the Motor
Assistance covers there is a reinsurance contract
with ACP Mobilidade, a part of the Automóvel
Clube de Portugal group. The other assistance services for the various products marketed by Liberty
Seguros are provided by Inter Partner Assistance
and Europ Assistance – Companhia Portuguesa de
2009
25%
0%
General Reinsurance AG, Sucursal in Spain
RGA International Reinsurance Company Limited
2010
30%
BBB
BB
No
Rating
UnitLinked
c. Reinsurers
With regard to the risk of reinsurance default, the
Company has a list of reinsurers pre-approved by
the Group and, for this reason, any exceptions to
this list required the prior approval of the Liberty
Mutual Group’s Corporate Reinsurance Credit
Committee.
Liberty Seguros’s Life reinsurance in 2010 and
2009 was split between two reinsurers having the
following ratings:
2010
A M Best
A++
A+
Liberty Mutual Insurance Europe Limited
General Reinsurance AG, Sucursal in Spain
Hannover Rueckversicherung AG
Münchener Rück - (Münchener
Rückversicherungs-Gesellschaft)
New Reinsurance Company
Partner Re Sa (France)
Swiss Re - Swiss Reinsurance Company
Vitodurum Reinsurance Company
(XL Winterthur International Re)
Médis - Companhia Portuguesa
de Seguros de Saúde
Lloyd’s Syndicate 0457
XLRE Europe Limited
S&P
AA+
AA-
2009
A M Best
A++
na
S&P
AAA
AA-
Seguros; lastly, within the scope of Legal Protection, we rely on the services of ARAG, Compañía
Internacional de Seguros e Reaseguros.
The deals placed as optional during 2010, as well
as the reinsurance treaties of previous years, still in
force, involve the following reinsurers:
2010
A M Best
A
A++
A
S&P
AAA+
AA-
2009
A M Best
A
A++
A
S&P
AAAA
AA-
A+
AA-
A+
AA-
na
A+
A
AAAAA+
na
A+
A+
AAna
A
na
BBB+
na
BBB+
na
A-
na
A-
A
A
A
A
A
na
A
A+
A+
A+
A+
A+
na
A
A
A
A
A
A
na
A
A+
A+
A+
A+
A+
na
A-
Liquidity Risk
This is the risk that the insurance company will
not hold assets of sufficient liquidity to meet
cash-flow requirements to fulfil its obligations to
policyholders and other creditors as they fall due.
The Liberty Seguros Liquidity-Management
Policy covers two major areas: Cash Management
and Investment-Portfolio Liquidity Management.
The control mechanisms implemented for Cash
Management are carried out on a weekly basis.
They allow a determination of fund needs or surpluses for the following weeks and, in the light of
this, the establishment of plans of action required
to meet cash requirements or to take investment
decisions,
The Investment Portfolio Liquidity Risk Management is based on a quantitative and qualitative
analysis of the match between assets and liabilities.
With regard to Non-Life business two analyses were performed during 2010, applying the
methodology used for Life business. Therefore,
for this business line, for each of the Life business
portfolios quarterly projections are performed
on the amounts of the coupons, maturities and
premiums receivable, as well as on the surrenders,
claims and maturities payable. Having determined these amounts, for each year under analysis,
the difference between assets and liabilities is
calculated. An analysis of these results determines
those situations that require a restructuring of the
portfolio or additional credit lines to meet liquidity needs, without taking a loss, and taking into
account adequate cover of liabilities. Each month
the projected amounts are compared with the real
amounts, determining any deviations so as to suit
future projections to the existing reality.
The periodic Asset Liability Management (ALM)
analysis includes an analysis of interest rates, modified duration, industry sector and issuer country,
diversification by type of security and ratings,
which are linked with the market risks and credit
risks mentioned in the foregoing points.
During 2010, Liberty Seguros performed monthly
monitoring of the securities valued using the
mark-to-model method between November 2008
and December 2009, when the market-to-model
criterion was discontinued because all the financial
assets in the portfolio as at December 31, 2009,
were being traded on active, liquid markets. These
securities considered in the model were traded
on markets that were not active, illiquid or in a
distress-sale situation. The criteria adopted in gauging the market conditions under which financial
December 31, 2010
Life
Non-life
Financial assets classified in the initial recognition at
Unit-Linked
Sub Total
Other Assets
Life
Non-life
Sub Total
Total:
December 31, 2009
Life
Non-life
Financial assets classified in the initial recognition at
Unit-Linked
Sub Total
Other Assets
Life
Non-life
Sub Total
Total:
assets are traded, as well as the methodology and
assumptions used to determine fair value using the
market-to-model are detailed in Note 6.11.
The results obtained through the analysis of future
cash flows as at December 31, 2010, demonstrate,
in total terms, the existence of positive covers for
the life and non-life portfolios.
The following tables present the segmentation, as
at December 31, 2010 & 2009, of the financial
and other assets allocated to insurance contracts
and to insurance contracts and operations conside-
< 1 year
red for accounting purposes investment contracts
for their maturity:
Comparing the two years, a prudent liquidity-risk
management policy has now been implemented, in which the option, in the light of market
conditions, was to reduce the amounts invested
in the long-term, giving preference to short-term
investments.
3-5 years
14 666 399
4 849 694
19 516 093
72 446 403
41 502 499
113 948 902
60 917 059
56 261 505
117 178 564
110 339 042
166 219 568
276 558 610
51 460 484
33 125 827
84 586 311
22 500
0
22 500
309 851 886
301 959 093
611 810 979
2 804 703
22 320 796
7 771 645
121 720 547
2 833 751
120 012 314
0
276 558 610
0
84 586 311
1 530 491
1 552 991
14 940 590
626 751 569
8 108
16 035 398
16 043 506
38 364 302
0
48 506
48 506
121 769 052
0
94 300
94 300
120 106 614
0
632 546
632 546
277 191 156
0
0
0
84 586 311
121 918
2 091 016
2 212 935
3 765 926
130 026
18 901 766
19 031 792
645 783 362
1-3 years
3-5 years
< 1 year
5-15 years
5-15 years
> 15 years
Without
maturity
1-3 years
> 15 years
Without
maturity
Total
Total
10 223 174
3 798 324
14 021 497
40 908 368
15 582 535
56 490 903
67 038 678
64 233 538
131 272 215
139 217 385
168 557 211
307 774 597
52 545 261
37 683 617
90 228 879
22 500
0
22 500
309 955 366
289 855 225
599 810 591
6 877 339
20 898 837
4 555 821
61 046 724
3 292 901
134 565 116
0
307 774 597
0
90 228 879
1 617 647
1 640 147
16 343 709
616 154 300
13 216
13 257 974
13 271 190
34 170 026
0
50 423
50 423
61 097 147
0
113 076
113 076
134 678 193
0
663 936
663 936
308 438 532
0
125 096
125 096
90 353 975
972 138
2 972 320
3 944 458
5 584 606
985 354
17 182 825
18 168 179
634 322 479
63
Operational Risk
The risk of losses stemming from inadequacy or
failure in internal procedures, people, systems or
external events. In accordance with technical guideline Circular 7/2009 published by the Insurance
Supervisory Authority on the operational risk,
the following aspects have to be appraised for this
component:
> intentional bad professional conduct
(internal fraud);
>illicit activities carried on by third
parties (external fraud);
> practices related with human resources and safety at work;
> customers, products and commercial
practices;
> external events causing damage to
physical assets;
>interruption of the business and
system failures;
> risks related with business processes.
With regard to internal fraud, the Company has
several mitigating measures, such as training in
fraud and its code of conduct, as well as physicalaccess control. Additionally, within the scope of
claims management, there is a service order on
settlement of claims, payment manuals and also a
definition of the ceilings system.
As far as external fraud is concerned, there are
training plans devoted to this subject, as well as
fraud rules in the matter of claims. The Company
has a Special Investigation Unit as a part of the
Claims Division.
In respect of the human resources risk, Liberty
Seguros has a formal performance management
policy, annual training plans and rules directed at
ensuring conformity with labour legislation.
In practical commercial terms, particularly in money laundering, the Company has rules and procedures for the prevention of money laundering.
To mitigate the risk of occurrence of disasters,
64
Liberty Seguros has a business-continuity policy
in force and a disaster recovery plan, which is
updated and tested on an annual basis.
In respect of the outsourcing risk, the Company
has entered into contracts with several service
providers, which define the service levels to be met
and the respective penalties for failure to comply.
The contracts contain confidentiality clauses.
During 2010 there were no significant alterations
to procedures or reorganisation at the level of the
various divisions. It was therefore considered that
the conditions were extant for a new appraisal
of the risk and control matrices with regard to
inherent risk, residual risk and tolerance levels for
the various types of risk analysed within the scope
of Risk Management, which include the operational risk.
The risk matrices are analysed by the Risk
Management Committee and include the annual
report on Current Status of the Risk Management
System, which is produced in accordance with the
Liberty Seguros Risk Management Policy.
4.4. Amount of impairment
losses recognised and written
back during the period in respect of reinsurance assets
The provision for credits generated by Reinsurance Operations is influenced in the sum of
€1,355,742 in respect of a provision set aside to
cover the possible non-recovery of the share of
a reinsurer, Suisse Ré, in a claim that is pending
settlement. The balance receivable that is at the
root of this amount of provision is carried, under
Assets, under Provision for Reinsurance Ceded
Claims. This means that the heading Assets,
Receivables for other reinsurance operations shows
a negative balance.
4.5. Adequacy of premiums and
provisions
Non-Life Segment
The adequacy of the technical provisions is checked by means of actuarial estimates of the final
cost of claims, comparing these estimates with the
provisions carried in the Company’s balance sheet.
The actuarial techniques used are based on the
Chain Ladder models, with due separation of the
claims into homogeneous groups and incorporation of the necessary security mechanisms in cases
of greater volatility. Considering the methodology
used to evaluate its estimates, the Company considers that its provisions are adequate and robust.
The adequacy of the premiums in the Non-Life
business lines is checked on the basis of the year’s
income statement and of the projection of future
results, considering cancellations, frequency evolutions, average cost and average premium in each
line and for each cover. This evaluation does not
consider the unpredictable impact of the actions
of the competitors on price levels.
Life Segment
The adequacy and sufficiency of the premiums
and provisions of Life business are assessed on
the basis of an embedded value model, which
generates future cash flows and profits on the
basis of the portfolio that exists at the end of each
calendar year.
The calculation assumptions are based on the best
estimate, taking into account inflation and other
economic variables, as well as mortality experience, policy surrenders and cancellations in the
various products.
The analysis performed shows that for the base
scenario, which corresponds to our best estimate,
the present value of future profits is positive.
4.6. Information on the main
ratios without deduction of
reinsurance ceded
Non-Life Segment
The claims ratio for Motor business remained
stable in 2010 when compared with 2009.
The costs ratio also remained at the level of the
previous year.
December 31, 2010
Loss Ratio DI + RA
Costs Ratio
Combined Ratio DI + RA
Operating Ratio
Ceding Ratio
Net Loss Ratio Third Party Liability
December 31, 2009
Loss Ratio DI + RA
Costs Ratio
Combined Ratio DI + RA
Operating Ratio
Ceding Ratio
Net Loss Ratio Third Party Liability
Life Segment
Net Claims Ratio Direct Insurance
Total:
64%
32%
95%
77%
8%
Accidents
and Health
71%
27%
98%
40%
4%
Fire & Other
Damage
56%
36%
92%
-20%
21%
-6%
-19%
-11%
64%
32%
95%
77%
8%
Accidents
and Health
71%
27%
98%
40%
4%
Fire & Other
Damage
56%
36%
92%
-20%
21%
-6%
-19%
-11%
Non-life
Non-life
Maturities
Redemption
Claims
The operational ratio is negative in Fire and Other
Damage as a result of the general increase of claims
in this business line during the year caused by the
storms in Madeira.
The claims rates of the other lines are consistent
with those of the previous year.
Motor
Other
70%
33%
103%
34%
1%
16%
25%
41%
23%
45%
-8%
-1%
Motor
Other
70%
33%
103%
34%
1%
16%
25%
41%
23%
45%
-8%
-1%
2010
Insurance
Investment
Contracts
Contract
32%
8%
67%
7%
18%
1%
117%
16%
Claims Ratio - Third
Party Liability
Claims Ratio – Third
Party vs. Direct
Insurance
Ceding Ratio
Operating Ratio
4.7. Reimbursements & Salvage
Property
Amounts recoverable in respect of payments made
against claims, generated by the acquisition of
rights or of ownership, are recorded under the
following headings:
2010
Other Policyholders reimbursement of claims
Total:
43%
-
112%
-
7%
-
14%
-
-
3%
30%
3%
54%
The direct insurance claims costs ratio suffered an
20 p.p. decrease in 2010, essentially the result of
the reduction of the surrender rate compared to
the previous year.
The ceded-reinsurance claims ratio versus direct
insurance stands at 7% in 2010, compared to
14% in 2009, the ceded-reinsurance claims rate
standing at 43% in 2010 and at 112% in 2009,
the result of the significant decrease of risk-product claims in 2010.
2009
6 983 821
5 108 788
6 983 821
5 108 788
2009
Insurance
Investment
Contracts
Contract
22%
0%
94%
6%
22%
0%
137%
6%
1%
7%
The amount recorded under reimbursements is
always the result of express, solvent acceptance by
third parties as to the reimbursement considered.
The reimbursements are in respect of:
> IDS reimbursements in the sum of
€5,406,573 (€4,245,284 in 2009).
> other reimbursements stemming from
claims in the sum of €1,577,170
(€863,504 in 2009).
The Company considers there is no probability
of non-recovery of the amounts in respect of IDS
reimbursements and no impairment loss has therefore been set aside under IAS 39.
With regard to other reimbursements of claims,
the Company has assessed the possibility of recovery as defined in the accounting policy of Note
3.1(m). It concluded that there was no reason for
impairment and no loss was therefore taken to
profit & loss, in keeping with the criteria defined
in the IAS cited above.
65
5. Liabilities for
investment contracts
In keeping with the requirements of IFRS 4,
insurance contracts issued by Liberty Seguros that
do not expose the insurer to a significant insurance
risk and do not involve discretionary profit sharing
are classified as investment contracts.
Financial liabilities correspond to the net value of
deposits received, plus the defined technical interest rates or the income credits generated by the
investments allocated to the investment contracts,
less the respective acquisition, management and
collection costs and the benefits paid.
The breakdown of Financial Liabilities of the
deposit component of insurance contracts and
of contracts involving operations considered for
accounting purposes to be investment contracts, in
2010 and 2009, is as follows:
Investment Contracts - Total
Balance at the start of the year
Deposits received
Commissions
Subscription & Redemption
Management
Benefits paid
Interest credited
Other movements
Balance at the end of the year
2010
18 753 197
540 481
-110 963
-20 122
-90 841
-3 420 813
335 266
2 907
16 100 075
2009
20 317 767
574 177
-124 912
-24 221
-100 691
-2 736 187
716 243
6 109
18 753 197
2010
16 258 002
540 481
-107 667
-20 122
-87 545
-2 077 473
279 220
-388
14 892 174
2009
17 816 893
574 177
-118 926
-24 115
-94 811
-2 633 656
619 702
-186
16 258 002
2010
2 495 194
0
-3 296
0
-3 296
-1 343 340
56 047
3 296
1 207 901
2009
2 500 874
0
-5 985
-106
-5 879
-102 531
96 541
6 295
2 495 194
Contracts linked to Investment Funds
Deposits received
Commissions
Management
Benefits paid
Interest credited
Other movements
Fixed-income Product Investment Contracts
Deposits received
Commissions
Management
Benefits paid
Interest credited
Other movements
66
6. Financial Instruments
6.1. Holdings and financial
instruments
The valuation criteria for investments are detailed
in point b.1 to b.3 of nº 3.1 of these Notes.
List of holdings and financial instruments other
than investment contracts, in keeping with the distinction made in IFRS 4 by referral to IAS 39, in
accordance with the model presented in Annex 1.
The Company’s financial instruments comprise:
> debt securities classified as “Availablefor-sale”;
> Mutual Fund units classified as “at fair
value through profit & loss”;
> short-term deposits at banking institutions, loans on policies and sureties,
classified as “Loans and receivables”.
6.4. Portfolio reclassifications
and transfers
In accordance with Point 3.1.b.4, the Company
has not reclassified its investment portfolio.
However, in accordance with the criteria established in ISP Circular 3/2008, the following
transfers of financial assets were undertaken between portfolios, though maintaining the original
classifications of the financial instruments:
Transfer date: 16/11/2010
> Original portfolio: OUTRAM
> Fair value: €936,285.00
> Book value: €1,487,295.59
> Potential gains: - €551,010.59
> Destination portfolio: FREE
> Fair value: €936,285.00
The transfers of financial assets performed in 2009
between investment portfolios occurred for loss of
credit-quality reasons.
6.11. Fair value
a) Methods and assumptions used to determine
fair value
Financial assets
Note 3.1.b.2. describes the criteria and bases of
measurement applied to the financial instruments
held by the Company.
The following paragraphs reflect the procedures
adopted to determine the fair value of the securities in the portfolio.
The Company determines the fair value of
the securities on the basis of the quoted prices
obtained from Bloomberg, when available. In the
absence of a quoted price or if there is evidence
of non-existence of an active market, fair value is
determined using the prices of similar recent transactions carried out under market conditions or
on the basis of valuation methodologies provided
by specialised entities, based on discounted future
cash flows considering market conditions, yield
curve and volatility factors.
Thus, and in keeping with IAS 39, paragraphs AG
74 to AG 79, for securities for which there is no
active market, the Company will apply as the means to determine the fair value the mark-to-model
valuation method developed in-house, based on
the discounted cash flow method.
This model was applied only to portfolios classified as “Available-for-sale” and to securities characterised as being traded on illiquid markets. This
model will be reviewed and calibrated monthly.
In keeping with the International Accounting
Standards and with Circular 11/2008 of December 16, the Company adopts this process by virtue
of the fact that the present working of the markets
implies an excessive volatility effect for some
securities.
To classify securities the Company has defined a
non-cumulative set of criteria, used as the basis for
the valuation of the portfolio, in particular:
(i) non-existence of transactions of securities
issued by a given issuer;
(ii) widening of the spread between Bid and Ask
prices of each financial asset;
(iii) volatility of the price of securities measured
over 12 months, and, in the event that, though
volatile, it presented short intervals, it was added
to the series of events of the previous year;
(iv) number of days without quotation.
their calculation, particularly the discount spreads,
can be observed. Level 3 corresponds to financial
assets valued on the basis of valuation models
underpinned by data not sustained by market
evidence. Level 3 includes the holding in Audatex
values at cost and loans on policies.
The Company’s financial assets are therefore
broken down as follows.
Those securities falling within the above criteria
were then valued on the basis of a model developed in-house, based on the use of:
(i) Discounted Cash Flow Method;
(ii) As discount spreads:
1) Yield associated with public debt financial assets
to determine the country risk associated with the
benchmark of the security in question;
2) Yield of the swap curve associated with the benchmark country to determine market liquidity;
3) CDS of the financial asset to measure the credit
risk of the issuer company.
In keeping with the classification provided for in
IFRS 4, paragraph 27 A, the Company organises
its financial instruments in the light of the fairvalue hierarchy, in which 3 levels are identified.
Level 1 considers all financial investments whose
fair value is obtained through prices quoted in
active markets. Under Level 2 we considered
financial investments carried using the mark-tomodel method, for although their prices cannot be
observed on the market, the assumptions used in
67
December 31, 2010
Debt Instruments
Equity Instruments
Loans against policies
Financial assets classified in the initial recognition at fair value through profit & loss
Debt Instruments
Equity Instruments
Level 1
Total:
December 31, 2009
Debt Instruments
Equity Instruments
Debt Instruments
Equity Instruments
Total:
AThe Company performed an impairment test
of the assets, and no need to record any sum was
encountered.
It was determined that presentation of the reconciliation of movements at level 3 was not relevant.
There were no transfers between levels during the
year.
Financial liabilities
Other than the Unit Links the Company has no
financial liabilities carried at fair value.
The assumptions used for valuation purposes are
described in Note nº 3.1.
68
6.16. & 6.17 Nature and extent of
risks resulting from financial
instruments
a) Risk exposure and origin
The financial instruments held by the Company
on the reporting date are exposed to a number of
financial risks, namely market risk, credit risk and
liquidity risk.
Market Risk
Among other things, the market risk reflects
movements that could impact on the fair value of
the Company’s assets, caused by interest-rate and
exchange-rate fluctuations. The concentration
risk by sectors of activity and by country is also
included in this point.
The following table shows the breakdown of our
financial assets.
Level 2
Level 3
Total Fair Value
636 659 708
636 094 011
565 697
0
14 940 590
13 410 099
1 530 491
0
651 600 298
0
0
0
0
0
0
0
0
0
82 800
0
22 500
60 300
0
0
0
0
82 800
636 742 508
636 094 011
588 197
60 300
14 940 590
13 410 099
1 530 491
0
651 683 098
Level 1
Level 2
Level 3
Total Fair Value
628 643 913
628 274 561
369 351
0
16 343 709
14 726 062
1 617 647
0
644 987 622
0
0
0
0
0
0
0
0
0
22 600
0
22 500
100
0
0
0
0
22 600
628 666 513
628 274 561
391 851
100
16 343 709
14 726 062
1 617 647
0
645 010 222
Other
636 742 508
Financial assets classified
in the initial recognition
0
at fair value through profit
& loss
Total: 636 742 508
2010
UnitLinked
Total
2009
UnitLinked
Other
0 636 742 508 628 666 513
14 940 590
14 940 590
0
14 940 590 651 683 098 628 666 513
Fixed-income securities account for 99.75% and
99.69% for 2010 and 2009 respectively.
Total
0 628 666 513
16 343 709
16 343 709
16 343 709 645 010 222
In terms of concentration by industry sector, the
Company’s structure is as follows:
Other
Industry sector
Government
Financial
Industrial
Energy
Utilities
Technology & communications
Basic materials
Cyclic consumption
Non-cyclic consumption
Sundry
180 371 028
165 134 193
27 579 815
20 637 774
94 806 976
59 817 874
18 462 805
37 473 082
20 078 088
12 380 874
Total: 636 742 508
2010
Unit-Linked
Total
%
Other
2009
Unit-Linked
Total
%
2 707 079
4 523 985
1 050 503
220 453
522 429
1 677 020
1 294 663
1 205 295
0
1 739 165
183 078 107
169 658 178
28 630 318
20 858 227
95 329 404
61 494 893
19 757 468
38 678 377
20 078 088
14 120 039
28%
26%
4%
3%
15%
9%
3%
6%
3%
2%
194 790 218
171 896 840
28 725 959
20 016 882
87 910 230
57 871 053
17 050 263
17 155 274
21 787 865
11 461 929
3 149 351
6 592 779
541 418
2 023 423
0
1 179 138
0
509 273
522 022
1 826 305
197 939 568
178 489 619
29 267 377
22 040 306
87 910 230
59 050 191
17 050 263
17 664 547
22 309 887
13 288 234
31%
28%
5%
3%
14%
9%
3%
3%
3%
2%
14 940 590
651 683 098
100%
628 666 513
16 343 709
645 010 222
100%
And lastly, the concentration of the Liberty
Seguros investment portfolio by issuer is broken
down as follows:
Other
Country
Germany
Spain
France
Great Britain
Italy
Netherlands
Portugal
United States
Belgium
Other
Total:
64 426 092
48 980 276
108 120 468
45 436 171
46 126 947
94 834 528
24 959 162
75 663 201
16 127 960
112 067 704
636 742 508
2010
Unit-Linked
1 280 844
1 747 495
1 109 404
2 179 881
2 418 256
1 205 295
0
737 508
0
4 261 907
14 940 590
Total
65 706 936
50 727 770
109 229 872
47 616 051
48 545 204
96 039 823
24 959 162
76 400 709
16 127 960
116 329 611
651 683 098
%
Other
10%
8%
17%
7%
7%
15%
4%
12%
2%
18%
100%
61 024 203
45 073 415
105 929 370
43 795 064
49 772 772
100 067 602
32 377 195
77 763 866
16 462 033
96 400 992
628 666 513
2009
Unit-Linked
763 538
464 468
1 154 075
2 594 976
2 456 237
1 357 364
1 617 647
2 569 116
0
3 366 287
16 343 709
Total
61 787 741
45 537 883
107 083 445
46 390 040
52 229 010
101 424 966
33 994 842
80 332 982
16 462 033
99 767 278
645 010 222
%
10%
7%
17%
7%
8%
16%
5%
12%
3%
15%
100%
69
Credit Risk
The credit risk is associated with the risk of a party
to a financial instrument not fulfilling its obligations, therefore causing a financial loss.
The evolution of the Company’s credit structure is
reflected in the following tables:
December 31, 2010
AAA
149 823 392
0
Total: 149 823 392
December 31, 2009
AAA
158 731 663
initial recognition at fair valu
0
Total: 158 731 663
In both years the portfolio held by Liberty Seguros
was practically the same, and the rating variations
presented largely stem from their lowering by the
financial notation agencies.
Considering just the credit quality of those
financial assets that have not matured and are
not impaired, Liberty Seguros had the following
credit-risk structure as at December 31, 2010:
(i) 22.99% of the portfolio comprises
assets having the best credit quality
(AAA);
(ii) assets rated better than A– account
for 70.63% of the portfolio;
(iii) portfolio assets having a rating of
BB or less account for 5.86%.
The Company’s credit risk is adequately controlled through the investment management policy
in force.
70
AA
A
BBB
BB
C
No-rating
Unit-Linked
Total
55 193 755
255 273 986
153 207 031
22 595 846
565 697
82 800
0
636 742 508
0
0
0
0
0
0
14 940 590
14 940 590
55 193 755 255 273 986 153 207 031
22 595 846
565 697
82 800
AA
A
BBB
BB
C
No-rating
14 940 590 651 683 098
Unit-Linked
Total
53 834 715
252 780 522
141 941 040
20 986 622
369 351
22 600
0
628 666 513
0
0
0
0
0
0
16 343 709
16 343 709
53 834 715 252 780 522 141 941 040
20 986 622
369 351
22 600
16 343 709 645 010 222
The securities that make up the Company’s
portfolio include preference shares (issued in US
dollars) in GMAC in the sum of €369,351, which
are assigned to the Not-Allocated portfolio. These
shares stem from the renegotiation of the bonds
held by the Company in 2008.
The market value as at December 31, 2010, as
well as the respective weight as a proportion of the
Company’s total investment portfolio involving
public-debt securities of Portugal, Spain and
Greece are as follows.
Public Debt
Instruments
Portugal
Spain
Greece
Total:
December 31, 2010
24 876 362
13 098 181
945 208
38 919 751
% of total investments
3,82%
2,01%
0,15%
5,97%
With regard to the public-debt securities of the
countries referred to above, there is no objective
default since no payments have been suspended.
There is a possibility that there will be recourse to
the European Financial Stabilisation Fund and to
the IMF, providing an optimistic position with
regard to future evolution.
Liquidity Risk
The liquidity risk stems from the possibility that
the Company will not hold assets of sufficient
liquidity to meet its liabilities.
The following tables show the segmentation of our
financial assets by their maturities at the end of the
past two years.
Comparing the two years, it can be seen that a
prudent liquidity-risk management policy has
been implemented, in which the option, in the
light of market conditions, was to reduce the
amounts invested in the long-term, giving preference to short-term investments.
b) Risk-management objectives, policies and
procedures
Within the scope of the in-house control and
management of the investment portfolio held by
Liberty Seguros a periodic study is performed to
analyse and monitor the sundry risks affecting our
portfolio.
The analysis that is performed involves to a greater
extent market-risk issues, especially variations of
the interest rate measured by Modified Duration,
concentration by industrial sector and by issuing
entity. Within the scope of the credit risk, the variations of the credit ratings provided by respective
entities and the respective concentrations are also
monitored.
Lastly, an analysis is also performed of the liquidity risk, requiring a study of the mismatch between
assets and liabilities so as to ensure that the risk is
properly controlled.
Note 4.3 details the internal risk-management
policy and the inherent risks.
December 31, 2010
< 1 year
Total:
December 31, 2009
Total:
f) Sensitivity analysis by type of market risk
Market risk is understood to be the risk that
the fair value or future cash flow of a financial
investment will fluctuate as a result of alterations to market prices which, in the case of the
financial instruments held by the Company on the
reporting date, December 31, 2010, are subject to
interest-rate and exchange-rate fluctuations.
Management of these risks is essentially a part
of the investment management policy in force,
which is intended to maximise the return on
the investment portfolio while complying with
the restrictions issued by the supervisory entity.
Another goal is to optimise the risk/return ratio so
as to obtain growth of income and profits in the
long term.
The sensitivity analysis performed on interest rates
was performed in two separate parts. We used,
on the one hand, the modified duration, which
reflects the sensitivity of the market value of the
portfolio to percentage alterations of the interest
rates and, on the other, the VaR (Value at Risk),
which provides, for a certain time horizon and
with a given probability, the maximum expected
loss.
1-3 years
3-5 years
5-15 years
> 15 years
Without
maturity
Total
37 396 184
2 804 703
115 332 064
7 771 645
117 178 564
2 833 751
279 463 690
0
87 289 206
0
82 800
1 530 491
636 742 508
14 940 590
40 200 887
123 103 709
120 012 314
279 463 690
87 289 206
1 613 291
651 683 098
< 1 year
1-3 years
3-5 years
5-15 years
> 15 years
Without
maturity
Total
32 667 994
6 877 339
62 502 896
4 555 821
131 272 215
3 292 901
309 737 774
0
92 093 782
0
391 851
1 617 647
628 666 513
16 343 709
39 545 333
67 058 717
134 565 116
309 737 774
92 093 782
2 009 499
645 010 222
The investment portfolio on the report date has
a modified duration equal to 5.45, which means
that it can be expected, if interest rates rise 1 p.p.,
that the value of our portfolio will fall by 5.45%.
Compared with the previous year it has fallen,
which means that our exposure to interest-rate
fluctuations has fallen during the year under
review. As at December 31, 2009, the modified
duration of the portfolio stood at 5.78%.
Using VaR to analyse the market risk, we find
that over a one-year time horizon there is a 1%
probability of generating a loss on the whole of
the portfolio of more than 6.59% of its present
value as at December 31, 2010. The same analysis
performed with reference to December 31, 2009
provided a VaR of 10.77% for the portfolio as a
whole. As in the case of the conclusion drawn on
the evolution of the modified duration, the VaR
has also declined, illustrating the reduction of the
exposure of our portfolio to the market risk.
Within the market risk, the investment portfolio is
also affected by the exchange-rate risk. The Company has just one asset issued in USD, the preference shares in GMAC, the fair value of which on
reporting date amounted to €564,696.75. This
asset is included in the Company’s Not-Allocated
portfolio, and does not therefore involve technical
provisions.
To measure the sensitivity of these shares to
exchange-rate fluctuations, their performance
throughout 2010 was analysed under ceteris paribus conditions, showing a maximum exchangerate risk loss of €27,561.
71
8. Cash, cash equivalents
& sight deposits
The breakdown of this heading as at December
31, 2010 & 2009 is as follows:
Cash
Bank deposits
at sight
Cash equivalents
Cash & cash
equivalents
Other balances
Balance-sheet
balances
2010
2 285
2009
4 420
920 113
2 904 906
24 891
12 210
31 055
72 947
0
0
978 344
2 994 483
9. Land & Buildings
9.1. Valuation model
The property acquired by the Company during
the year is carried as Premises and does not affect
technical provisions. It is valued using the Cost
Model.
It is condominium unit ‘J’ of the urban property registered as horizontal property at the First
Conservatory of the Almada Land Registry under
number nine hundred and seventy-five.
9.2. Criteria used to differentiate land and buildings held
for income and those used as
premises.
The building was acquired by the Company for
use as its own premises and is classified as such.
72
9.6. Measurement Criteria, Methods and Depreciation Rates
used.
The measurement criterion used to determine the
value of the asset was the acquisition cost set out
in the notarial deed, plus the respective taxes, the
municipal transaction tax and stamp duty.
The straight-line depreciation method was
used and, for tax purposes, the useful life of the
depreciable asset is the period over which its value
will be fully written down, in this case 50 years,
in keeping with Regulatory Decree 25/2009 of
September 14, using the specific depreciation or
amortisation rates fixed in Table I appended to the
decree.
The minimum useful life was adopted since it was
considered the correct period to fully write the
asset down.
The building was depreciated/amortised in December 2009 on the basis of the annual rate over
the number of months as from the time the asset
came into use on December 2, 2009.
To comply with Article 10.2(a) of Regulatory
Decree 25/2009 and since there was no express
indication of the value of the land, the provisions
of Article 10.3(a) were applied, fixing the value of
the land at 25% of the total value.
9.7. & 9.8. Gross carrying cost
and accumulated depreciation
at the start and end of the period
The detail of the real-estate asset as at December
31, 2010 & 2009,is as follows:
Gross Value
Opening Balance
Additions resulting from
improvements
Additions resulting from
acquisitions
Transfers
Closing Balance
Land
Accumulated depreciation
Opening Balance
Depreciation charge for the year
Transfers
Closing Balance
Land
2010
Buildings
643 800
69 128
0
712 928
2010
Buildings
-805
-9 891
0
-10 696
Total
643 800
69 128
Total
0
0
0
712 928
Total
-805
-9 891
0
-10 696
2009
Buildings
Land
0
643 800
643 800
643 800
0
643 800
2009
Buildings
Land
-805
0
-805
Total
0
-805
0
-805
9.20. Indication and quantification of restrictions to ownership and assets given to secure
liabilities
The are no restrictions to the ownership of the
acquired asset.
10. Other tangible
fixed assets
(except land & buildings)
10.1. Tangible asset management
criteria
The measurement criteria are described in Note
3.1.
10.2. Movement under acquisitions, transfers, write-offs,
disposals and depreciation
The movement under tangible fixed assets over the
year is presented in the following table:
2010
HEADINGS
Opening Balance
Gross
Depreciavalue
tion
Increases
AcquisiRevaluations
tions
Transfers &
Write-offs
Depreciation for the year
RegularisaIncrease
tion
Disposals
Closing
Balance
Net value
TANGIBLE ASSETS
Office equipment
Machines & tools
Hardware
Fixtures & fittings
Transport equipment
Hospital equipment
Other tangible fixed assets
Fixed assets in progress
Advances on account
614 959
235 088
5 062 973
8 235
537 887
0
139 540
474 657
167 521
3 817 949
8 235
455 074
0
139 540
0
6 598 682
5 062 976
22 903
1 527 183
856 195
2 406 281
0
237 335
39 607
24 665
1 068 242
233 865
323 001
129 943
308 736
1 262 458
542 601
560 337
0
100 695
65 805
1 700 495
0
794 799
0
0
0
0
2 661 794
2009
HEADINGS
Opening Balance
Gross
Depreciavalue
tion
Increases
AcquisiRevaluations
tions
Transfers &
Write-offs
Disposals
RegularisaIncrease
tion
Closing
Balance
Net value
TANGIBLE ASSETS
Office equipment
Machines & tools
Hardware
Fixtures & fittings
Transport equipment
Hospital equipment
Other tangible fixed assets
Advances on account
568 362
277 796
4 874 565
8 235
1 675 472
0
146 149
24 538
412 798
177 447
3 455 773
8 235
1 419 988
0
127 816
0
46 597
5 030
859 857
7 575 117
5 602 056
941 600
671 448
61 859
37 811
1 031 187
47 737
669 011
1 167 701
158 634
1 123 548
18 333
6 609
1 307 824
1 846 905
47 737
30 116
6 609
24 538
0
78 884
1 839 149
140 303
67 567
1 245 025
0
82 813
0
0
0
1 535 708
10.3. Reconciliation of tangible assets at the start and end
of the period
The reconciliation of tangible assets is presented in Note 10.2 of the Notes to the Accounts.
73
11. Allocation of investments and other assets
As as December 31, 2010, the breakdown of the investment headings in accordance with the respective
allocation is as follows:
With-profits life
insurance
Headings
Cash & cash equivalents
Land & buildings
Financial Assets held for trading
Financial assets classified in the initial recognition
Hedge derivatives
Available-for-sale financial assets
Held-to-maturity investments
Other assets
Without-profits
life insurance
Life insurance and
transactions classified as investment
contracts
39 860
Non-Life
Insurance
Not allocated
(account 23)
938 484
702 232
978 344
702 232
0
0
14 940 590
274 243 664
Total:
82 059
8 108
274 373 690
TOTAL
34 389 441
34 389 441
1 218 781
16 159 371
14 940 590
301 959 093
778 013
450 300
16 032 737
320 860 859
24 931 528
24 931 528
0
636 742 508
778 013
0
532 359
16 040 845
670 714 890
Information in respect of 2009:
With-profits life
insurance
Headings
Cash & cash equivalents
Land & buildings
Hedge derivatives
Available-for-sale financial assets
Held-to-maturity investments
Other assets
Life insurance and
transactions classified as investment
contracts
913 377
Non-Life Insurance
Not allocated
(account 23)
2 081 106
642 995
273 851 237
58 761
13 216
274 836 590
36 104 130
36 104 130
16 343 709
289 855 225
959 867
16 343 709
TOTAL
2 994 483
642 995
0
0
16 343 709
Total:
74
Without-profits
life insurance
248 219
13 250 638
307 038 050
28 855 922
28 855 922
0
628 666 513
959 867
0
306 980
13 263 853
663 178 401
12. Intangible assets
12.1 The measurement criterion used by the
Company is the cost model, in which intangible
assets, following their initial recognition, are
carried at cost less accumulated depreciation and
any impairment losses.
12.3 The accounting policies applicable to this
Balance Sheet heading are described in Note
3.1(d).
The Company’s intangibles involve only software
costs. Movement under acquisitions, transfers,
write-offs, disposals and amortisation during the
year is presented in the following table:
There follows information for 2010 in respect of
the outstanding period of amortisation:
2011
332 561
Future amortisation of Intangible Assets
2012
52 398
2013
35 493
2014
0
2010
Opening Balance
HEADINGS
INTANGIBLE ASSETS
Software costs
Formation & set-up costs
Research & development costs
Expenditure on rented premises
Key money
Other intangible fixed assets
Advances on account
Gross value
5 426 983
Depreciation
4 587 405
Increases
Increases
Transfers &
Write-offs
Revaluation
Disposals
Increase
152 237
Regularisation
571 362
420 452
308 690
5 426 983
4 587 405
Closing
Balance
Net value
308 690
460 927
0
0
0
571 362
0
729 142
2009
Opening Balance
HEADINGS
INTANGIBLE ASSETS
Software costs
Formation & set-up costs
Research & development costs
Expenditure on rented premises
Key money
Other intangible fixed assets
Advances on account
Gross value
Depreciation
Increases
Increases
5 293 709
4 005 914
133 274
5 293 709
4 005 914
133 274
Transfers &
Write-offs
Revaluation
Disposals
Increase
Regularisation
581 492
0
0
0
581 492
Closing
Balance
Net value
839 577
0
839 577
75
During 2010 the Company made a start to
overhauling its entire core information technology
system. The total estimated cost of this new application will be in the order of €6.5 million and
its implementation will extend over the coming 3
years. The project involves three distinct stages in
keeping with the technical business lines to be developed. Therefore, at the end of each stage all the
external costs inherent in its development will be
transferred from intangible fixed assets in progress
to intangible fixed assets. The estimated useful life
of this new software is 6 years.
As at December 31, 2010, the total costs borne
in respect of the development of this system ,
recorded under intangible fixed assets in progress,
amounts to €96,000.
13. Other Provisions
and Adjustments
to Asset Accounts
13.1. Breakdown of the
adjustments and other
provisions accounts
by the respect sub-accounts
There follows a breakdown of the adjustments and
other provisions accounts:
2010
Accounts
490 Provision for receipts pending collection
491 - Doubtful debt provisions
492 - Provisions for contingencies & liabilities
Opening balance
0
3 127 811
1 177 474
4 305 285
Total:
Increase
0
161 785
0
161 785
Reduction
0
160 247
333 063
493 310
Closing balance
0
3 129 349
844 411
3 973 759
2009
Accounts
Opening balance
490 Provision for receipts pending collection
491 - Doubtful debt provisions
492 - Provisions for contingencies & liabilities
387 437
3 134 389
1 663 129
5 184 955
Total:
13.2. Description of the
nature of the obligation
13.2.1 Other Provisions
This heading in the sum of €844,411 includes:
a) provision for work on rented buildings
A provision has been sent aside for works on
rented buildings in the sum of €750,000. This
was the maximum sum of the co-payment agreed
at the time of the sale, between the Company and
the new owner.
b) Provision for taxes in the sum of €81,411,
involving:
(i) IRS (personal income tax) in the sum of
€74,086;
(ii) IRC (corporate income tax) in the sum of
€7,325;
76
Increase
0
452 599
300 000
752 599
Reduction
387 437
459 177
785 655
1 632 269
Closing
balance
0
3 127 811
1 177 474
4 305 285
13.2.2 Doubtful debt provision
The breakdown of the doubtful debt provision
is as follows:
Headings
Other debtors For Direct Insurance
transactions
Other debtors - For
Reinsurance transactions
Other Debtors for
other transactions
Total:
2010
1 440 679
2009
1 290 175
1 355 742
1 345 120
332 928
492 517
3 129 350
3 127 812
The provision for credits generated by
Reinsurance Operations is influenced in the sum
of €1,355,742 in respect of a provision set aside
to cover the possible non-recovery of the share of
a reinsurer, Suisse Ré, in a claim that is pending
settlement in that it is still undergoing litigation.
The balance receivable that is at the root of this
amount of provision is carried, under Assets,
under Provision for Reinsurance Ceded Claims.
This means that the heading Assets, Receivables
for other reinsurance operations shows a negative
balance.
14. Insurance Contract
Premiums
14.1. Premiums recognised
resulting from insurance
contracts
Liberty Seguros, SA, closed 2010 recognising
under profit & loss – gross direct insurance
premiums written the sum of €180,442,269,
of which €155,973,206 in respect of Non-Life
business and the remaining €24,469,063 in
respect of Life business.
14.2. Life Business Insurance Contract Premiums
There follows the breakdown of premiums
associated with Life business insurance contracts:
insurance contracts issued by Liberty Seguros
in respect of which there is only a transfer
of a financial risk without discretionary
profit-sharing are classified as investment contracts
and are carried under liabilities. This classification
includes contracts in which the investment risk
is borne by the policyholder and without-profits
fixed-rate contracts.
14.3. Non-life business insurance
contract premiums:
Insurance contract premiums are detailed in Note
4 of the Notes to the Accounts.
Gross direct insurance premiums written
In respect of personal contracts
In respect of group contracts
Periodic
Non-periodic
On without profits contracts
On with-profits contracts
Contracts in which the investment risk is borne by the
Policy Holder
Gross reinsurance accepted premiums
Reinsurance (Ceded) balance
2010
25 210 104
2009
26 218 241
20 086 833
5 123 271
25 210 104
17 632 487
7 577 618
25 210 104
4 223 242
20 986 863
20 691 139
5 527 102
26 218 241
17 661 317
8 556 924
26 218 241
2 834 202
23 384 039
25 210 104
26 218 241
-156 472
93 397
15. Insurance contract
commissions received
15.1. Accounting policies
adopted for recognition
of commissions
In accordance with IAS 18, recognition of c
ommissions complies with the accrual accounting
principle.
Commissions and other similar income are
connected with without-profits capitalisation
product subscription and management
commissions, especially fixed-rate capitalisation
products and products in which the investment
risk is born by the policyholder.
insurance contracts issued by the Company in
respect of which there is only a transfer of a f
inancial risk without discretionary profit-sharing
are classified as investment contracts and are
carried under liabilities.
Therefore, contracts in which the investment risk
is borne by the policyholder and without-profits
fixed-rate contracts are no longer recognised in the
form of premiums and only their subscription and
management commissions are recorded as income.
The accounting policies adopted for the treatment
of commissions are described in Note 3.1(n) and
3.1(r).
15.2. Commissions received
by type of contract
Commissions received comprise subscription,
management and surrender commissions in
respect of the various types of contracts.
In accordance with the requirements of IFRS
4, insurance contracts and operations classified
for accounting purposes as investment contracts
have come to be considered deposits of a financial
liability without recording premiums, and income
is considered to be only the subscription,
management and surrender commissions,
the breakdown of which is as follows:
Subscription
Commissions
Redemption
Commissions
Sub-Total
Management
Commissions
Sub-Total
Total Commissions
2010
18 395
2009
19 135
6 359
9 718
24 753
86 210
28 853
96 059
86 210
110 963
96 059
124 912
77
16. Investment income / revenue
16.1. Accounting policies adopted for recognition of income
The policies adopted for the recognition of revenue are described in Notes 3.1(b2) and 3.1(b3).
16.2. Breakdown of income by investment category
The breakdown of the investment income headings net of financial costs (no costs imputed)
in 2010 & 2009 is as follows:
Life business:
Loans & accounts receivable
Cash, cash equivalents & sight deposits
Non-Life business:
Not allocated:
2010
Interest
Dividends
0
17 871
0
0
14 545 624
638 264
0
0
299
0
0
0
0
78
2009
Interest
Dividends
0
0
14 563 495
13 383
638 264
0
0
16 204 414
861 105
0
16 217 797
861 105
0
0
0
2 284
0
2 284
0
0
12 694 544
0
0
12 694 544
0
0
0
0
0
12 843 565
0
0
12 843 565
0
0
0
34 673
0
34 673
0
0
0
39 578
0
39 578
0
0
42 136
0
0
536 347
0
0
578 483
0
0
34 388
0
0
3 016 102
0
0
3 050 490
0
0
0
60 007
0
3 583
28 453 333
3 583
28 513 041
0
0
47 772
727 323
222 464
33 916 833
727 323
222 464
33 964 604
Financial income recorded under profit & loss comprises interest on debt securities and bank deposits,
recorded taking into account accrual accounting principles.
Also recorded under this heading are gains resulting from the amortisation process involving the use of the
effective interest method.
Total
Total
17. Gains & losses realised on investments
In 2010 & 2009, the breakdown of gains and losses realised on investments is as follows:
2010
Realised
Losses
Realised
Gains
Life business:
Non-Life business:
Not allocated:
Financial assets classified in the initial recognition a
t fair value through profit & loss
2009
Realised
Losses
Realised
Gains
Net
Net
0
86 559
147 216
0
0
260 514
0
86 559
-113 298
0
849 473
0
0
2 526 642
96 957
0
-1 677 168
-96 957
1 628 227
97 921
1 530 306
484 372
386 756
97 616
14 430
27 302
-12 872
0
1 831 939
-1 831 939
1.876.431
385.736
1.490.695
1.333.845
4.842.294
-3.508.449
18. Gains & losses stemming from adjustments
to the fair value of investments
In 2010 & 2009, the breakdown of gains and losses realised on investments is as follows:
2010
Perdas por
reduções no
justo valor
Ganhos por
aumentos no
justo valor
2009
Perdas por
reduções no
justo valor
Ganhos por
aumentos no
justo valor
Líquido
Líquido
Life business:
Land & buildings held
for income
Non-Life business:
Not allocated:
0
0
0
0
0
0
0
2 028 772
0
2 301 598
0
-272 827
0
2 737 912
0
1 863 690
0
874 222
0
0
2 028 772
0
0
2 301 598
0
0
-272 827
0
0
2 737 912
0
0
1 863 690
0
0
874 222
79
19. Profits and losses
on currency translation
differences
At this time the Company has no balances
expressed in foreign currency, with the exception
of the preference shares in GMAC in the sum of
€564,696.75.
Translation into euros of transactions in foreign
currencies is undertaken at the exchange rates
ruling on the dates of the transactions.
The figures for assets expressed in the currency of
countries not members of the Euro Area have been
translated using the latest reference rate published
by the Bank of Portugal.
Currency-translation differences between the dates
ruling on the contract date and those ruling on the
balance sheet date have been recorded in the Profit
& Loss Account for the year.
Profits and losses resulting from currencytranslation differences recorded in 2010 & 2009
in the profit & loss account, with the exception
of those that resulted from fluctuations of the
value of financial instruments carried at fair
value through profit & loss, amounted to a net
gain of €12,361.10 and a net loss of €571,406
respectively.
80
21. Sundry gains by
function and nature
21.1. Expenses by function
Expenses are initially recorded by nature and then
imputed to claims, acquisition, administrative
and investments in accordance with the plan of
accounts.
2010
LIFE
680-Staff costs
681-Third-party supplies & services
682-Taxes and charges
683-Depreciation for the year
684-Provisions for contingencies & liabilities
685-Interest expense
686-Commissions
NON-LIFE
680-Staff costs
686-Commissions
FREE
680-Staff costs
686-Commissions
TOTAL EXPENSES IMPUTED
680-Staff costs
686-Commissions
The criteria used to distribute the costs and
expenditure among the various functional areas
are described in Note 3.1(o).
In 2010 & 2009 the breakdown of costs & losses
incurred by the Company by function of expense
was as follows:
Acquisition
1 375 608
683 311
648 908
13 919
29 472
0
0
0
19 922 891
9 184 770
9 471 846
859 815
406 460
0
0
0
0
Management
3 980 054
1 715 171
1 922 714
2 941
339 228
0
0
0
10 223 791
4 456 789
4 937 583
6 975
822 443
0
0
0
0
Claims
681 664
328 638
296 157
46
56 823
0
0
0
5 970 797
3 724 101
1 835 284
222 206
189 207
0
0
0
0
21 298 500
9 868 080
10 120 754
873 734
435 932
0
0
0
14 203 845
6 171 960
6 860 297
9 916
1 161 671
0
0
0
6 652 462
4 052 738
2 131 441
222 252
246 030
0
0
0
Investments
640 925
3 728
797
0
40
0
7 001
629 359
602 554
14 109
2 280
0
37
0
0
586 128
44 656
2 986
448
3
0
0
0
41 220
1 288 135
20 823
3 525
3
77
0
7 001
1 256 707
Total
6 678 251
2 730 847
2 868 576
16 906
425 562
0
7 001
629 359
36 720 033
17 379 769
16 246 993
1 088 996
1 418 148
0
0
586 128
44 656
2 986
448
3
0
0
0
41 220
43 442 941
20 113 602
19 116 017
1 105 905
1 843 710
0
7 001
1 256 707
21.1.1 Net operating costs and expenses
Net operating costs and expenses are detailed in
the following table:
2010
2009
LIFE
680-Staff costs
686-Commissions
NON-LIFE
680-Staff costs
686-Commissions
FREE
680-Staff costs
686-Commissions
TOTAL EXPENSES IMPUTED
680-Staff costs
686-Commissions
Acquisition
1 817 337
829 971
923 475
15 180
48 711
0
0
0
19 107 894
8 292 784
9 540 619
803 836
470 654
0
0
0
0
0
0
0
0
0
0
0
20 925 232
9 122 755
10 464 094
819 017
519 365
0
0
0
Management
3 770 870
1 536 484
1 913 316
384
320 686
0
0
0
10 178 583
4 302 266
5 066 642
1 019
808 657
0
0
0
0
0
0
0
0
0
0
0
13 949 453
5 838 750
6 979 958
1 402
1 129 343
0
0
0
Claims
723 765
329 429
335 387
17
58 932
0
0
0
5 189 812
2 805 846
1 968 851
232 738
182 376
0
0
0
0
0
0
0
0
0
0
0
5 913 577
3 135 275
2 304 238
232 755
241 308
0
0
0
Investments
836 449
3 296
371
0
53
0
242 239
590 490
970 103
10 505
1 907
0
49
0
450 291
507 350
94 508
2 132
427
0
3
0
36 818
55 128
1 901 060
15 933
2 704
1
106
0
729 349
1 152 967
Total
7 148 421
2 699 180
3 172 549
15 581
428 381
0
242 239
590 490
35 446 392
15 411 401
16 578 019
1 037 593
1 461 737
0
450 291
507 350
94 508
2 132
427
0
3
0
36 818
55 128
42 689 322
18 112 714
19 750 995
1 053 175
1 890 122
0
729 349
1 152 967
Acquisition costs
Direct insurance
product intermediation
commissions
Costs imputed to the
acquisition function
Other
Sub-total
Deferred acquisition
costs
Administrative costs
Costs imputed to the
administrative function
Brokerage remuneration
Reinsurance
commissions
& profit-sharing:
Share of reinsurance
profits/(losses)
Sub-total
Total:
2009
18 963 610 18 298 578
21 298 500 20 925 232
7 101 065 6 355 897
47 363 175 45 579 707
-552 676
-785 140
16 041 691 15 656 534
14 086 333 13 949 453
1 955 358
1 707 081
-373 373
-12 293
0
0
-373 373
-12 293
62 478 817 60 438 808
The firm of official auditors and related enterprises
earn the remuneration established by contract,
divulged hereunder in keeping with legal requirements.
Legal Audit
Other Reliability Assurance Services
Statistical Tables
Risk Management and
Control
Tax Consultancy
Total:
2010
166 914
10 015
14 883
39 144
230 956
21.1.2 Financial costs
Other financial charges has to do with costs imputed to investments.
81
21.2. Expenses using a classification based on their nature
In 2010 & 2009 the breakdown of costs & losses incurred by the Company by nature of expense was as
follows:
Staff costs
Third-party supplies & services
Taxes & charges
Amortisation & depreciation
Tangible fixed assets
Intangible fixed assets
Other Provisions
Interest expense
Interest on Loans
Interest on reinsurers’ deposits
Monetary instrument management commissions
Total:
2010
20 113 602
19 116 017
1 105 902
1 843 712
571 362
1 272 350
0
7 001
0
7 001
1 256 707
43 442 941
2009
18 112 714
19 750 995
1 053 175
1 890 121
587 319
1 302 802
0
729 349
718 710
10 639
1 152 967
42 689 321
22.2. Amount of staff costs for the year
The breakdown of the staff costs headings in 2010 & 2009 is as follows:
Justification of the sum carried under Post-employment benefits is provided in Note 23.4.
2010
Remuneration
- of corporate officers
- of the staff
Charges on remuneration
Post-employment benefits
Defined-contribution plans
Defined-benefit plans
Other employee long-term benefits
Termination of employment benefits
Mandatory insurance
Other staff costs
Total:
2009
0
15 730 589
2 968 242
0
14 082 248
2 842 136
0
117 512
-12 758
0
328 137
981 880
20 113 602
0
390 555
-27 513
0
299 741
525 547
18 112 714
22. Staff costs
23. Obligations involving employee benefits
22.1. Average number of workers in service during the year
The average number of workers in the Company’s service, broken down by professional category, is as
follows:
The breakdown of balances presented under assets and liabilities in respect of employee benefits is as
follows:
2010
Senior management
Middle management
Highly-skilled/skilled workers
Semi-skilled workers
Directors
Total:
62
169
217
3
10
461
2009
61
155
207
1
9
433
2010
Pension Fund
Group policy
Individual policy
2009
308 983
0
776 234
1 085 217
Total assets:
2010
Group policy
Individual policy
Total liabilities
326 512
2 547 478
665 344
3 539 334
2009
0
776 234
776 234
2 547 478
665 344
3 212 822
At the start of 2010 retirement-benefit liabilities financed through polices were transferred in full to the
Liberty personnel pension fund (see Note 23.1).
82
23.1. Surviving Relative and
Orphan Annuities Plan
(long-term employee benefits)
a) General description of the plan, group of
persons covered and benefits provided
The costs are recognised annually in the light of
the amount of the insurance.
Group of people covered
All Liberty Seguros employees aged less than 65
are covered by the plan.
Benefits provided
In the event of the decease of an employee the
surviving spouse will be paid a surviving-relative
annuity as from the 1st day of the month next
following the death.
The annuity is expressed as the following percentages calculated on the insured annual income, in
keeping with the age of the employee on the date
of decease:
Age
Under 35 anos
From 36 to 55
From 56 to 65
%
35%
25%
15%
The surviving-relative annuity will be paid to the
spouse until death. Should the surviving spouse
remarry the annuity comes to an end.
Should the deceased employee leave children,
either natural or fully adopted, an orphan annuity
will be paid to the surviving spouse for as long as
they are minors, or to the children themselves on
achieving their majority, as from the 1st day of
the month following the decease of the employee.
These annuities are calculated using the following
percentages to the insured annual income, under
the following terms:
7.5%, or 15% orphan
by mother and father
15.0%, or 30% orphan
2 children
22.5% or 45% orphan
3 or + children
1 child
Orphans annuities end at the end of the month
they reach the age of 20 or on the date of their
death. Orphans who continue their studies successfully will also be entitled to receive their annuities
until they conclude their courses, though the age
at which the annuities comes to an end may be no
more than 25.
Insured annual income is understood to be the
real gross salary received by the employee during
the 12 months prior to the date of death, excluding overtime, cashier bonuses, variable remunerations and lunch subsidies.
Expected deadline for settlement of commitments
assumed: Not Applicable.
b) Financing vehicle used
Renewable Temporary Annual Life Assurance
Policy.
c) Amount of the plan’s assets and effective rate
of return on the plan’s assets
The life assurance policy’s renewal date in January
1 of each year and there are therefore no assets as
at December 31.
d) Amount recognised as an expense
The amount of the premium paid in 2010 was
€180,395 (2009: €147,695).
23.2. Retirement Pension
Liabilities in respect of
employees and pensioners (Collective Bargaining Agreement)
a) Accounting policy of recognition of actuarial
gains & losses, as well as corrected cost of past
services
In keeping with the requirements of IAS 19
– Employee benefits, the cost associated with
benefits plans granted to employees is recognised
when the respective benefit is earned, that is, as
the employee provides services. The difference
between the amount of the liabilities assumed and
the assets acquired to cover the liabilities is carried
in the Company’s balance sheet. The carrying
cost corresponds to the sum of the cost of current
services, the interest cost and the expected result of
the assets. Actuarial gains/losses each year are recognised under a specific heading of equity, called
“SORIE” Method – whereby each year’s actuarial
gains and losses are recognised under that heading.
b) General description of the plan
The pension plan to be financed is that set out in
the Collective Bargaining Agreement for insurance
business, the current wording of which is provided
in Chapter V “Retirement and pre-retirement
pensions”, Clauses 51 to 60, without prejudice to
the provisions of the following paragraph.
The Pension plan covers all permanent employees
of Liberty Seguros eligible in accordance with
the industry’s collective bargaining agreement.
Employees having employment contracts in force
in the insurance business as of 22/6/1995 will be
entitled, on retirement or pre-retirement from
insurance activity, to payment of a pre-retirement
instalment or of a life-long retirement pension,
regardless of their date of admission, provided the
grace period is complied with. Also covered by
the pension plans are those who, by virtue of their
individual employment contracts, are granted this
benefit.
Grace period
Employees shall be entitled to retirement pensions
provided:
c) they have been granted old-age retirement
by social security and have provided at least
120 months effective service, continuous or
interpolated, in insurance activity;
d) they have been granted disability retirement
by social security and have provided at least
60 months effective service, continuous or
interpolated, in insurance activity.
Indication of benefits provided
> Old-age retirement
The retirement pension to be granted to employees retiring for old age is calculated in accordance
with the following formula:
P= (0,8* 14/12*R) - (0,022*n*S/60)
where:
P = monthly pension;
R = last actual monthly wage on retirement date;
n = number of calendar years with contributions
paid to social securities or equivalent systems;
S = sum of the annual wages of the 5 best of the
last 10 years in respect of which social security
contributions were paid.
Should the result of the multiplication of the factor 0.022 by n be less than 0.3 or greater than 0.8
these will the figures to be considered, respectively.
> Disability retirement
The monthly pension to be granted to employees
retiring for disability is calculated in accordance
with the following formula:
P=(0,022*t*14/12*R) - (0,022*n*S/60)
where:
P = normal pension;
R = last actual monthly wage on retirement date;
n = number of calendar years with contributionspaid to social securities or equivalent systems;
S = sum of the annual wages of the 5 best of the
last 10 years in respect of which social security
contributions were paid.
t = length of service, in years, in insurance business
(any part of a year counts as a full year)
Should the result of the 0.022 * t operation be less
that 0.5 or greater than 0.8 these will the figures to
be considered, respectively.
83
Should the result of the multiplication of the factor 0.022 by n be less than 0.3 or greater than 0.8
these will the figures to be considered, respectively
> Pre-Retirement
On reaching the age of 60 and having 35 years
service in insurance activity, employees may agree
with the employer to transfer to pre-retirement
situation.
The agreement is made in writing and determines
the start date as well as the rights and obligations
of each party, especially the amount of the annual
pre-retirement payment, its method of updating,
number of monthly instalments in which it will be
paid, and composition of the salary for calculation
of future retirement or disability pensions.
Pre-retired employees shall be provided a total annual pecuniary pre-retirement payment calculated
using the following formula:
P = 0,8 * R * 14
where:
P = annual instalment;
R = last actual monthly wage on pre-retirement
date;
The right to pre-retirement payments ends on the
date the pre-retiree satisfies the minimum legal
conditions to apply for social security pension or
retires for disability.
On the date on which pre-retired employees reach
the minimum legal age to apply to social security
for old-age retirement or become disability pensioners their retirement pension will be calculated
by application of the formulae for the old-age or
disability pension, depending on their situation
on the retirement date, taking the following into
account:
- The salary to be considered for the purpose
of calculation of the old-age or disability
pensions consists of the minimum wage and
84
-
the supplements provided for, respectively in
clauses 43 and 46 of the Collective Bargaining
Agreement (CBA), updated in accordance
with the amounts in force on the date of preretirement.
Minimum wage is deemed to be the minimum wage established in the respective wage
scale for each category, plus the length of service bonus to which the employee is entitled.
> Vested rights
Former participants have vested rights for as long
as they continue to work in insurance activity and
if they are engaged in this activity on the date of
their retirement for old age or disability.
In accordance with Clause 55 of the CBA, the
entity responsible for payment of the old-age and
disability pensions is the company in the service of
which the employee was on retirement date.
If there were previous employers covered by the
CBA, they are jointly liable for payment of the
retirement pensions.
bonus earned on retirement not exceeding 30% of
the basic Level X wage.
The retirement pension may not be reduced as a
result of the provisions of the preceding numbers,
though it may remain unchanged without being
updated.
The exception is 3 pensioners who are guaranteed
an annual increase of their pensions equal to the
consumer price index, though without the maximum limit referred to above.
> Employees who retired between January
1984 and July 1995
All retired employees enjoy increases of their
complementary retirement pensions whenever the
wage scale is altered.
The increases are the same as those of the wage
scale in the category in which the employee
retired.
The following formula applies for updating
purposes.
A * 14 / 12 * P
> Updating of Retirement and Pre-Retirement Pensions
Employees covered by the present CBA published
in Boletim de Trabalho e Emprego nº 23 – 1st
Series, of 22/6/1995.
Old-age and disability retirement pensions are
updated annually by application of a factor equal
to the official consumer price index, excluding
housing, in respect of the previous year.
Pre-retirement payments are updated as established in the individual pre-retirement agreement of
each employee or, if not stated, under the terms of
the applicable law.
The annual retirement pension resulting from the
update of the old-age and disability retirement
pensions, plus the annual pension received from
social security, may not exceed the annual net
minimum wage that the employee would have received if still in service, with the length-of-service
where A equals the increase of the wage scale
mentioned above and P the percentage fixed at the
time of retirement.
In no case may the total annual pension exceed
the annual net minimum wage that the employee
would receive were he in service, with the length
of service at the time of retirement.
Employees already retired on the date the CBAs
published in the Boletim de Trabalho e Emprego,
1st Series, nºs 1 and 10, of January 8, 1984, and
March 15, 1984, came into force Retirement
pensions will be updated in accordance with the
formula:
A * 14 / 12 * P
less the amount of the increase granted to them by
social security.
> Expected deadline for settlement of commitments assumed:
The duration of the plan’s liabilities is 8.5 years
for pensioners and 22.6 for the participant population, the modified duration standing at 8.2 and
21.6 years respectively.
c) Financing vehicle used
The liabilities are covered by a Pension Fund.
d) Amount and effective rate of return on the
plan’s assets
2010
Value of the Plan's
Assets
Effective rate of return
of the Plan's assets
2009
8 851 034
7 033 751
-1,20%
9,50%
e) Past liability for post-employment benefits
The following table presents the liability for
past services, segregated by the present value of
liabilities for past services and the present value of
benefits now payable.
2010
Present value of liabilities for past services
Present value of
benefits payable
Past liability for
post-employment
benefits
2009
593 210
2 210 043
7 948 841
4 497 198
8 542 050
6 707 241
f) Recognition of opening and closing balances
of the present value of the defined-benefits
obligationx
The following table shows the reconciliation of the
opening balances with the closing figures:
Liabilities
as at January 1
Cost of current service
Interest cost
Actuarial (gains) and
losses in liabilities
Benefits paid
by the Company
Corrected cost
of past services
Transfer of Liabilities
for Past Services
Cuts & settlements
Liabilities
as at December 31
2010
2008
6 707 241
6 784 835
109 383
396 482
102 863
350 794
-449 727
-21 546
-778 748
-509 705
j) Total expense recognised in the Profit & Loss
Account for the current year
k) Cumulative amount of actuarial
gains & losses
The accumulated value of actuarial gains and losses as at December 31, 2010, under a specific heading of Equity was €510,298 (2009: €498,487).
0
2 557 420
0
0
8 542 050
6 707 241
g) Cover of liabilities
The defined-benefits obligation, which, as at
December 31, 2010, amounts to €8,542,050,
is financed by a Pension Funds in the sum of
€8,851,034, representing a financing ratio of
103.62%. The Company has no plans to be
financed.
h) Reconciliation of opening and closing
balances of the fair value of the plan’s assets
and of the opening and closing balances of any
reimbursement right recognised as an asset
The following table shows the reconciliation of the
opening balances with the closing figures:
i) Reconciliation of the present value of the
defined-benefit obligation under indent f)
and of the fair value of the plan’s assets under
indent h) with the assets & liabilities
recognised in the balance sheet:
l) Percentage and amount of each main
category of the plan’s investments and other
assets that constitute the fair value of all the
plan’s assets
The Pension Fund’s asset portfolio is made up as
follows (by class of assets):
m) Sums included in the fair value of the plan’s
assets in respect of the entity’s financial
instruments and any land and building
occupied by the insurance company
The Company does not make use of the Pension
Fund’s assets. The Fund holds no securities issued
by entities of the Company.
n) Base used to determine the expected overall
rate of return on the assets
On the basis of the investment policy stemming
from the Pension Fund, the expected overall rate
of return on the assets was determined using the
expected gains on the contracted assets.
The relative yield rates relating to the interest
on the fixed-income securities were determined
through the gross reimbursement of the yield rates
on the balance sheet close date.
o) Real return on the plan’s assets and on
reimbursement rights recognised as an asset
The real return of the plan’s assets was -€79,043
(€660,843 in 2009).
(h)
Balance of the Fund on January 1
Expected return on the plan's assets
Actuarial (gains) and losses in liabilities
Employer's contributions
Plan participants' contributions
Benefits paid by the Company
Corrected cost of past services
Cuts & settlements
Balance of the Fund on December 31
2010
7 033 751
388 353
467 396
2 675 074
0
-778 748
0
0
8 851 034
2009
6 882 613
275 305
-385 538
0
0
-509 705
0
0
7 033 751
(i)
Liabilities as at December 31
(Surplus) / Shortfall of the Fund
Net actuarial gains or losses not recognised in the balance sheet
Corrected cost of past service not recognised in the balance
sheet
Amount not recognised as an asset (owing to the IAS 19 limit)
Other amounts recognised in the balance sheet (*)
(Asset) / Liability recognised in the Balance Sheet
2010
8 542 050
8 851 034
-308 983
2009
6 707 241
7 033 751
-326 510
-308 983
-308 983
-326 510
-326 510
(j)
Cost of current services
2010
109 383
2009
102 863
396 482
-388 353
350 794
-275 305
117 512
178 352
Interest expense
Expected return on the plan’s assets and on possible
reimbursement rights
Actuarial (gains) and losses (*)
Gains or losses arising from cuts or liquidations of the plan
Effect of the limit established by IAS 19
Total impacts on Profit & Loss
(l)
2010
Valor
2009
%
Valor
%
Floating-rate securities
Land & buildings
Other
Total assets of the Fund
8 851 034
100%
7 033 751
100%
8 851 034
100%
7 033 751
100%
85
p) Description of the main actuarial assumptions (in absolute terms) used by the Company
The information presented was taken from the
annual actuarial report on the valuation of the
Pension Fund.
i. Pensioners’ discount rate: 3.96%
ii. Discount rate for participants and former
participants: 4.6%
ii. Expected rate of return on the plan’s assets:
4.0%
iii. Expected wage growth rate: 3.0%
iv. Medical costs growth trend rate: not applicable
v. Mortality, disability and employee rotation
tables, and rates of pre-retirement and/or early
retirement.
Mortality Table: TV 88/90 - The Fund is insufficient to be able to perform analysis and come to
credible conclusions as to the real mortality of this
population.
Disability Table S.O.A. Trans Male
Service rotation: 0.0%
Decreases used in the calculation of the probability that the participants will be in service on
reaching old-age retirement age: Decreases for
disability were used in the mortality table
Pension growth rates after the INR: 2.0%
Pensions payable growth rate: 0.5% / 1.6% (1)
(1) Pre-retirees’ pensions: growth of 1.6%.
Retirement pensions payable (growth of 1.6%
for beneficiaries having an increase equal to or
greater than the consumer price index in any
year from 2005 to 2009; growth of 0.55% for
other beneficiaries).
The methods, assumptions and hypotheses used in
the actuarial valuation were the same in 2009 and
2010, with the exception of the following:
> Discount Rate
In 2009 the discount rate was defined taking into
account the IBOXX AA Euro Corporate 10+ for
the duration of the whole of the Fund’s liabilities.
In the 2010 valuation the discount rated were
defined taking into consideration the EUR Composite AA yield curve as at December 31, 2010,
taking into account the duration of the respective
liabilities, that is, separated for participants/exparticipants (4.6%) and for pensioners (3.96%).
> Transfer of Liabilities
At the start of 2010 the Company transferred to
the Pension Fund the liability for pensions payable
under 3 Group Life annuity policies issued prior
to the constitution of the Pension Fund. Liabilities
transferred totalled €2,547,478, the the contribu-
> Pension Growth
The 2009 valuation took into consideration a growth equal to the average of the CPI rates over the
past 3 years for pensions that have had an increase
equal to or greater than the CPI and 0.5% for the
remainder.
In the 2010 the method employed in 2009 to
determine pension growth was maintained, that
is, of the average of the CPI rates over the past 3
years, although the resultant rate fell from 1.8%
to 1.6%.
Present value of the defined-benefits obligation
Fair value of the plan's assets
Plan shortfall /(surplus)
Experience adjustments resulting from the plan's liabilities
Experience adjustments resulting from the plan's assets
86
tion in assets amounting to €2,665,132.
Additionally, the liabilities for the past services of
the workers covered by the CBA of the branch in
Portugal of Genesis Seguros Generales SA Seguros
Y Reaseguros in the total sum of €9,942 of assets
and liabilities were transferred.
q) Elements in respect of the amortization
plans provided for in the regulations
In accordance with Article 5 of ISP Regulatory
Standard 4/2007, of April 27, “insurance companies may recognise in retained earnings, on the
basis of an amortization plan of uniform annual
instalments over a maximum of five years, the
impact of the application of the new accounting
standards applicable to commitments relating to
their employees’ pension plans”. This provision
was not used by the Company because all costs
were recognised in 2010.
t) Figures for the current year and for the previous four years
v) Estimated contributions for the coming year
The contribution expected for 2011 is €21,329.
2010
8 542 050
8 851 034
-308 983
-449 727
467 396
2009
6 707 241
7 033 751
-326 510
-21 546
-385 538
2008
6 784 835
6 882 613
-97 779
167 473
1 535
2007
6 647 553
7 064 435
-416 882
-803 967
543 556
2006
7 521 841
7 759 912
-238 071
210 896
542 874
23.3. The retirement and
pre-retirement pension
plan (Collective Bargaining
Agreement for the Insurance
Industry) - Annuities payable,
dating from before the
constitution of the Liberty
Seguros Employees Pension
Fund
a) Accounting policy of the entity in recognising actuarial gains & losses, as well as the
corrected cost of past services
At the start of 2010 the Company transferred to
the Pension Fund the liability for pensions payable
under 3 Group Life annuity policies issued prior
to the constitution of the Pension Fund. Liabilities
transferred totalled €2,557,420, the contribution
in assets amounting to €2,675,074.
The pension plan to be financed is that set out in
the Collective Bargaining Agreement for insurance
business, the current wording of which is provided
in Chapter V “Retirement and pre-retirement
pensions”, Clauses 51 to 60.
The people covered by this plan are those Liberty
Seguros’s pensioners and pre-retirees having
pensions payable that began on a date prior to
the constitution of the Liberty Seguros Employee
Pension Fund (May 20, 1998).
Cover of the liabilities up to 2009 was undertaken
through a Life Assurance Policy (Annuity type).
These policies were contracted with the Company
itself and, as such, do not qualify under IAS 19.
plan’s assets
2010
Value of the Plan’s Assets
Effective rate of return
0
0,00%
2009
2 547 478
4,20%
e) Past liability for Annuities payable, dating
from before the constitution of the Liberty
Seguros Employee Pension Fund
2010
Present value
of liabilities
for past services
Present value
of benefits payable
Past liability for
post-employment
benefits
obligation
Liabilities as at January 1
Cost of current service
Interest cost
Actuarial (gains) and losses on liabilities
Transfer of Liabilities for Past Services
Cuts & settlements
Liabilities as at December 31
2010
2 547 478
2009
2 759 211
0
137 974
-9 141
-340 566
-2 547 478
0
0
0
2 547 478
2009
0
0
0
2 547 478
0
2 547 478
g) Reconciliation of opening and closing
Balance of the Fund on January 1
Expected return on the plan's assets
Actuarial (gains) & losses
Employer's contributions
Plan participants' contributions
Transfer of Assets to the Pension Fund
Cuts & settlements
2010
2 547 478
117 653
-2 665 132
0
2009
2 761 574
106 134
-20 337
0
0
0
-340 566
0
0
2 547 478
87
23.4. Additional Pension
Complement
j) Total expense recognised in the Profit &
Loss Account for the current year
2010
Cost of current services
Interest expense
Expected return on the plan's assets a
nd on possible reimbursement rights
Actuarial gains & losses
Gains or losses arising from cuts or liquidations of the plan
Effect of the limit established by IAS 19
Total impacts on Profit & Loss
2009
0
0
137 974
-106 134
0
31 840
t) Figures for the current year and for
the previous four years
2010
Present value
of the defined-benefits
obligation
Fair value of the plan's
assets
Experience adjustments
resulting from the plan's
liabilities
Experience adjustments
resulting from the plan's
assets
2009
2008
2007
2006
0
2 547 478
2 759 211
2 862 127
3 024 397
0
2 547 478
2 761 574
2 862 127
3 024 397
0
0
-2 362
0
0
0
-22 689
53 655
39 862
54 179
0
-6 789
-8 043
-12 270
-24 724
a) Accounting policy of the entity in recognising actuarial gains & losses, as well as the
corrected cost of past services
Costs are recognised when the respective benefit
is earned. Each year’s actuarial gains and losses are
recognised under a specific heading of Shareholders’ equity
The plan provides for payment of a retirement
pension at the age of 65, the value of which is
established by negotiation under the individual
employment contract.
The plan includes an option of remission of the
pension into capital on the retirement date and
establishes vested rights in the light of past years
of service.
The expected deadline for the liquidation of the
commitments is 10 years.
This complement was created in 2008.
The cover of liabilities was undertaken on the
basis of a Life Assurance policy set up within the
Company itself and, as such, not eligible for the
purposes of IAS 19.
plan’s assets
2010
Value of the
Plan's Assets
Effective rate
of return
88
2009
776 234
665 344
4,0%
3,4%
e) Past liability for post-employment benefits
2010
Present value of
liabilities for past
services
Present value of
benefits payable
Past liability for
post-employment
benefits
2009
776 234
665 343
0
0
776 234
665 343
obligation
2010
Liabilities
as at January 1
Cost of current
service
Interest cost
Actuarial (gains) and
losses on liabilities
Benefits paid by the
Company
Initial cost of past
services
Cuts & settlements
Liabilities as at
December 31
2009
665 343
554 453
76 293
82 059
34 598
31 715
0
-2 883
0
0
0
0
0
0
776 234
665 343
g) Cover of liabilities
The defined-benefits obligation, which, as at December 31, 2010, amounts to €776,324, is wholly
financed by an insurance policy. The Company
has no plans to be financed.
h) Reconciliation of opening and closing
2010
Balance of the Fund
on January 1
Expected return
on the plan's assets
Actuarial (gains)
& losses
Employer's
contributions
Plan participants'
contributions
Management charges
Benefits paid
by the Company
Corrected cost
of past services
Cuts & settlements
Balance of the Fund
on December 31
24. Income Tax
q) Description of the main actuarial assumptions (in absolute terms) used by the Company
i. Discount rate 4.17%
ii. Expected rate of return on the plan’s assets:
4.0%
iii. Expected wage growth rate: not applicable
iv. Medical costs growth trend rate: not applicable
v. Mortality table: GRM/GRF 95
t) Figures for the current year and for the previous four years
2009
665 343
554 453
26 614
22 178
0
0
84 277
88 712
0
0
0
0
0
0
0
0
0
0
776 234
665 343
p) Real return on the plan’s assets and reimbursement rights recognised as an asset
The real return of the plan’s assets was €26,614.
Present value of the defined-benefits obligation
Fair value of the plan's assets
Experience adjustments resulting from the plan's liabilities
Experience adjustments resulting from the plan's assets
v) Estimated contributions for the coming year
No contributions are expected for 2010.
2010
776 234
776 234
0
0
0
2009
665 343
665 343
0
0
0
2008
554 453
554 453
0
0
0
Calculation of the current tax for 2010 has been
made on the basis of a nominal tax rate plus the
municipal surcharge, totalling 28.6% (2009:
26.5%), the nominal rate approved on the
balance-sheet date.
The Company’s self assessment returns are subject
to inspection and possible adjustment by the Tax
Authorities during a period of four years, which,
up to 2008., is extended to 6 years in the event
that tax losses are carried forward. There may therefore be additional tax assessments, essentially as a
result of different interpretations of the tax law.
However, the Company’s Board is of the conviction that no additional assessments of a significant
value will be made within the context of the
financial statements.
During 2010 the tax authorities reviewed the
2008 accounts, with no significant impact. No
significant adjustments are expected in respect of
the 2009 and 2010 tax returns (not yet inspected
by the tax authorities).
There is still disagreement as to tax losses not
accepted by the tax authorities in respect of the
Winterthur Seguros Generales, Sociedade Anónima de Seguros e Resseguros and Winterthur Vida,
Sociedade Anónima de Seguros sobre La Vida
branches in the sum of:
2000:€13,252,791
2001:€17,147,752
In February 2005, the South Central Administrative Court ruled that these tax losses could be
incorporated. The Tax Authorities appealed to the
Supreme Administrative Court (STA) which, on
July 12, 2006, ruled against Liberty Seguros, SA.
On August 1, 2006, Liberty Seguros SA submitted
a plea of Nullity of the Ruling, which was denied
by the STA. On November 30, 2006, Liberty
Seguros SA lodged an appeal with the Constitutional Court. The appeal was allowed and the case is
now before the Constitutional Court for appraisal.
89
On February 5, 2009, the Supreme Administrative
Court, through an order of the Rapporteur, admitted to judgement the Case-law Harmonisation
Appeal, agreeing with the reform of the Ruling (it
revoked previous negative decisions of the Rapporteur and of the Conference of Judges), finding no
reason to reject the appeal.
There were no significant alterations to the case in
2010, just procedural developments.
Therefore, the sums associated with the tax losses
not accepted by the tax authorities have not been
recognised as assets for the sake of prudence.
24.1 Tax estimate
The basis for the calculation of the tax estimate
recognised during the year is presented hereunder:
Tax rate
Tax calculated on the basis of the tax rate
Permanent differences
Variation of Potential Gains (Initial Recognition) with-profit Life
(1/5)
Annual variation of potential Gains - with-profit Life
Tax benefits
Excess of the Estimate
Other permanent differences
Temporary differences
Variation of Potential Gains (Initial Recognition) with-profit Life
(1/5)
Accrual accounting
Provisions
Extraordinary depreciation
Other temporary differences
Tax losses used
Assessment
Autonomous taxation
Total current tax
The current tax on the estimated profit in the sum
of €3,807,283 is broken down into two vectors, in
accordance with its nature, to wit:
90
1. impacting on profit & loss €3,831,999,
current tax on net profit, plus autonomous tax
in the sum of €221,737;
2. impacting on reserves -€23,999, which
corresponds entirely to the application of the
current tax rate of 28.6% to a base of potential
gains of the with-profits Life securities portfolio that occurred during the year, and to 1/5
of the calculated amount of potential losses
on the with-profits Life securities portfolio as
at 31/12/2007 (initial recognition), which,
2010
12 944 926
28,60%
3 702 249
586 840
0
2009
12 494 599
26,50%
3 311 069
5 139 403
0
720 028
-117 900
-95 320
80 033
-703 543
-689 394
5 191 844
-69 091
-1 847
18 497
-660 512
-689 394
-126 388
206 225
-88 745
-5 240
0
3 585 546
221 737
3 807 283
138 596
-189 365
-8 187
87 838
-1 181 092
6 608 868
240 013
6 848 879
by legal imposition, will be deducted over a 5
years, the third fifth being deducted this year.
This sum is reflected in the amount carried as
a reserve for deferred tax under equity, since
there is no adequate heading to record the
current tax.
24.2 Cost/income components
of taxes
The income tax reported in the income statement
is broken down as follows:
Current Tax
Deferred tax
Tax recorded
in profit & loss
2010
3 831 282
-262 552
2009
2 346 430
1 036 837
3 568 730
3 383 267
The sum recognised as deferred tax, impacting
on Profit & Loss of Deferred Taxes, calculated in
the temporary differences, for 2010 and 2009, is
broken down as follows:
Recognised in
profit & losss
2010
2009
Commercial
provisions
Accrual accounting
Extraordinary
depreciation
Provisions not
deductible or in
excess of legal limits
Pension Fund
Insurance/Live
business operations
Tax loss for the year
Other
Deferred tax assets/
(liabilities)
429 174
-209 970
-83 760
138 596
-81 203
-8 187
-5 766
73 408
-13 922
97 571
-14 133
144 042
0
32 163
-1 310 794
38 496
262 552
-1 036 838
24.3 Income tax reported under
reserves
The breakdown of tax reported under reserves in
2010 and 2009 is as follows:
Current Tax
Opening balance
Potential gains on Securities with profit-sharing Life
Corrections to current tax of previous years
Deferred tax
Opening balance
Pension Fund impacting on reserves
Potential gains on Securities profit-sharing except Life
Correction of opening balance - alteration of the tax rate
Tax Reported under Reserves
The sums reflected under tax reserves stem from:
(i) tax estimate for the year;
(ii) deferred tax determined during the year in
respect of the Pension Fund;
(iii) deferred tax in respect of potential gains
on available-for-sale assets associated with the
without-profits Life and Non-Life portfolio.
24.4 Detail of the variations of deferred taxes
(assets and liabilities) recognised in the balance Sheet
2010
-1 429 810
-1 744 873
23 999
291 065
-319 562
-686 297
6 270
416 923
-56 458
-1 749 372
2009
-1 744 873,41
0,00
-4 502 449
2 757 576
-686 297
4 261 630
-116 800
-4 831 127
0
-2 431 171
Commercial provisions
Accrual accounting
Extraordinary depreciation
Provisions not deductible or in excess of legal limits
Insurance/Live business operations
Tax loss on investments
Deferred tax assets
Pension Fund
Fund for future allocations
Deferred tax assets recognised in profit & loss
Unrealized Gains/Losses
Deferred tax assets
Equity Pension Fund
Deferred tax assets recognised in capital
Recognised in profit & loss
2010
2009
429 174
-209 970
-83 760
138 596
-81 203
-8 187
-5 766
73 408
-14 133
144 043
0
-1 310 794
244 312
-1 172 904
-13 922
97 571
32 163
38 496
18 240
136 067
262 552
-1 036 837
Recognised in Capital
2010
2009
416 923
-4 831 127
-44 857
372 066
-4 831 127
6 270
-116 800
-11 601
-5 331
-116 800
366 735
-4 947 927
24.5 Reconciliation between nominal and effective rates
Reconciliation between the nominal rate and the effective tax rates in 2010 and 2009 is as follows:
Profit before tax
Tax rate
Tax calculated on the basis of the tax rate
Tax benefits
Excess of the Estimate
Other permanent differences
Tax on Profit before Tax and Permanent Differences
Autonomous taxation
Tax on Profit before tax and Permanent Differences
with Autonomous Taxation
2010
12 944 926
28,60%
3 702 249
-117 900
w-95 320
80 033
3 569 061
221 737
3 790 798
2009
12 494 599
26,50%
3 311 069
-69 091
-1 847
18 497
3 258 628
240 013
3 498 641
91
25. Contributed capital
26. Reserves
The whole of the contributed capital in the sum
of €26,548,290.69 is represented by 506,937 nominative shares each of a par value of €52.37. All
shares issued are fully paid up. The shares belong
to the firm Liberty Insurance Group, Compañia
de Seguros e Reaseguros, SA, having its registered
office in Madrid (464,937 shares ) and to Genesis
Seguros Generales SA de Seguros y Reaseguros
(42,000 shares). Both enterprises belong to the
Liberty Group, the top parent company of which
its the Liberty Mutual Holding Company having
its registered office in Boston, USA.
As at December 31, 2010, the par value of each
share is €52.37.
26.1 Nature and Purpose of the
Reserves within Equity
2010
Number of shares
as at January 1
Equity capital
increase during
the year
Number of shares
as at December 31
464 937
Legal reserve
The legal reserve may be used only to cover
accumulated loses or to increase equity capital. In
accordance with Portuguese legislation, the legal
reserve has to be credited each year with at least
10% of the year’s net profit until it equals the
issued capital.
Revaluation reserves
Revaluation reserves through adjustment of the
fair value of financial assets represent the potential
gains and losses in respect of the available-forsale financial investments, net of the impairment
recognised during the year or in previous years.
2009
464 937
42 000
506 937
464 937
With reference to December 29th, 2010, the contributed capital was increased, in kind, through
the transfer of the whole of the assets and liabilities of the branch in Portugal of Genesis Seguros
Generales SA de Seguros e Reaseguros. A total of
42,999 ordinary shares were issued, each of a par
value of €52.37, corresponding to an increase of
the Contributed Capital in the sum of €2,199,540
and to an issue premium of €222.78 per share
totalling €9,594,097.39. The total capital increase
amounted to €11,793,637.39.
92
The breakdown of the total assets and liabilities
transferred is as follows:
Assets
Cash & cash equivalents and sight
deposits
Available-for-Sale Financial Assets
Other Assets and receivables
Total Assets
Liabilities
Technical Provisions
Other Liabilities and payables
Total Liabilities
Equity
Other Reserves
Retained earnings
Results for the Year
Total Equity
Valor
1.301.999
15.655.909
1.631.705
18.589.613
4.439.652
2.356.323
6.795.975
901.542
10.604.750
287.345
11.793.637
Deferred tax reserves
Deferred taxes, calculated on temporary differences between the book values of assets and liabilities
and their tax base, are recognised in profit & loss,
except where they relate to items not recognised
directly under equity, in which case they are also
recorded with a contra entry under equity, under
this heading. Deferred taxes recognised under
equity stemming from the revaluation of availablefor-sale financial assets are subsequently recognised
in profit & loss at the time the gains & losses that
gave rise to them are recognised in the profit &
loss account.
Other Reserves
Under this heading the Company records the Free
Reserves generated by net profits not required to
increase the legal reserve or to cover losses brought
forward and not distributed to shareholders.
26.2 Movement under Reserves
under Equity
As at December 31, 2010 & 2009, the breakdown
of reserves and retained earnings is as follows:
2010
Revaluation
Reserves
For adjustment
of the fair value
of financial
assets
For revaluation
of land and
premises
Deferred tax
reserves
For adjustment of the fair
value of financial assets
For movements
in the Pension
Fund
Other Reserves
Legal reserve
Retained earnings
Net profit/(loss)
for the period
2009
5 414 011
6 951 626
-1 603 018
-2 290 149
-146 353
-141 022
22 941 269
6 488 340
13 169 034
5 577 206
42 869 591
34 669 393
9 376 196
9 111 332
The variation under Reserves is detailed in the
Statement of Changes in Equity.
27. Earnings per share
Basic earnings per share are calculated by dividing
the profit attributable to the holders of ordinary
shares (net profit for the year after deduction
of preference-share dividends) by the weighted
average number of shares in circulation, excluding
the average number of treasury shares held by the
Company
As at December 31, 2010 & 2009, the calculation
of earnings per share is as follows:
Profit attributable to holders of
ordinary shares
(numerator)
Weighted average number of
ordinary shares in
circulation (denominator)
Earnings per
share Basic ( € )
2010
2009
9 376 196
9 111 331
464 937
464 937
20,2
19,6
29. Transactions between
related parties
In compliance with Article 3 of Act 28/2009
of June 19, and also of Regulatory Standard
5/2010-R and of Circular 6/2010 of the Insurance
Supervisory Authority, both dated April 1, the
remuneration policy in respect of the members of
the management and supervisory bodies is detailed
in point 16 of the Management Report.
In compliance with Act 28/2009 of June 19, the
remuneration paid in an aggregate and individual form to the corporate officers in 2010 was as
follows:
The Company’s accounts are consolidated into
those of Liberty Insurance Group, Compañia de
Seguros y Reaseguros, SA, in Spain. In Spain,
as at December 31, 2010, this company directly
and indirectly holds the whole of Liberty Seguros
through Genesis Seguros Generales SA de Seguros
e Reaseguros.
The topmost parent company is Liberty Mutual
Holding Company, Inc, headquartered in Boston,
State of Massachusetts, United States of America.
Liberty Seguros has no branches and existing
relations with parent companies and affiliates are
as follows:
> Board of Directors
– On an aggregate basis: €470,362.16
– On an individual basis:
Members of the Board of Directors
Dr. José António
Chairman of the Board
da Graça Duarte
of Directors
de Sousa
Salaries
€ 152.482,74
Short-term bonus
€ 100.898,54
Long-term bonus
€ 109.239,52
International
€ 43.821,91
Partnership Plan *
Dra. Marta Sobreira
Member / CFO
Reis Alarcão Troni
Salaries
€ 48.539,80
Short-term bonus
€ 15.379,65
Member without
Sr. David Henry Long
remuneration
Sr. Christopher Locke
Member without
Pierce
remuneration
Member without
Sr. Luis Bonell Goytisolo
remuneration
Liberty Seguros Spain –
Empréstimos de valores
Liberty Internacional Insurance Company –
Gestão de Investimentos
Liberty Mutual Insurance Company –
Resseguro Cedido
Liberty Mutual Insurance Europe Limited –
Resseguro Cedido
28. Dividend per share
The Company did not distribute a dividend in
2010.
The following table provides a summary of the
operations in 2010 and 2009, with these related
entities:
Related Parties
Liberty Seguros Spain
Liberty International Insurance Company
Liberty Mutual Insurance Company
Liberty Mutual Insurance Group
Genesis Seguros Generales
Liberty Mutual Insurance Europe Limited
Assets
633 661
61 664
2010
Liabilities
Costs
2 950
1 761 591
Income
5 745 061
33 206
179 695
The Short-term Bonus refers to compensation
awarded for the performance achieved during
the year, considering qualitative and quantitative
objectives.
The Long-term Bonus awarded solely to presidents of the companies of the Liberty Mutual
companies, has to do with the compensation awarded for the performance archived in the 2007-09
period in global and local terms. Its payment is
dependent on meeting the profit targets each year.
The International Partnership Plan refers to a
compensation plan granted by Liberty Mutual at
global level to the presidents of the Group companies and to the Country Managers for the Group’s
performance in regional and global terms. The
plan is in respect of the 2003-10 period and was
paid on a single occasion in 2010. Following this
payment, the plan was extinguished.
> Board of Auditors
– On an aggregate basis: €9,900.00
– On an individual basis:
Members of the Board of Auditors
Dr. José Melheiro
Chairman
€ 3.300
Oliveira Barbosa
Dra. Inês Maria Vaz Ramos
Member
€ 3.300
da Silva da Cunha Leão
Dr. Carlos Afonso Dias
Member
€ 3.300
Leite Freitas dos Santos
Member
Dr. Arlindo Dias Duarte Silva
(Alternate)
Assets
291 117
2 809 681
2009
Liabilities
Costs
718 710
190 000
988 418
1 552 796
4 342 049
35 801
47 077
35 801
218 796
Income
1 924 271
93
30. Cash-flow Statement
31. Commitments
Demonstração de fluxos de caixa
Cash flow from operating activities
Premiums received
Reinsurance ceded premiums
Cash flow from operating activities
Claims paid
Claims received reinsurance ceded
Net commissions
General expenses paid
Other taxes paid
Other costs paid
Cash flow from insurance activities
Returns on investments received
Operating cash flow before taxes
Taxes paid
Net cash flow generated/(used) by operations
Cash flow from investing activities
Purchases of investments
Sales and maturity of investments
Assets and equipment purchases
Assets and equipment sales
Policy holder loans
Other acquisitions
Investment cash flow
Cash flow from financing activities
Policyholders net activity
Subordinated loans
Cash flow from financing activities
Cash flow generated by operations
Net variation of Cash & Cash Equivalents and Sight Deposits
Cash & cash equivalents at the start of the period
Cash & cash equivalents at the start of the period
94
2010
2009
218 168 939
-16 800 857
201 368 082
-156 499 811
2 755 828
190 279 377
-11 593 791
178 685 586
-140 575 696
677 716
-35 783 851
-32 361 277
-2 537 221
-151 957
-224 578 289
30 000 025
6 789 818
-12 346 532
-5 556 714
-26 972 093
-34 336 613
-2 477 427
-623 008
-204 307 121
30 177 396
4 555 861
1 672 185
6 228 046
-78 592 367
88 275 780
-2 833 482
-136 600
0
0
6 713 331
-90 862 329
98 142 322
-1 589 121
0
250 000
97 780
6 038 652
-3 172 756
0
-3 172 756
3 540 575
-2 016 139
2 994 483
978 344
-1 355 060
-14 672 438
-16 027 498
-9 988 846
-3 760 800
6 755 283
2 994 483
The Company has several operating lease contracts
in respect of vehicles and office equipment.
Payments made under these lease contracts are recognised in profit & loss over the useful life of the
contracts. Future minimum payments in respect
of non-revocable lease contracts are as follows:
Outstanding rents
on lease contracts
2011
3 269 396
2012
3 055 899
2013
2 770 715
2014
2 591 754
2015
2 593 425
2016
2 645 293
The lease contracts do not impose acquisition of
the assets at the end of the contract.
32. Contingent Liabilities
The Company is involved in legal proceedings
in Portugal related with actions brought by and
against the Company, which are related with the
normal course of its business as an insurance company, employer and taxpayer. It is not possible to
estimate or predict the final outcome of the legal
proceedings Nevertheless, the Company’s Board
of Directors is of the conviction that, with all due
reserve, there is only a remote possibility that the
outcome of the legal proceedings under way will
have a materially adverse effect on the Company’s
The Company’s tax contingencies are described in
Note 13.
34. Off-balance
Sheet Elements
As at December 31, 2010 & 2009, bank guarantees totalled €169,000. These guarantees are related
with claims processes.
36. Events after the
balance sheet date
not described in the
foregoing points
The Judgement of the Supreme Court of Justice
of the European Union of March 1, declared
invalid the rule contained in Article 5.2 of
Directive 2004/113/EC of the European Commission, transposed to Portuguese law through
Act 14/2008, effective as from December 21,
2012. The said Article 5.2 of Directive 2004/113
stipulated a derogation of the general equality of
treatment of men and women in insurance matters
provided it was based on and justified by actuarial
and statistical data.
Thus, as from December 21, 2012, there may be
no gender differentiation in the matter of insurance business in terms of premium calculation,
provision of insurance or benefits.
This legal alteration will imply an alteration of the
context in which the Company operates. It will
therefore have to make a start to efforts to alter
rules and systems so as to eliminate differences of
insurance premiums, benefits and annuities based
on the gender of the insured. Consequently, it is
not yet possible to quantify the future impact of
this alteration.
On March 7, 2011, the rating agency Moody’s
Investors Service lowered its rating notation of the
Greek public debt from Ba1 to B1, with a negative
outlook. On March 10, this agency lowered its rating notation of the Spanish public debt from Aa1
to Aa2, and also maintained a negative outlook.
As disclosed in Notes 6.16 and 6.17, the
Company is exposed to Greek and Spanish debt
totalling €945,208 (0.15% of its portfolio).
Considering the aid mechanisms created within
the European Union and having observed the
evolution of the market prices following this
announcement, we expect that these downgrades
will not have a significant impact on the valuation
of our portfolio.
37. Other information
37.1. Standards and
interpretations applicable
to 2010
As a result of the endorsement by the European
Union (EU), there were the following standards
and interpretations issues, revisions, alterations
and improvements with effect as from January 1,
2010,
a) Revisions , alterations and improvements of
the standards and interpretations endorsed by the
EU with no effect on the accounting policies and
disclosures adopted by the Company.
IAS 7 (Improved) – Cash-Flow Statement
Clarifies that only expenditure that leads to
recognition of assets can be classified as cash flow
from investing activities. In this connection, as a
result of the amendment of IAS 27, some flows till
now considered as generated by investing activities
(e.g., flows in respect of acquisition cost and subsequent variations in contingent payments) will be
considered as generated by operating actovities.
IFRS 5 (Improved) - Non-current Assets Held
for Sale and Discontinued Operations
The improvement clarifies that:
- where a subsidiary is held for sale all its assets
and liabilities must be classified as held for sale
within the scope of IFRS 5, even when the enterprise will retain a non-controlling interest in the
subsidiary after the sale.
- disclosures required in respect of non-current
assets, available-for-dale groups or discontinued
operations are solely those set out in IFRS 5.
IFRS 3 (Revised) – Business combinations
This revision introduced significant alterations
to the measurement and recognition of business
combinations undertaken in periods beginning on
or after July 1, 2009.
IFRS 2 (Amended and Improved) - Share-based
Payment
The amendment of IFRS 2 clarifies the accounting
of situations in which an enterprise receives services or products from its employees or suppliers,
the financial consideration of which is paid by the
parent company or other Group company. The
improvement clarifies that the contribution of a
business to the formation of a joint venture and
combinations under common control do not fall
within the scope of IFRS 2.
IAS 1 (amended) - Presentation of financial
statements
Balance Sheet: The improvement clarifies that
the terms of settlement of a liability that could at
any time result in the issue of capital instruments
at the option of the counterparty does not affect
the classification of the instruments convertible
into current and non-current in the Statement of
Financial Position.
Statement of changes in equity: As a result of the
amendment of IAS 27 two additional lines have to
be included in the Statement of changes in equity:
(i) acquisition of subsidiaries, and (ii) acquisition
of non-controlling interests, to reflect transactions
with owners resulting from alterations to the
holding in subsidiaries that do not lead to loss of
control.
IAS 27 (Amended) – Consolidated and Separate
The alteration of this standard relates to the separate financial statements of the holding company,
suppressing from IAS 27 the definition of the
cost method and the distinction between pre- and
post-acquisition results. Therefore, the dividends
of a subsidiary, a joint venture or associate may
be recognised in full, taking any indication of
impairment into account. Additionally, IAS 27
was amended to actually allow the cost of an
investment in a subsidiary, in limited situations
of reorganisations, to be based on the book value
previously recognised instead of the fair value.
IAS 38 (Improved) – Intangible Assets
The improvement:
- determines that if an intangible acquired in a
business combination is identifiable only with
another intangible asset, both may be recognised
as a single intangible provided that they have
similar useful lives.
- clarifies that the calculation techniques to measure the fair value of intangible assets acquired in a
business combination are merely examples and do
not restrict the methods that can be used.
IAS 39 (Amended and Improved) – Financial
Instruments: recognition and measurement –
eligible hedged items
This amendment:
- clarifies that the designation is allowed of a part
of the alterations of the fair value or variability of
cash flows of a financial instrument as an eligible
hedge item;
- states that inflation is not a risk identifiable
separately and cannot be designated as a hedged
risk unless it represents contractually-specified
cash flows.
The improvement introduces the following
alterations:
- exemption from application of the standard in
contracts involving business combinations applies
only to forward contracts between an acquirer
and a seller equityholder with a view to buying
or selling one acquired on a future date and to to
derivative contracts where it is necessary that the
future shares have still to occur;
95
- if, in a cash-flow hedge, the hedge of a forecast
transaction subsequently results in the recognition
of a financial asset or a financial liability, any gain
or loss on the hedging instrument that was previously recognised directly in equity is ‘recycled’
into profit or loss in the same period(s) in which
the financial asset or liability affects profit or loss.
- it is considered that a prepayment option is
intimately related with the host contract where the
exercise price reimburses the lender a sum up to
the approximate present value of the interest lost
during the remaining life of the host contract
IFRIC 18 – Transfer of assets from customers
The purpose of this interpretation is to clarify the
form of recognising tangible fixed assets or cash
received from customers with a view to being used
to acquire or build specific assets, as is therefore
not applicable.
IFRIC 17 – Distributions of non-cash assets to
owners
This interpretation clarifies the form of accounting
the distribution of assets in kind to owners, determining that they must all have the same rights.
IFRIC 15 – Agreements for the construction of
real estate
This interpretation clarifies how and when the
revenue associated with the construction of immovables must be recognised.
IFRIC 12 – Service Concession Arrangements
This interpretation applies to concession operators and clarifies how to recognise the liabilities
assumed and the rights received in concession
arrangements.
Other improvements to the IFRS
The annual process of improvement of the IFRS
seeks to resolve situations that need to be improved in order to increase their general understan-
96
ding, but are not classified as priority resolution.
Some of the improvements relate to terminology
or alterations of an editorial nature to ensure
consistency among the standards, their impact
being minimal.
Other improvements can lead to alterations in recognition and measurement. The main alterations
that came into force in 2010, other than those
summarised above, can be summarised as follows:
Improvements in 2009 applicable in 2010:
- IFRS 8 – Operating Segments: The improvements clarify that assets and liabilities by segments
need to be reported only where included in the
measures used by the chief operating decision
maker.
- IAS 17 – Leases: The specific provisions relating
to land and buildings are removed and only the
general provisions are maintained.
- IAS 18 – Revenue: Guidelines are added to
determine whether an entity is acting as seller or
agent. [Note: Since this is an improvement of an
appendix of the IAS it is not subject to endorsement by the EU].
- IAS 36 – Impairment of Assets: The improvements clarify that on testing the impairment of
the goodwill acquired in a business combination,
the biggest unit allowed for the allocation of the
goodwill is the operating segment defined in IFRS
8, which, depending on the circumstances, may be
of a level below that of the segment reported.
- IFRIC 9 – Reassessment of embedded derivatives The improvements clarify that clarify that
the scope of IFRIC 9 excludes contracts with
embedded derivatives acquired in a combination
between entities under common control or in the
formation of a joint venture
- IFRIC 16 – Hedges of a Net Investment in a
Foreign Operation: The improvements clarify that
qualifying hedging instruments may be held by an
entity of the group provided that the designation,
documentation and IAS 39-effectiveness requirements are satisfied.
37.2 New standards and interpretations already issued but
not yet mandatory
The standards and interpretations recently issued
by the IASB, application of which is mandatory
only for periods starting after January 1, 2010, and
that the Company did not adopt in advance, are
presented hereunder: Application of these standards and interpretations is not expected to generate
relevant impacts on the Company’s financial
statements.
a) Already endorsed by the EU
IFRS 1 (Amended) - Exemptions from disclosure
of the comparable information required under
IFRS 7 on first-time adoption of the IFRS.
This amendment comes into force no later than
the start of the first period beginning on June
30, 2010. It determines that a first-time adopter
does not have to present comparable information
in respect of the disclosures required by IFRS 7
Financial Instruments.
Disclosures
IFRS 7 (Amended) - Financial Instruments:
Disclosures
the start of the first period beginning on June 30,
2010. It determines that the improvements to this
standard do not have to affect financial statements
or comparable financial statements prior to December 31, 2009.
IAS 24 (Reformatted) – Related Party Disclosures
This revised standard comes into force no later
than the start of the first period beginning on
December 31, 2010. The main alterations are as
follows:
- alteration of the definition of related parties,
causing some entities to be considered not related
and others to be considered related;
- partial exemption from disclosures relating to
transactions with governmental entities and with
the government itself;
- explicit obligation of disclosure of related parties
including executory contracts.
IAS 32 (Amended) - Classification of rights
issues
the start of the first period beginning on January
31, 2010. The amendment alters the definition
of financial liabilities to come to classify issue
rights (and certain options and warrants) as equity
instruments, if:
- the rights are granted on a proportional basis to
all owners of the same class of the entity’s nonderivative capital instruments;
- they were used to acquire a fixed number of
equity instruments of the entity itself in consideration of a fixed amount of any currency.
IFRIC 14 (Amended) - Prepayments of a minimum funding requirement
the start of the first period beginning on December 31, 2010. With this amendment, an entity
must recognise as an asset payments made in
advance and, each year, the analysis of the plan
shall be performed as though there had been no
prepayments
IFRIC 19 – Extinguishing Financial Liabilities
with Equity Instruments
This IFRIC comes into force no later than the
start of the first period beginning on June 30,
2010. It clarifies that capital instruments issued to
a creditor with a view to extinguishing financial
liabilities are considered payments for the purposes
of paragraph 41 of IAS 39.
b) Not yet endorsed by the EU
IFRS 9 – Financial instruments - introduces new
financial-asset classification and measurement
requirements.
Other IFRS amendments - improvements in
2010 The IASB approved 11 amendments to six
standards.
The Accountant
Vitor César Martins dos Santos
The Chairman of the Board of Directors
José António de Sousa
The Financial Manager
Marta Sobreira Reis Alarcão Troni
97
Annexes
INVENTORY OF HOLDINGS AND FINANCIAL INSTRUMENTS
Expressed in euros
Annex 1
Book value
Designation
Quantity
1 - AFFILIATES, ASSOCIATES, JOINT VENTURES
AND OTHER RELATED COMPANIES
1.1 - Domestic Securities
1.1.1 - Holdings in affiliates
1.1.2 - Holdings in associates
1.1.4 - Holdings in other related companies
sub-total
1.1.5 - Debt securities of affiliates
1.1.6 - Debt securities of associates
1.1.7 - Debt securities of joint ventures
1.1.8 - Debt securities of other related companies
sub-total
1.1.9 - Other securities in affiliates
1.1.10 - Other securities in associates
1.1.11 - Other securities in joint ventures
1.1.12 - Other securities of other related companies
sub-total
sub-total
1.2 - Foreign Securities
1.2.1 - Holdings in affiliates
1 .2.3 - Holdings in associates
1.2.4 - Holdings in other related companies
sub-total
1.2.5 - Debt securities of affiliates
1.2.6 - Debt securities of associates
1.2.7 - Debt securities of joint ventures
1.2.8 - Debt securities of other related companies
sub-total
1.2.9 - Other securities in affiliates
1.2.10 - Other securities in associates
1.2.11 - Other securities in joint ventures
1.2.12 - Other securities of other related companies
sub-total
sub-total
total
98
Amount of
par value
% of value
Average
Total value
acquisition cost acquisition cost
unit
Total*
Annexes
Book value
Designation
Quantity
2 - OTHER
2.1 - Domestic securities
2.1.1 - Capital instruments and unit trusts
2.1.2.1 - Equities
AUDATEX
sub-total
Amount of
par value
% of value
Average
Total value
unit
Total*
90 00
90 00
250 00
250 00
22 500 00
22 500 00
250 00
250 00
22 500 00
22 500 00
90 00
250 00
22 500 00
250 00
22 500 00
1 595 39
2 628 91
566 26
1 130 233 00
1 083 400 00
1 776 960 00
2 006 960 00
515 955 98
492 239 70
17 793 303 68
592 437 50
3 419 66
25 399 700 08
51 55
48 77
41 15
90 95
83 82
89 32
97 09
101 35
99 95
100 83
78 89
53 00
1 574 03
3 003 31
699 92
1 037 890 37
847 409 32
1 624 224 80
1 989 485 88
514 218 30
477 889 42
17 866 595 39
510 299 40
3 071 90
24 876 362 04
250 00
25 422 200 08
250 00
24 898 862 04
224 30
224 30
180 110 71
180 110 71
704 48
704 48
565 696 75
565 696 75
2.1.2.2 - Equity paper
sub-total
2.1.2.3 - Investment fund units
sub-total
2.1.2.4 - Other
sub-total
sub-total
2.1.2 - Debt securities
2.1.2.1 - Public debt
PORTUGUESE GOVT CONSOLIDATED
MEDIUM-TERM TREASURY BONDS
TREASURY BONDS
TREASURY BONDS
TREASURY BONDS
TREASURY BONDS
TREASURY BONDS
PORTUGAL (REPUBLIC OF)
3 037 68
6 095 31
1 695 91
1 130 000 00
1 000 000 00
1 800 000 00
2 000 000 00
500 000 00
465 000 00
17 250 000 00
625 000 00
5 796 03
24 786 624 93
sub-total
52 52
43 13
33 39
100 02
108 34
98 72
100 35
103 19
105 86
103 15
94 79
59 00
2.1.2.2 - Other public issuers’
sub-total
2.1.2.3 - Other issuers’
sub-total
total
90 00
sub-total
803 00
803 00
2.2 - Foreign Securities
2.2.1 - Capital instruments and unit trusts
2.2.2.1 - Equities
GMAC INC
24 786 624 93
2.2.2.2 - Equity paper
sub-total
2.2.2.3 - Investment fund units
sub-total
99
Annexes
Book value
Designation
Quantity
Amount of
par value
% of value
Average
Total value
unit
Total*
2.2.2.4 - Other
sub-total
sub-total
2.2.2 - Debt securities
2.2.2.1 - Public debt
BELGIUM KINGDOM
BELGIUM KINGDOM
BELGIUM KINGDOM
BELGIUM KINGDOM
BONOS Y OBLIG DEL ESTADO
BUNDESOBLIGATION
BUNDESOBLIGATION
BUNDESREPUB. DEUTSCHLAND
BUONI POLIENNALI DEL TES
BUONI POLIENNALI DEL TES
BUONI POLIENNALI DEL TES GOVERNMENT
BUONI POLIENNALI DEL TESORO
CZECH REPUBLIC
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
100
803 00
224 30
1 500 000 00
2 125 000 00
1 300 000 00
1 501 500 00
2 000 000 00
500 000 00
1 000 000 00
1 500 000 00
100 000 00
3 000 000 00
2 000 000 00
600 000 00
675 000 00
450 000 00
1 000 000 00
1 450 000 00
1 200 000 00
2 500 000 00
4 450 000 00
1 000 000 00
410 000 00
4 475 000 00
2 775 000 00
6 525 000 00
1 095 000 00
875 000 00
2 600 000 00
1 900 000 00
1 000 000 00
1 200 000 00
50 000 00
2 500 000 00
1 500 000 00
1 000 000 00
1 350 000 00
2 700 000 00
104 86
97 85
103 64
100 14
114 82
101 77
96 63
103 81
100 08
106 91
115 43
99 98
93 92
105 79
100 34
119 63
110 78
102 30
97 11
97 79
95 85
100 64
96 02
99 19
103 93
100 43
115 08
104 38
97 29
116 14
99 40
121 82
116 75
98 84
99 60
102 05
180 110 71
704 48
565 696 75
1 572 900 00
2 079 372 00
1 347 350 00
1 503 588 45
2 296 400 00
508 864 50
966 300 00
1 557 150 00
100 084 00
3 207 330 00
2 308 500 00
599 907 18
633 960 00
476 063 28
1 003 400 00
1 734 635 00
1 329 300 00
2 557 500 00
4 321 305 00
977 900 00
392 985 00
4 503 798 75
2 664 585 00
6 472 271 00
1 138 084 39
878 762 50
2 992 100 00
1 983 220 00
972 900 00
1 393 680 00
49 700 00
3 045 375 00
1 751 250 00
988 380 00
1 344 598 00
2 755 366 75
109 70
98 96
102 46
98 18
100 72
102 20
94 18
85 80
99 16
94 89
97 44
100 48
77 03
106 07
99 63
131 95
116 51
107 22
106 60
108 50
106 38
109 68
114 71
111 09
102 37
102 41
104 76
97 77
100 40
127 79
106 28
126 70
121 88
108 02
106 01
103 19
1 702 866 57
2 120 819 92
1 371 722 61
1 488 783 16
2 124 574 99
521 064 32
976 704 51
1 318 175 58
101 017 75
2 905 386 44
1 997 629 22
627 121 72
545 950 22
481 577 27
1 001 090 38
2 003 094 52
1 426 353 71
2 792 042 59
4 826 537 16
1 124 631 63
442 755 57
4 996 864 74
3 241 713 21
7 386 281 36
1 140 329 44
904 023 88
2 785 876 47
1 884 912 30
1 036 651 36
1 546 338 15
54 515 89
3 195 471 46
1 884 994 53
1 087 670 85
1 463 667 97
2 855 736 74
Annexes
Book value
Designation
Quantity
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (GOVT OF)
FRANCE (REPUBLIC OF)
FRENCH TREASURY NOTE
FRENCH TREASURY NOTE
GERMANY (FEDERAL REPUBLIC OF)
HELLENIC REPUBLIC
ITALIAN REPUBLIC GOVERNMENT
ITALIAN REPUBLIC GOVERNMENT
ITALY (REPUBLIC OF)
MEXICO (UNITED MEXICAN STATES)
NETHERLANDS GOVERNMENT
NETHERLANDS GOVERNMENT
POLAND GOVERNMENT BOND
REPUBLIC OF AUSTRIA
REPUBLIC OF AUSTRIA
SPAIN (KINGDOM OF)
SPAIN (KINGDOM OF)
UNITED MEXICAN STATES
sub-total
Amount of
par value
% of value
Average
Total value
unit
Total*
2 300 000 00
4 000 000 00
1 050 000 00
4 700 000 00
970 000 00
1 800 000 00
1 600 000 00
1 195 000 00
760 000 00
1 500 000 00
1 500 000 00
2 000 000 00
1 280 000 00
2 000 000 00
8 050 000 00
1 470 000 00
2 725 000 00
2 500 000 00
850 000 00
1 500 000 00
300 000 00
500 000 00
8 925 000 00
115 281 500 00
96 53
96 52
94 32
93 86
100 86
102 11
105 77
101 13
105 32
99 81
62 42
94 49
111 43
97 38
104 76
100 92
95 32
96 98
98 25
93 25
98 43
97 96
96 00
2 220 190 00
3 860 900 00
990 360 00
4 411 225 00
978 380 80
1 837 998 00
1 692 256 00
1 208 524 50
800 397 27
1 497 115 97
936 285 00
1 889 800 00
1 426 256 00
1 947 500 00
8 433 125 00
1 483 524 00
2 597 400 25
2 424 500 00
835 125 00
1 398 750 00
295 287 00
489 800 00
8 567 715 25
116 631 280 84
103 57
104 37
102 42
106 19
107 13
108 95
101 66
101 51
105 49
99 88
61 07
98 51
107 59
99 49
107 85
105 76
104 07
100 70
104 13
104 40
92 63
96 68
103 50
2 394 914 65
4 264 339 66
1 083 205 79
5 111 917 74
1 046 860 67
1 975 388 23
1 665 027 51
1 232 916 20
817 948 00
1 498 236 66
945 207 53
2 005 606 07
1 409 390 83
2 023 009 66
9 067 260 85
1 576 878 39
2 934 134 06
2 624 731 02
900 556 55
1 615 759 80
280 085 49
491 134 58
9 444 178 26
123 773 636 39
1 000 000 00
1 000 000 00
1 500 000 00
1 000 000 00
1 100 000 00
275 000 00
300 000 00
1 000 000 00
2 375 000 00
700 000 00
2 000 000 00
1 000 000 00
720 000 00
1 200 000 00
2 500 000 00
108 60
105 65
104 86
98 33
102 45
104 36
101 97
99 17
102 12
90 17
104 29
102 65
101 92
89 06
94 95
1 086 000 00
1 056 540 00
1 572 885 00
983 300 00
1 126 928 00
287 001 47
305 910 00
991 670 00
2 425 350 00
631 190 00
2 085 820 00
1 026 500 00
733 825 00
1 068 720 00
2 373 750 00
104 49
105 91
100 38
100 42
110 91
104 71
103 81
126 83
104 51
102 21
113 19
108 23
97 75
68 24
75 18
1 050 484 32
1 085 632 68
1 562 305 31
1 034 109 26
1 265 889 85
290 916 99
312 512 64
1 347 712 26
2 498 728 19
720 671 51
2 355 785 50
1 091 747 75
709 244 38
821 120 42
1 957 057 50
2.2.2.2 - Other public issuers’s
sub-total
2.2.2.3 - Other issuers’
ABB INTL FINANCE LTD
ABB INTL FINANCE LTD
ALSTOM SA
AMERICAN HONDA FINANCE
ANGLO AMERICAN CAPITAL
ANHEUSER-BUSCH INBEV SA
ARCELOR FINANCE
ASFINAG
AT&T INC
AUTOBAHN SCHNELL AG
AVIVA PLC
AYT CEDULAS CAJAS GLOBAL
101
Annexes
Book value
Designation
BAC_04
BANCO BILBAO VIZCAYA ARG
BANCO BILBAO VIZCAYA ARG
BANCO BRADESCO SA
BANCO DE SABADELL SA
BANCO ESPANOL DE CREDITO S A
BANCO SANTANDER SA
BANCO SANTANDER SA
BANK OF AMERICA CORP
BANQUE FED CRED MUTUEL
BANQUE PSA FINANCE
BAYER AG
BAYER HYPO- VEREINSBANK
BBVA BANCOMER SA
BBVA SENIOR FINANCE SA UNIPERSONAL
BES FINANCE LTD
BMW FINANCE NV
BMW FINANCE NV
BMW FINANCE NV
BMW FINANCE NV
BMW FINANCE NV CORPORATE
BMW US CAPITAL LLC
BMW US CAPITAL LLC
BP CAPITAL MARKETS PLC
BRISTOL-MYERS SQUIBB CO
BRISTOL-MYERS SQUIBB CO
BRITISH TELECOM PLC
CAISSE D’AMORT DETTE SOC
CAISSE DAMORT DETTE SOC
CAISSE NATIONALE DES AUTOROUTES
CAJA AHORRO MONTE MADRID
CAJA DE AHORROS Y MONTE DE PIEDAD
CATERPILLAR INTL FIN LTD
CIE FINANCEMENT FONCIER
CIR SPA
CITIGROUP INC
CITIGROUP INC
CITIGROUP INC
CITIGROUP INC
102
Quantity
Amount of
par value
6 200 000 00
700 000 00
2 000 000 00
1 000 000 00
4 870 000 00
1 400 000 00
200 000 00
7 400 000 00
1 200 000 00
800 000 00
4 100 000 00
1 850 000 00
650 000 00
2 150 000 00
3 100 000 00
100 000 00
700 000 00
550 000 00
500 000 00
730 000 00
400 000 00
3 950 000 00
1 500 000 00
500 000 00
230 000 00
500 000 00
4 225 000 00
3 125 000 00
1 300 000 00
1 950 000 00
500 000 00
2 000 000 00
1 800 071 00
1 300 000 00
300 000 00
550 000 00
500 000 00
3 800 000 00
2 000 000 00
750 000 00
1 206 551 96
2 400 000 00
% of value
88 67
104 43
84 04
90 21
110 48
92 28
100 26
85 00
102 86
97 31
105 67
101 48
105 58
112 05
100 00
104 93
96 90
102 54
97 20
104 28
101 67
99 06
87 23
107 24
100 95
100 57
98 86
91 49
99 20
102 25
101 16
99 61
105 92
89 82
110 52
104 14
103 80
100 66
102 86
101 24
103 23
93 42
Average
Total value
5 497 509 00
731 010 00
1 680 840 00
902 100 00
5 380 562 50
1 291 920 00
200 513 60
6 290 000 00
1 234 320 00
778 480 00
4 332 500 00
1 877 306 75
686 249 46
2 409 075 00
3 100 000 00
104 931 00
678 300 00
563 964 50
486 000 00
761 225 55
406 684 20
3 912 825 00
1 308 375 00
536 195 00
232 185 00
502 840 00
4 177 040 00
2 859 040 75
1 289 600 00
1 993 875 00
505 775 00
1 992 200 00
1 906 635 20
1 167 660 00
331 560 00
572 786 50
519 000 00
3 825 260 00
2 057 232 00
759 300 00
1 245 558 89
2 242 080 00
unit
Total*
87 48
102 85
80 39
83 82
110 00
92 04
100 15
79 06
96 00
89 43
103 61
100 20
105 62
104 61
93 24
100 84
97 60
100 64
105 27
104 94
101 99
110 56
105 59
108 99
101 55
106 19
105 18
107 12
106 96
105 37
103 99
106 94
107 43
68 48
98 86
101 10
108 13
81 00
103 62
90 95
97 83
78 30
5 431 822 90
750 067 43
1 675 656 21
846 469 58
5 439 248 90
1 313 492 21
206 705 16
6 108 675 45
1 200 456 35
739 886 27
4 300 336 78
1 910 037 97
714 929 17
2 365 772 44
2 983 730 14
105 421 29
710 659 83
569 268 61
546 391 25
774 529 81
418 934 42
4 447 271 32
1 643 756 83
559 879 91
235 238 95
533 772 28
4 469 109 43
3 433 705 12
1 400 161 95
2 103 353 62
531 131 76
2 155 071 77
1 954 631 57
931 845 30
305 367 80
574 813 82
553 027 96
3 087 578 08
2 085 476 70
713 837 19
1 222 017 24
1 965 845 26
Annexes
Book value
Designation
CRED SUISSE GP FIN (GRN)
CREDIT SUISSE FINANCE (GUERNSEY) L
CREDIT SUISSE LONDON
CSSE DE REF DE L’HABITAT
CSSE DE REF DE L’HABITAT
DAIMLER AG
DAIMLER AG
DAIMLER FINANCE NA LLC
DAIMLER INTL FINANCE BV
DAIMLER NORTH AMERICA CORP
DAIMLERCHRYSLER INTERNATIONAL FINA
DAIMLERCHRYSLER INTL FIN CORPORATE
DAIMLERCHRYSLER NA HLDG
DEUTSCHE BANK AG
DEUTSCHE TELEKOM INT FIN
DEUTSCHE TELEKOM INT FIN CORPORATE
DEXIA MUNICIPAL AGENCY
DIAGEO CAPITAL BV
DONG ENERGY A/S
E. ON INTERNATIONAL FIN CORPORATE
E.ON INTL FINANCE BV
EADS FINANCE B.V.
EDP FINANCE BV
ELECTRICITE DE FRANCE
ELIA SYSTEM OP SA/NV
ELIA SYSTEM OPERATOR SA/NV
ENEL INVESTMENT HLDG BV
ENEL SOCIETA PER AZIONI
ENEL-SOCIETA PER AZIONI
ENI SPA
ENI SPA
ERSTE BK OEST SPARKASSEN
ERSTE BK OEST SPARKASSEN
EUROPEAN INVESTMENT BANK
Quantity
Amount of
par value
1 000 000 00
225 000 00
600 000 00
800 000 00
2 500 000 00
325 000 00
600 000 00
100 000 00
950 000 00
2 425 000 00
500 000 00
2 850 000 00
1 700 000 00
950 000 00
2 000 000 00
3 325 000 00
1 500 000 00
750 000 00
1 000 000 00
2 000 000 00
500 000 00
1 500 000 00
1 500 000 00
1 000 000 00
1 000 000 00
6 175 000 00
2 750 000 00
3 500 000 00
250 000 00
1 000 000 00
1 000 000 00
100 000 00
1 000 000 00
200 000 00
1 000 000 00
7 688 000 00
900 000 00
3 550 000 00
2 500 000 00
950 000 00
700 000 00
1 750 000 00
% of value
81 62
106 11
103 94
109 10
94 68
106 13
101 78
105 75
105 92
94 16
108 78
105 21
100 23
102 10
116 07
134 72
98 73
99 63
101 87
116 24
102 50
103 73
99 39
106 12
109 50
105 04
106 54
96 97
101 08
99 83
99 58
109 35
104 40
103 05
109 86
100 00
107 22
97 07
94 78
99 67
99 42
96 04
Average
Total value
816 150 00
238 757 40
623 622 00
872 800 00
2 366 900 00
344 914 86
610 650 00
105 754 00
1 006 264 00
2 283 459 80
543 890 00
2 998 620 00
1 703 910 00
969 950 00
2 321 397 50
4 479 395 00
1 480 950 00
747 225 00
1 018 690 00
2 324 764 82
512 524 50
1 555 875 00
1 490 850 00
1 061 200 00
1 095 000 00
6 486 373 00
2 929 950 00
3 393 870 00
252 698 25
998 340 00
995 820 00
109 349 00
1 044 000 00
206 095 86
1 098 600 00
7 688 002 73
964 983 42
3 446 082 50
2 369 500 00
946 865 00
695 947 00
1 680 650 00
unit
Total*
98 12
106 30
100 83
107 69
105 46
106 74
103 89
104 45
102 80
105 06
107 71
101 09
101 89
101 55
118 43
128 14
103 83
108 04
101 31
117 73
102 43
105 98
92 24
112 20
106 52
110 02
102 91
104 35
100 99
101 66
106 65
109 50
107 80
102 98
105 41
120 35
107 39
105 27
102 96
102 11
105 79
103 72
1 015 218 37
247 350 25
627 920 52
868 975 49
2 655 663 64
351 897 39
646 893 09
107 506 97
994 139 16
2 630 813 93
579 997 71
3 037 476 75
1 749 784 52
997 348 66
2 469 613 81
4 494 226 18
1 604 395 49
831 081 25
1 037 702 71
2 430 392 37
520 010 21
1 616 627 03
1 422 480 54
1 132 266 38
1 095 515 12
7 000 540 68
2 867 107 50
3 744 637 43
258 872 27
1 046 519 16
1 094 517 45
115 070 61
1 124 346 37
206 475 77
1 067 793 08
9 632 133 75
976 884 93
3 764 752 55
2 590 619 96
977 447 00
746 292 49
1 866 792 68
103
Annexes
Book value
Designation
EWE AG
FINMECCANICA FINANCE SA
FINMECCANICA SPA
FORTUNE BRANDS INC
FRANCE TELECOM
FRANCE TELECOM CORPORATE
FRANCE TELECOM SA
GAS NATURAL CAPITAL
GAZ DE FRANCE
GDF SUEZ
GE CAPITAL EURO FUNDING
GE CAPITAL EUROPEAN FUNDING
GENERAL ELEC CAP CORP
GIE PSA TRESORERIE
GIE PSA TRESORERIE
GIE SUEZ ALLIANCE
GIE SUEZ ALLIANCE
GLAXOSMITHKLINE CAPITAL PLC
GLENCORE FIN EUROPE LUX
GLENCORE FINANCE EUROPE
GOLDMAN SACHS GROUP INC. (THE)
HANNOVER FINANCE SA
HANNOVER FINANCE SA
HBOS PLC
HBOS TREASURY SRVCS PLC
HSBC FINANCE CORP
HSBC HOLDING PLC
HSBC HOLDINGS PLC
HSBC HOLDINGS PLC
HUTCHISON WHAMPOA 05
HUTCHISON WHAMPOA FIN
IBERDROLA FINANZAS SAU
IBERDROLA INTL BV
ING BANK NV
ING BANK NV
INSTITUTO DE CREDITO OFICIAL - (LT
INTERNATIONAL ENDESA BV
IRISH LIFE & PERMANENT PLC - (LT)
JOHN DEERE CAPITAL CORP
JP MORGAN CHASE & COMPANY INC
104
Quantity
Amount of
par value
500 000 00
6 265 000 00
6 900 000 00
2 500 000 00
1 000 000 00
6 550 000 00
1 750 000 00
2 350 000 00
450 000 00
750 000 00
400 000 00
3 950 000 00
4 100 000 00
600 000 00
6 925 000 00
4 400 000 00
4 800 000 00
2 600 000 00
800 000 00
1 450 000 00
4 500 000 00
1 000 000 00
1 500 000 00
5 075 000 00
3 150 000 00
500 000 00
1 600 000 00
1 700 000 00
1 000 000 00
1 000 000 00
5 900 000 00
1 000 000 00
1 450 000 00
1 000 000 00
3 500 000 00
475 000 00
200 000 00
1 300 000 00
1 200 000 00
1 500 000 00
1 200 000 00
225 000 00
% of value
101 88
104 93
96 06
94 29
99 73
129 25
101 34
99 00
100 83
103 14
104 69
101 31
88 24
96 27
96 94
99 24
107 03
93 82
103 00
111 47
100 99
102 00
100 56
96 00
99 51
98 60
95 09
104 10
112 70
90 50
103 07
95 30
104 73
100 22
99 83
101 62
100 45
103 30
107 03
100 40
100 65
101 16
Average
Total value
509 400 00
6 574 080 40
6 628 320 00
2 357 170 00
997 300 00
8 465 745 00
1 773 367 50
2 326 500 00
453 735 00
773 520 00
418 740 16
4 001 583 50
3 617 840 00
577 644 00
6 713 323 25
4 366 681 00
5 137 575 00
2 439 330 00
824 000 00
1 616 271 50
4 544 350 00
1 020 000 00
1 508 400 00
4 872 047 50
3 134 623 50
493 000 00
1 521 434 89
1 769 703 00
1 127 000 00
905 000 00
6 081 087 00
953 000 00
1 518 554 00
1 002 200 00
3 494 015 00
482 695 00
200 900 00
1 342 900 00
1 284 360 00
1 506 000 00
1 207 764 00
227 602 80
unit
Total*
107 70
108 13
93 91
101 17
109 24
136 51
107 68
88 33
106 07
102 89
105 08
94 20
77 95
101 40
93 28
109 91
116 35
98 60
102 35
110 06
104 52
99 62
86 96
73 32
103 34
101 05
96 56
104 48
108 19
102 76
108 08
97 69
103 84
92 04
103 94
99 18
100 15
90 32
105 75
77 39
114 27
101 08
543 787 73
6 794 161 86
6 740 279 82
2 621 391 80
1 124 578 68
9 434 018 89
1 966 958 93
2 174 082 10
495 842 66
803 164 92
436 401 26
3 877 532 75
3 244 314 52
617 685 03
6 577 821 29
4 953 854 37
5 729 239 41
2 620 354 15
829 772 16
1 667 490 85
4 862 480 22
1 044 860 58
1 348 319 35
3 901 596 25
3 344 019 23
508 242 65
1 574 553 29
1 779 194 19
1 131 234 17
1 048 782 36
6 545 086 69
995 446 85
1 515 043 12
952 498 19
3 786 031 70
488 688 88
210 343 84
1 209 336 36
1 324 515 51
1 209 630 52
1 455 550 41
232 825 57
Annexes
Book value
Designation
JPMORGAN CHASE & CO
JPMORGAN CHASE & CO
KFW
KFW
KFW BANKENGRUPPE
KFW BANKENGRUPPE
KFW BANKENGRUPPE
KFW BANKENGRUPPE
KONINKLIJKE KPN NV
KONINKLIJKE KPN NV
LAFARGE SA
LAFARGE SA
LINDE FINANCE BV
LLOYDS TSB BANK PLC
LLOYDS TSB BANK PLC
MERRILL LYNCH & CO
MERRILL LYNCH & CO INC
MORGAN STANLEY
MUNICH RE FINANCE BV
NATIONAL AUSTRALIA BANK
NATIONAL AUSTRALIA BANK LTD
NATIONAL AUSTRALIA BANK LTD
NATIONAL GRID ELECTRICITY TRANSMIS
NATIONAL GRID PLC
NATIONAL GRID TRANSCO PLC
NATIONWIDE BUILDING SOCIETY
NATL GRID PLC
NEDER WATERSCHAPSBANK
NEW YORK LIFE GLOBAL FDG
NUON FINANCE BV
OEBB-INFRASTRUKTUR BAU
OTE PLC
PEMEX PROJ FDG MASTER TR
PEMEX PROJ FDG MASTER TR CORPORATE
PEUGEOT SA
PPR
PROCTER & GAMBLE CO
RABOBANK NEDERLAND
RCI BANQUE
RED ELECTRA FINANCE CORPORATE
REPSOL INTL FINANCE
REPSOL INTL FINANCE
Quantity
Amount of
par value
1 000 000 00
2 000 000 00
1 000 000 00
425 000 00
450 000 00
2 550 000 00
3 500 000 00
1 100 000 00
485 000 00
1 000 000 00
1 600 000 00
4 000 000 00
1 800 000 00
350 000 00
1 100 000 00
1 000 000 00
2 450 000 00
4 800 000 00
2 200 000 00
750 000 00
500 000 00
1 000 000 00
100 000 00
550 000 00
6 280 000 00
2 000 000 00
1 300 000 00
975 000 00
2 000 000 00
1 750 000 00
1 000 000 00
100 000 00
4 660 000 00
4 600 000 00
400 000 00
2 000 000 00
7 325 000 00
2 370 000 00
500 000 00
8 500 000 00
5 500 000 00
1 000 000 00
% of value
101 80
89 40
103 87
100 67
102 32
92 25
97 72
101 63
101 86
101 89
83 14
82 41
96 63
99 21
107 39
99 52
80 90
94 41
113 10
101 83
116 04
105 45
112 18
81 26
101 26
99 91
103 73
100 50
96 81
99 48
91 09
97 42
105 49
106 50
100 79
108 22
95 15
93 02
100 10
100 23
99 82
100 47
Average
Total value
1 018 000 00
1 787 900 00
1 038 660 00
427 847 50
460 440 00
2 352 375 00
3 420 312 50
1 117 930 00
494 021 00
1 018 920 00
1 330 208 00
3 296 300 00
1 739 296 00
347 231 18
1 181 279 00
995 230 00
1 981 959 50
4 531 776 00
2 488 280 00
763 702 50
580 200 00
1 054 450 00
112 180 00
446 924 50
6 359 139 00
1 998 100 00
1 348 490 00
979 836 00
1 936 180 00
1 740 900 00
910 850 00
97 421 00
4 915 995 00
4 899 222 50
403 176 00
2 164 400 00
6 969 990 00
2 204 642 00
500 520 00
8 519 829 66
5 490 100 00
1 004 650 00
unit
Total*
98 01
98 71
100 67
108 52
102 07
100 29
107 32
110 12
101 61
105 87
103 45
94 30
103 74
99 16
98 30
105 91
101 29
95 78
103 90
95 22
110 11
106 63
112 23
102 46
108 83
93 98
104 38
100 20
103 38
103 51
98 95
98 46
109 26
107 68
101 55
100 69
104 22
101 59
102 21
104 93
104 70
103 38
986 060 45
2 032 726 55
1 036 021 86
470 425 87
470 461 28
2 601 644 03
3 827 786 48
1 261 767 39
502 609 95
1 104 077 90
1 692 250 54
3 919 744 02
1 921 602 56
360 236 52
1 100 684 90
1 100 681 89
2 509 957 92
4 758 085 24
2 364 783 98
745 011 01
568 003 83
1 088 381 79
118 365 21
583 127 06
6 991 984 90
1 939 806 68
1 398 912 08
1 000 001 14
2 150 867 94
1 814 607 05
996 620 30
98 986 02
5 212 809 16
5 070 424 97
409 057 29
2 093 756 60
7 654 666 33
2 483 932 98
521 255 63
9 035 354 51
5 881 233 96
1 044 554 35
105
Annexes
Book value
Designation
RESEAU FERRE DE FRANCE
RESEAU FERRE DE FRANCE
ROLLS-ROYCE PLC
ROYAL BANK OF CANADA
ROYAL BANK OF CANADA
ROYAL BANK OF SCOTLAND PLC (THE)
RWE FINANCE B.V.
RWE FINANCE BV
CORPORATE
RWE FINANCE BV CORPORATE
SANPAOLO IMI
SANPAOLO IMI
SANTANDER INTERNATIONAL DEBT SAU
SANTANDER INTL DEBT SA
SANTANDER ISSUANCES SA UNIPERSO
SIEMENS FINANCIERINGSMAT
SNS BANK NEDERLAND
SNS BANK NEDERLAND
SOCIETE GENERALE
STANDARD CHARTERED BANK
SYNGENTA FINANCE NV
TELECOM ITALIA SPA
TELECOM ITALIA SPA CORPORATE
TELEFONICA EMISIONES SAU
TELEFONICA EUROPE BV
TELEFONICA EUROPE BV CORPORATE
TELSTRA CORP LTD
TERNA SPA
THYSSENKRUPP AG
TOTAL CAPITAL
TPSA EUROFINANCE FRANCE
UBS AG LONDON
UNICREDIT SPA
UNICREDIT SPA
UNICREDITO ITALIANO SPA
UNITED UTILITIES WATER PLC
VATTENFALL TREASURY AB
VATTENFALL TREASURY AB
VEOLIA ENVIRONNEMENT
106
Quantity
Amount of
par value
2 000 000 00
500 000 00
300 000 00
300 000 00
1 100 000 00
2 700 000 00
200 000 00
3 570 000 00
2 530 000 00
3 000 000 00
250 000 00
350 000 00
800 000 00
1 100 000 00
600 000 00
200 000 00
1 050 000 00
350 000 00
1 900 000 00
3 000 000 00
1 000 000 00
3 900 000 00
1 775 000 00
2 500 000 00
1 500 000 00
1 000 000 00
600 000 00
8 150 000 00
900 000 00
3 450 000 00
10 275 000 00
1 900 000 00
825 000 00
100 000 00
500 000 00
1 350 000 00
2 800 000 00
3 615 000 00
100 000 00
875 000 00
700 000 00
2 750 000 00
% of value
110 05
99 66
103 39
103 75
106 83
101 60
108 03
103 92
105 67
90 19
97 48
100 69
107 04
85 50
108 10
104 08
103 63
111 33
108 48
92 14
100 64
95 46
101 44
92 63
100 00
100 00
102 61
107 06
102 99
103 88
100 65
102 15
100 67
110 48
105 39
107 09
100 90
90 56
105 71
111 62
99 70
100 57
Average
Total value
2 201 029 00
498 300 00
310 170 00
311 256 00
1 175 152 00
2 743 250 00
216 060 00
3 709 865 00
2 673 574 60
2 705 820 20
243 689 68
352 427 25
856 354 00
940 500 00
648 600 00
208 163 24
1 088 115 00
389 655 00
2 061 137 00
2 764 065 00
1 006 400 00
3 722 762 00
1 800 603 63
2 315 700 00
1 500 000 00
1 000 000 00
615 660 00
8 725 345 00
926 910 00
3 583 800 00
10 342 219 50
1 940 850 00
830 543 75
110 481 00
526 970 00
1 445 674 50
2 825 256 00
3 273 837 30
105 705 00
976 631 25
697 900 00
2 765 590 00
unit
Total*
111 55
108 03
100 60
102 05
107 66
94 89
107 25
110 72
107 95
92 64
97 26
100 61
102 20
83 52
102 12
104 19
102 35
109 08
104 35
105 87
100 09
102 76
100 09
101 45
103 68
106 47
105 22
101 66
102 41
105 66
103 19
101 61
101 46
108 97
97 38
104 89
96 38
101 78
105 99
110 55
106 24
110 76
2 253 691 73
542 260 41
312 558 81
308 130 96
1 232 174 95
2 653 661 41
218 605 54
4 033 811 46
2 759 473 15
2 873 214 65
248 812 71
365 161 62
857 190 70
931 278 10
629 825 22
214 570 23
1 116 803 85
382 411 24
2 012 317 96
3 262 132 44
1 042 617 23
4 201 013 74
1 837 271 13
2 636 052 21
1 618 199 96
1 095 780 17
658 390 51
8 706 006 10
950 891 67
3 671 460 33
10 958 497 22
1 954 095 34
855 861 78
111 029 16
507 079 47
1 484 404 16
2 733 375 28
3 823 174 55
108 630 63
990 901 01
764 044 64
3 134 102 78
Annexes
Book value
Designation
Quantity
VERIZON WIRELESS CAPITAL
VODAFONE GROUP PLC
VODAFONE GROUP PLC CORPORATE
VOLKSWAGEN BANK GMBH
VOLKSWAGEN FIN SERV AG
VOLKSWAGEN INTL FIN NV
VOLKSWAGEN INTL FIN NV
VOLKSWAGEN LEASING GMBH
WESTFAELISCHE HYPOBANK
WOLTERS KLUWER NV
XSTRATA CANADA FINANCIAL CORP
XSTRATA FINANCE (CANADA) LTD
XSTRATA FINANCE (CANADA) LTD
ZURICH FINANCE (USA) INC
ZURICH FINANCE (USA) INC
sub-total
sub-total
Amount of
par value
803 00
6 300 000 00
1 500 000 00
1 500 000 00
500 000 00
2 600 000 00
590 000 00
200 000 00
3 000 000 00
2 500 000 00
1 000 000 00
5 197 250 00
3 500 000 00
475 000 00
3 100 000 00
4 500 000 00
5 700 000 00
175 000 00
464 956 872 96
580 238 372 96
893 00
605 024 997 89
% of value
Average
Total value
108 03
94 55
107 58
103 24
99 58
100 74
103 35
109 50
99 81
90 16
48 10
48 10
101 99
99 03
103 17
100 83
100 65
224 30
6 805 770 00
1 418 250 00
1 613 700 00
516 215 00
2 589 198 00
594 389 60
206 700 00
3 285 000 00
2 495 125 00
901 570 00
2 500 000 03
3 765 650 00
484 457 25
3 069 880 00
4 642 562 50
5 747 285 02
176 137 50
465 112 083 65
581 923 475 20
unit
Total*
108 95
101 96
126 30
103 48
109 60
100 96
102 76
112 84
106 40
105 14
52 34
106 32
101 68
105 62
103 98
104 98
98 72
704 48
6 903 219 36
1 533 133 08
1 899 495 70
519 061 05
2 924 834 15
602 824 48
208 419 50
3 484 135 80
2 734 821 52
1 061 411 82
2 720 240 65
3 887 837 15
499 728 50
3 364 160 28
4 800 700 14
6 058 207 34
177 066 86
487 444 012 63
611 783 345 77
2.3 - Trading derivatives
sub-total
2.4 - Hedging derivatives
sub-total
total
3 - GRAND TOTAL
607 345 675 28
636 682 207 81
* Includes the value of accrued interest
107
Annexes
BREAKDOWN OF THE PROVISION FOR CLAIMS IN RESPECT OF CLAIMS MADE IN PREVIOUS YEARS
AND OF THEIR READJUSTMENTS (CORRECTIONS)
Expressed in euros
Annex 2
Cost of claims *
Provisions for claims*
amounts paid during
as at 31/12/N-1
as at 31/12/N
the year
(1)
(3)
(2)
8 841 594
6 423 170
4 626 915
BUSINESSES/
GROUPS OF BUSINESSES
LIFE
NON-LIFE
ACCIDENT & HEALTH
FIRE & OTHER PROPERTY DAMAGE
MOTOR
THIRD-PARTY LIABILITY
OTHER COVER
MARINE, AIR & TRANSPORT
GENERAL THIRD-PARTY LIABILITY
CREDIT & FIDELITY INSURANCE
LEGAL PROTECTION
ASSISTANCE
SUNDRY
TOTAL
GRAND TOTAL
108
91 391 832
8 885 098
12 831 243
5 377 493
77 647 266
2 408 504
103 926 236
6 572 954
3 931 543
2 951 855
104 404
892 294
71 482
27 903 116
6 682 376
599 422
284 026
597
197 677
147 556
70 901 747
1 137 574
3 047 450
2 621 765
106 099
405 533
4 603
218 727 697
227 569 292
54 023 506
60 446 676
Readjustments
(3)+(2)-(1)
2 208 491
-913 323
-1 099 100
-5 121 373
1 246 996
-284 671
-46 065
2 292
-289 084
80 677
0
158 280 540
-6 423 652
162 907 455
-4 215 161
Notes: * Claims in year N-1 & earlier
Annexes
BREAKDOWN OF COST OF CLAIMS
Expressed in euros
Annex 3
BUSINESSES/GROUPS OF BUSINESSES
Amounts paid - instalments
(1)
DIRECT INSURANCE
ACCIDENT & HEALTH
MOTOR
OTHER COVER
LEGAL PROTECTION
ASSISTANCE
SUNDRY
TOTAL
REINSURANCE ACCEPTED
GRAND TOTAL
Amounts paid - claims
‘management costs imputed
(2)
0
115.528.751
44
115.528.794
Variation of the
provisions for claims
(3)
Cost of claims
(4)=(1)+(2)+(3)
1.067.606
745.498
867.835
-2.842.093
22.910.322
13.081.780
2.521.457
1.501.370
65.167
16.174
3.245
5.682
44.598
0
5.970.797
0
5.970.797
-10.716.268
90.246
-313.083
-4.353
38.165
-483.515
46.694
0
-13.316.373
32.746
-13.283.627
40.318.128
29.455.951
1.060.162
657.473
90.373
-279.525
888.512
0
108.183.176
32.789
108.215.965
BREAKDOWN OF VALUES BY BUSINESS LINE
Expressed in euros
Annex 4
Gross premiums
written
BUSINESSES/GROUPS OF BUSINESSES
DIRECT INSURANCE
ACCIDENT & HEALTH
MOTOR
OTHER COVER
LEGAL PROTECTION
ASSISTANCE
SUNDRY
TOTAL
REINSURANCE ACCEPTED
GRAND TOTAL
3 172
172 049 427
2 810 042
174 859 469
Gross
premiums
earned
32 477 331
20 536 402
99 189 902
61 353 866
37 836 036
2 107 455
2 620 869
70 921
1 155 884
9 404 544
3 220
167 566 528
2 810 042
170 376 570
Cost of claims
gross*
22 910 322
13 081 780
69 774 079
40 318 128
29 455 951
1 060 162
657 473
90 373
-279 525
888 512
0
108 183 176
32 789
108 215 965
Gross operating
costs & espenses*
Balance
of reinsurance
8 897 168
1 031 653
8 469 958
1 659 362
32 537 550
732 513
26 655 086
437 545
5 882 464
294 968
647 439
108 437
1 727 474
315 460
16 898
0
161 555
294 577
1 310 618
6 439 517
1 085
377
53 769 744
10 581 896
117
2 809 681
53 769 862
13 391 577
Notes:* Without deduction by reinsurers
109
Official Reports
Legal Certification of Accounts
Introduction
1. We have audited the attached financial statements of Liberty Seguros,
SA (“Company”), which comprise the Balance Sheet as at December 31,
2010, (which shows a total of €686,808,221 and total equity in the sum
of €111,888,325, including a net profit of €9,376,196), the Profit & Loss
Account, the Comprehensive Income Statement, the Statement of Changes in
Equity and the Cash-Flow Statement for the year then ended, and the Notes to
the Accounts.
Responsibilities
2. The Board of Directors is responsible for the preparation of financial statements that truly and fairly present the financial position of the Company, the
result and the comprehensive income of its operations and its cash flows, as
well as for the adoption of adequate accounting policies and criteria and for
maintaining an appropriate system of internal control.
3. Our responsibility is to express a professional, independent opinion based on
our audit of the said financial statements.
Scope
4. Our audit was performed in accordance with the Technical Rules and Auditing
Directives of the Association of Official Auditors, which require that it be so
planned and performed as to obtain an acceptable degree of certainty as to
whether the financial statements contain any materially relevant distortions.
For the purpose, the said audit includes:
− verification, on a test basis, of the documents underlying the figures and disclosures contained in the financial statements and an evaluation of the estimates,
based on judgements and criteria established by the Board of Directors, used in
their preparation;
− an appraisal of the adequacy of the accounting policies employed and of their
disclosure, taking the circumstances into account;
− verification of the applicability of the going concern principle; and
110
− an appraisal as to the adequacy, in overall terms, of the presentation of the
5. Our audit also included verification of the consistency of the financial information contained in the Management Report with the financial statements.
6. We believe that our audit provides an acceptable basis for the expression of
our opinion.
Opinion
7. In our opinion, the said financial statements truly and fairly present, in all
materially relevant aspects, the financial position of Liberty Seguros, SA,
as at December 31, 2010, the result and the comprehensive income of its
operations and its cash flows during the year then ended, in accordance with
accounting principles generally accepted for the insurance industry in Portugal as established by the Plan of Accounts approved by Regulatory Standard
4/2007 of April 27 and subsequent amendments thereto.
Report on other legal requirements
8. We are also of the opinion that the financial information contained in
Management Report is consistent with the financial statements for the year.
Ernst & Young Audit & Associados – SROC, SA
Sociedade de Revisores Oficiais de Contas
Represented by:
Ana Rosa Ribeiro Salcedas Montes Pinto (ROC nº 1230)
Official Reports
BOARD OF AUDITORS’ REPORT AND OPINION
To the Members of Liberty Seguros, SA,
Introduction
In compliance with applicable legal and statutory requirements and with the
mandate with which we were entrusted, the Board of Auditors is pleased to present
its report and opinion on the Management Report and other accounting documents
of Liberty Seguros, SA, issued by the Board of Directors at is responsibility, for the
period ended December 31, 2010.
Supervision
This Board of Auditors was elected at the General Meeting held on October 7,
2010, and immediately made a start to its duties, having monitored the management of the Insurer and the evolution of its business, and having held frequent
meetings with the extent considered adequate. These meetings were attended by the
operational managers of the financial area, particularly the CEO, the Controller,
the head of Internal Control - SOX, and the head of Compliance. We were also
in close contract with the Official Auditor who kept us informed of the planning
of its work, its scope and nature, and of the conclusions of the audits performed.
The Board of Auditors was also informed about the development of the process
of preparation and disclosure of the financial information and of the audit of
the accounting documents. Within the scope of its duties, the Board of Auditors
examined the Balance Sheet as at December 31, 2010, the Profit & Loss Account,
the Statement of Comprehensive Income, the Statement of Changes in Equity
which, in particular, includes the increase of the contributed capital paid up in kind
through the incorporation of all the assets and liabilities of the branch in Portugal of
Génesis Seguros Generales, SA, de Seguros y Reaseguros, the Cash-flow Statement
and the Notes to the Accounts for the period then ended, with which we agree.
It also appraised the Management Report issued by the Board of Directors and the
Legal Certification of Accounts issued by the Official Auditor, which was issued
with no reserves or emphases, which warranted the agreement of the Board of
Auditors. In performing its duties the Board of Auditors obtained at all times from
the Board of Directors, the Insurer’s various services and the Official Auditor such
information and clarification as was requested, providing an understanding and
assessment of the evolution of the business and of its performance and financial
position, and also of the risk-management and internal-control systems.
Complying with the requirements of Article 420.6 of the Companies Code, the
Board of Auditors declares that, to the extent of its knowledge, the information
contained in the financial statements and other accounting documents under appraisal was drawn up in accordance with applicable accounting, legal and statutory
requirements, providing a true and fair image of the assets and liabilities, financial
position and results of Liberty Seguros, SA, and that the management report truly
sets out the evolution of the business, the performance and the financial position,
and it contains a description of the main contingencies and uncertainties with
which the Insurer is faced.
DECLARATION OF RESPONSIBILITY
In accordance with the provisions of Article 420.6 of the Companies Code, the
members of the Board of Auditors declare that, to the extent of their knowledge,
the information contained in the Management Report and other accounting
documents has been drawn up in conformity with the applicable accounting standards, providing a true and fair image of the Company’s assets, liabilities financial
position and results.
They further declare that the Management Report truly sets out the evolution of
the Insurer’s business, performance and position, and that it contains a description
of the main contingencies and uncertainties with which it is faced.
OPINION
Taking the Foregoing into account, we are of the opinion that the following be
approved:
1. The Annual Management Report and the accounts presented by the Board of
Directors in respect of 2010;
2. The proposal for the appropriation of profit contained in the said Management Report.
THE BOARD OF AUDITORS
CLOSING REMARKS
The Board of Auditors expresses its gratitude for the co-operation received from
the Board of Directors and from the managers of the Insurer’s relevant areas, as
well as to the Official Auditor.
111
CENTRO DE CONTACTO
Liberty Seguros
Geral
808 243 000
+351 21 312 43 00 (no Estrangeiro)
Av. Fontes Pereira de Melo, 6 - 11º
1069-001 Lisboa
Fax Geral: 21 355 33 00
producao@libertyseguros.pt
Fax Sinistros: 21 355 33 52
sinistros@libertyseguros.pt
Serviço de Assistência
Clínica Liberty Seguros
800 505 112
+351 21 312 43 33 (no Estrangeiro)
Assistência Auto
800 505 CAR (227)
+351 21 312 43 30 (no Estrangeiro)
Assistência Lar e Comércio
808 505 LAR (527)
+351 21 312 43 31 (no Estrangeiro)
Protecção Jurídica
808 505 111
+351 21 312 43 32 (no Estrangeiro)
Outros Ramos de Assistência
808 505 LIB (542)
+351 21 312 43 35 (no Estrangeiro)
www.libertyseguros.pt
Contacts
Centro Liberty Auto Évora
Rua Manuel Correia Lopes, 18
7005-145 Évora
Tel.: 266 751 112
Centro Liberty Auto Leiria
Rua da Barcaria, 51, Parceiros
2400-441 Leiria
Tel.: 244 830 490
Centro Liberty Auto Lisboa
Rua Prof. Henrique Barros, 2 C/v
2685-338 Prior Velho
Tel.: 808 505 252
Fax: 21 942 20 32
cla@libertyseguros.pt
Centro Liberty Auto Santarém
Rua do Moderno, 18/20 - Grainho
2005-021 Casais Quintão
Tel.: 243 351 981
Fax: 243 351 960
ribafragoso@gmail.com
Centro Liberty Auto Paços de Ferreira
Rua do Fontelo, 154
4594-908 Freamude
Tel.: 255 870 128
Fax: 255 878 763
geral@autofilivone.pt
Centro Liberty Auto Portimão
Zona Industrial Coca Magalhães, Lt. 55
8500-483 Portimão
Tel.: 282 475 970
Centro Liberty Auto Porto
Rua Manuel Pinto de Azevedo, 269 Armz.3
4100-321 Porto
Tel.: 808 505 252
Fax: 22 011 02 39
cla_porto@libertyseguros.pt
Centro Liberty Auto Torres Vedras
Estrada Nacional 9 – Fonte Santa
2560-250 Torres Vedras
Tel.: 261 319 500
Fax: 261 319 586
francisco.agostinho@bretescar.com
Design
Editando - Edição e Comunicação, Lda.
Junho de 2011
Centro Liberty Auto Viseu
Rua do Marcão, Campo Bairro da Cumieira
3515-432 Viseu
Tel.: 232 459 716

Annual Report - Liberty Seguros

Transcription

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