CIG Pannónia Életbiztosító : 2023. I. Quarterly Report (IFRS)

CIG PANNONIA

LIFE INSURANCE PLC.

Quarterly report

On the basis of the consolidated financial statements prepared according to the International Financial Reporting Standards adopted by the EU

Q1 2023

					30 May 2023, Budapest	1
CIG Pannonia Life Insurance Plc. - Quarterly report

dr. István Fedák

Chief Executive Officer

Summary

Preamble

The Issuer would like to draw the attention of Shareholders and other capital market actors to the fact that this is the first report prepared in accordance with IFRS 17, which is based on a different logic and methodology than previous periodic reports, and therefore the understanding and analysis of the facts, data and information in the report published in light of these rules requires knowledge of the regulatory logic.

Our company, as a premium category issuer of the Budapest Stock Exchange, due to this new content, intends to formulate all relevant information in an objective manner in the summary, which helps to assess the Issuer through the eyes of investors, and tries to present the accounting differences caused by the deviation from the previous accounting principles in their full context, and with explanations. In order to fully understand the new assessment - in our opinion - needs to be analyzed for several periods, since the review of the Issuer's business performance at new standards are based upon actual business occurrences.

1. SUMMARY

1.1 Economic summary

TARTALOM

Summary	2
Financial statements	16
Transition to IFRS 17	23
Changes of accounting policy	50
Operating Segments	51
Number of employees, ownership
structureNumber of employees,
ownership structure	56
Information published in
the period	58
Disclaimer	59

CIG Pannónia Life Insurance Public Limited Company (registered office: 1097 Budapest Könyves Kálmán krt. 11, building "B"; company registration number: 01 10 045857; court of registration: Registry Court of the Metropolitan Court (hereinafter: Issuer or Company) publishes on this day its first quarterly report (hereinafter: Report) for 2023. The Issuer publishes in this Report for the first quarter of 2023, as required by the legislation, its consolidated, unaudited data in accordance with the International Financial Reporting Standards adopted by the EU (hereinafter: EU IFRS). The Report has been prepared in accordance with the provisions of IAS 34.

1.1.1. Significant results of the first quarter of 2023:

• Our organic consolidated after-tax profit increased more than threefold compared to last year's first quarter - reaching HUF 93 million - if we exclude the one-timeHUF 475 million tax effect of the capital increase due to the transition to IFRS 17.
• This report is the first financial report published in the Hungarian insurance market that complies with the new IFRS 17 standards, which significantly changed the conceptual and valuation framework used in the market until now.

CIG Pannonia Life Insurance Plc. - Quarterly report	2

Summary

1. SUMMARY

(continuation)

• The use of the IFRS 17 accounting transition methodology for 31 December 2021 increased the consolidated equity at that date by HUF 7.3 billion - 56% - thus increasing the ownership value. However, due to the tax impact of the transition the aforementioned tax charge of HUF 475 million needs to be taken into account, which is charged to the profit for the first quarter of 2023.
• Our premium income grew by 33% in one year, reaching nearly HUF 11 billion. Compared to the last quarter of 2022, this is an increase of HUF 1 billion. Premium growth is driven by an increase in the portfolio of long-term insurance contracts in both segments.
• The result of the short-termcontracts of our life insurance segment - the products valuated with the so-called PAA methodology - grew by HUF 130 million in one year, and the result of the long-termproducts of our non- life insurance segment - the products valuated with the so-called GMM model - increased by HUF 147 million in annual comparison.
• According to the IFRS 17 methodology, our consolidated after-tax profit for the entire year of 2022 is HUF 200 million higher than the old result according to IFRS 4.
• Our insurer's capital position is stable, our capital adequacy ratio is 215%.

CIG Pannonia Life Insurance Plc. - Quarterly report	3

Summary

The transition to IFRS 17 has	During the first quarter of
The transition	2023
our income
to IFRS 17 has
increased our	has increased
equity by	by 38%
56%1	and the profit
and increased	after taxation
our profit by	has increased
200 million	by 3x3
HUF2

300,000+	200,000+
shared customers	shared customers
with MVM cPlc.	with MBH Bank Plc.4

1,500+	+80%
active advisors	joint new
in the branch	business with
network of MBH	MBH Bank Plc.4
Bank Plc.4	compared to Q1
	2022

1in the matter of 31.12.2021.

2in the 2022 comprehensive financial year compared to the IFRS 4 report, as well as at consolidated level. 3at consolidated profit after taxation level.

4Formerly MKB Bank Plc., Takarékbank cPlc.

1.1.2. A short summary for the interpretation of our report

Our first quarterly report for 2023 is a milestone in the life of both our Company and the domestic insurance sector, as it is the first report published in accordance with IFRS 17 after a long and intensive preparatory work. We are also the first in the Hungarian capital market to provide investors with the most important financial and economic information, our stock market flash report, in accordance with this new set of rules. The interpretation of each new standard requires a new approach and a deeper understanding of the principles and practical applications in order to enable the full interpretation and analysis of our results. We have supported this learning journey by already providing details of our new IFRS 17-compliant accounting policies in our annual financial statements for 20225. The first practical application of this new accounting policy is indeed our current 2023 Q1

Summary

report. Due to the nature of the publication of the quick reports our report is unaudited. The full audit for the year 2023 will be done in 2024Q1 just like in every year.

It is very difficult to summarize the key features of a standard that has taken several years of preparation and development to implement, but we believe that knowledge of the key features is essential to the interpretation of the Company's financial statements:

• We use three valuation methodologies, the application of which is determined by the characteristic of the particular product. These valuation methodologies and the valuated product groups are as follows:

Segment / valuation	GMM	VFA	PAA
methodology
Life insurance	- traditional (risk) life and
segment	accident insurances,	- unit linked life and pension
	- permanent group life	- annually renewed individual
	and permanent accident	insurances,	and group life, accident and
	- traditional savings (mixed)
	insurances,	health insurances
	life, grace and pension
	- group credit coverage	(typically short-term, one-
	insurances ,
	insurance with life insurance	year, annually renewable
	(typically long-term, multi-
	services,	contracts)
	annual contracts)
	(typically long-term, multi-
	annual contracts)
Non-life insurance			- home insurance,
segment	- technical, guarantor		- travel insurance,
	insurances		- fleet casco,
	- group credit insurances,		- industrial property and
	non-life insurances		liability insurance,
	(typically long-term, multi-		- group non-life insurances
	annual contracts)		(typically short-term, one-
			year contracts)

5 See details in Chapter 3 of this report	5
CIG Pannonia Life Insurance Plc. - Quarterly report