vsk insurance house. annual report 2013 eng

KEEPING CALM THEORYFor Large Business and Individual Entrepreneurs

Annual repor t 2013

RUB

38.5 bln RUB

18.5 bln

MAIN PERFORMANCE PARAMETERS

Assets, billion rubles

Insurance reserves, billion rubles

Capital, billion rubles

2009

2009

2009

2010

2010

2010

2011

2011

2011

2012

2012

2012

2013

2013

2013

19.3

12.5

5.2

24.7

17.7

5.3

26.6

18.7

6.0

32.2

22.0

7.5

38.0

26.4

7.8

Collections, billion rubles

Payments, billion rubles

Share

2009

2009

2009

2010

2010

2010

2011

2011

2011

2012

2012

2012

2013

2013

2013

20.0

3.8%

12.1

25.9

4.5%

13.8

30.8

4.5%

17.4

34.8

4.2%

17.6

38.5

4.2%

18.5

LEADERSHIPVSK has been working since 1992 and is one of the acknowledged leaders in the insur-ance service market of Russia.

RELIABILITYEvery year VSK confirms the highest national rating A++ “Exceptionally high reliability lev-el” under Expert RA rating agency version.

TRUSTOver 10 million Russians and more than 130 thousand enterprises and organizations are under VSK coverage.

MERITSThe high level of Company’s work has been acknowledged by the professional compa-nies of insurance market. Besides the Presi-dent of Russia as well as was twice awarded the gratitude of the President of Russia for the major contribution to the development of insurance business (in 2002 and 2007)

SCOPEVSK regional chain accounts to over 600 branches and divisions in all the constitu-ent entities of Russia, which allows effec-tively support insurance policies and settle losses all over the country.

ANNUAL REPORT 2013

ANNUAL REPORT 2013

CONTENTS

Message from the Chairman of the Board of Directors .................................... 05

Message from the Director General ...................... 07

VSK Mission and Values ...................................... 08

Insurance market in 2013 ................................... 10VSK Positions in the Insurance Market ...................... 12

Key Performance Indexes ................................... 16

Capital .......................................................... 16Insurance reserves ........................................... 16Actuarial Policy ................................................ 17Priority activities ............................................. 18Insurance Portfolio Coverage ................................ 18Assets management ........................................... 18

Insurance Results .............................................. 22

Insurance types ..........................................................22Property insurance for enterprises ........................... 22Agricultural risks insurance ................................... 24Construction and Assembly risk insurance ................... 26Aviation risks insurance ....................................... 27Space risks insurance .......................................... 28Cargo and carriers’ liability insurance ........................ 30Legal entities’ liability insurance ............................. 31Motor insurance ................................................ 33Property insurance for Citizens ............................... 34Mortgage insurance ............................................ 36Voluntary Health insurance ................................... 36Accident and illness insurance ................................ 37Travel insurance ................................................ 38

2

Sales channels ......................................................... 42Direct sales in the corporate segment ....................... 42Competitive sales .............................................. 43Retail insurance ................................................ 44Affiliate Sales .................................................. 45

• Bank insurance ........................................... 45• Leasing companies ....................................... 46• Automotive dealerships .................................. 47

Insurance technologies ...................................... 50Claims settlement ............................................. 50Underwriting .................................................. 52Legal support .................................................. 53Subrogation activities ........................................ 55HR policy ....................................................... 56Business integrity ............................................. 61

Strategy of Regional development ....................... 64Central Federal District ....................................... 65Volga Federal District ......................................... 66Northwestern Federal District ............................... 67Ural Federal District .......................................... 68Southern Federal District .................................... 69Siberian Federal District ...................................... 70Far Eastern Federal District .................................. 71North Caucasian Federal District ............................ 72

Information Technologies ................................... 73

Charity activities .............................................. 74

Balance sheet ................................................... 75

3

Dear ladies and gentlemen!

2013 was a real challenge for the whole insurance market of Russia: the enterprises had to optimize their insurance budgets because on the total reduction of macroeconomic indicators. Despite the conditions of severe competition VSK successfully finished another period with high financial indicators and achieved a new record by collections – over 38.5 billion rubles.

We managed to overcome new market challenges, having intensi-fied the policy of individual complex approach to each customer. In many respects therefore VSK managed to confirm the leader’s title in the mortgage insurance, leasing transactions insurance and pledge insurance again as well as to win the status of the most loyal insurer among the major insurers.

Once upon a time, when we decided that our customers are our partners, VSK started to orient at the customer. We mastered our technologies during the recent years, which permitted our part-ners to conduct their business. It’s a pleasure that our forces were seen, and last year the expert Board of the National Competition

“The Company of the Year” named VSK the best insurance company, having marked the careful attention to the perfection of the cus-tomer’s service.

It goes without saying that this achievement is the result of the well coordinated efforts of the whole team of VSK, which is com-prised of more than 600 branches and offices throughout the coun-try. Many of our customers point out the professional properties of the company’s employees. It is especially pleasant that we get positive responses not only at the stage of sales but within settle-ment of losses. Following the high standards policy, we approved the corporate program of enhancement of the customers’ loyalty via the perfection of the loss arrangement system, including the reduction of the terms for case examination.

We are not going to be satisfied with what has already been achieved and we continue looking for the optimal business solu-tions for our customers. The team of VSK professionals contributes all the accumulated knowledge and experience to develop each new product or service, so that our partners could feel stable and maximally comfortable further.

Possessing business identity, the company increases its financial result stably. The new bar is set for the following year. We are cer-tain that our ambitious plans will be fulfilled!

Chairman of the Board of Directors of IOJSC “VSK” Sergei Tsikalyuk

5

Dear ladies and gentlemen!

Summing up the results of the year of 2013, we are glad to mark the high level of trust on the part of our partners and customers. During the last year we secured the insurance protection to over 130 thou-sands of organizations and to over 10 million citizens. Our activity resulted in the risk hedging covering totally over 1,000 trillion ru-bles. The collections by VSK, when compared to 2012, increased by 12.6% and made 38.5 billion rubles.

The company concentrated its main efforts traditionally in the sphere of increase of the customers’ loyalty. In 2013 we consider-ably advanced in application of individual approach policy when working with our customers, to select optimal ways of insurance protection to each of you and to promote to construct the effective risk management system.

By supporting the unified high standard of servicing in all the branches and offices, we managed to get the high level of custom-ers’ satisfaction. By continuing the traditions of orientation at the customers, including when settling losses, – we reduced the terms of payments, improved the notification on the procedure of case consideration, increased the total comfort level when communicat-ing to us.

Working constantly over the increase of level of business technol-ogy, we opened online sales channel in 2013. Now our customers may buy the policy for travelers going abroad at the site, and in the nearest time we plan to extend the proposal due to “box” products on life, health and property insurance of individuals.

Off course such changes required active work with staff. In 2013 we developed and implemented the Corporate Governance Code. Its norms intend to ensure profound and consequent adherence of the highest values of the business relations by all the employees: reli-ability, integrity and transparency, commitment to common result, respect to each customer and colleague, professionalism and con-tinuous development.

Nowadays we can see that our internal work yields the serious re-sults. The company looks into future with confidence and is ready to new achievements!

Director General of IOJSC “VSK” Oleg Ovsyanitsky

7

VSK MISSION AND VALUES

MissionWe seek to be a national scale and importance company, which will change the attitude to insurance in Russia, having proved that it may be based on partnership and trust.• We develop the insurance market paying special attention to

economics of the regions• We support our corporate customers and partners in their at-

tempt to build a stable business• We consider performance of all the undertaken obligations a

condition for insurance development in Russia.• We build long-term and mutually beneficial relations giving

confidence to people and safeguarding their ordinary world.


8

Values

Honesty and opennessWe consider that only open and honest relations may be called partnership. All the work among the company employees and sub-divisions, as well as with all the partners and customers is based on the honesty and openness principles.

Focus on the common resultInteracting with each other, our customers and partners, we base upon the statement that we are doing a common business, we have common purposes, which achievement is beneficial to all the par-ticipants.

Respect to each employee, customer and partnerAll our colleagues, customers and partners deserve equal respect.

Professionalism and developmentFor the whole team to be strong, each of its members should share the company philosophy, be a part of the whole and perform the tasks posed to them the most effectively. It is important for us not to stop where we are, but persist in perfection and development. As real professionals we are always ready to undertake responsibil-ity for our deeds and actions.

Succession and traditionsMaintenance of the established and creation of the new traditions is an integral part of the company corporate culture. Our history is experience and knowledge allowing us to succeed.


9

INSURANCE MARKET IN 2013

INSURANCE MARKET IN 2013By the results of 2013 the total amount of insurance premiums (ex-cluding obligatory health insurance) made up 905 billion rubles, having exceeded the indicator of the similar period of the last year by 11.4%. The amount of compensations increased by 13.5% and reached 421 billion rubles. On the background of growth of the insurance market main parameters the compensations ratio made 47% by the results of 2013 (46% for the previous year).

Insurance share in the GDP by the year results increased to 1.35% (1.30% in 2012). The costs of the population for insurance in-creased in nominal terms by 18% to 479 billion rubles, the insur-ance premium share in total costs of households for consumption reached 1.39% against 1.3% in the previous year.

Collections and payments over the market

Number of companies operating in the market continues sustain-able decline. In general, as of the end of 2013 the register of insur-ance subjects included 420 insurers. For the year the sector lost 38 players. The share of TOP-10 largest companies in total collections reduced (by 0.3 p.p.) to 56.8% for the first time during 5 years.

2009 2010 2011 2012 2013

514 558665

809905

56 % 53 %46 % 46 % 47 %

Premiums collections, billion rubles Payments level,%

10

The main contribution to the collections amount was ensured by such insurance types as hull insurance (212.3 billion rubles), prop-erty insurance (181.5 billion rubles), MTPL (134.2 billion rubles), voluntary health insurance (115 billion rubles), accident and ill-ness insurance (93.8 billion rubles) and life insurance (84.9 billion rubles). Positive collections dynamics may be observed in all the segments.

Among the large segments of the insurance market, life insurance (60.5%) and accident and illness insurance (25.0%) demonstrate the highest growth. However, despite the significant growth rates, there is still no comprehensive market development. The seg-ments develop mainly for the account of physical persons credit-ing as the banks are the main sales channel for life insurance and accident and illness insurance products.

Number of insurance companies

TOP-10 Companies market share


2009

2009

2010

2010

2011

2011

2012

2012

2013

2013

702618

572

458 420

52.6%

55.0%

56.9% 57.1% 56.8%

11

VSK Positions in the Insurance MarketBy the results of 2013 VSK demonstrated stable growth in pri-ority insurance types and took the seventh place by the collec-tions amount in the RF. The share of VSK at the insurance market amounted to 4.2%, and the increment of premium incomes ex-ceeded the market level having made 12.6%. The greatest col-lections growth was noted in such insurance types as property insurance for citizens (27.4%), accident and illness insurance (20.0%) and MTPL (18.0%).

Increment of premium incomes of VSK relative market indicators


Accident and illness insurance

MTPL

Motor hull insurance

СLiability Insurance

Property Insurance (except cars)

Obligatory insurance of liability of hazardous facilities owners

TOTAL

25.0%

20.0%

10.5%

18.0%

8.3%

15.0%

-0.9%

5.2%

1.0%

3.8%

0.8%

3.0%

11.4%

12.6%

Market incrementVSK increment

12

VSK takes a confident place among TOP-5 of the RF insurance com-panies for such insurance types as compulsory insurance of liabil-ity of hazardous facilities owners (3rd place, holding market share of 11.0%), accident and illness insurance (4th place holding mar-ket share of 6.3%), property insurance for citizens (4th place hold-ing market share of 6.0%), MLTP (5th place holding market share of 6.2%) and hull insurance (5th place holding market share of 5.7%).

The Company insurance portfolio remains one of the most balanced in the market and at the same time meets the general structure of collections throughout RF both with regard to certain types and obligatory and voluntary insurance segments.

VSK portfolio structure by types


Voluntary motor insurance

MTPL

Accident and illness insurance

Enterprise property insurance (except cars)Insurance of citizens’ property and civil liability (except cars)

Voluntary Health Insurance

Construction and assembly operations

Cargo and Carriers’ LiabilityCompulsory insurance of liability

of hazardous facilities ownersTravel insurance

Aviation risks

Civil Liability of the Legal Entities

Agricultural risks

Space risks

32.6%

21.8%

13.0%

7.5%

4.9%

4.3%

4.2%

2.8%

2.7%

2.5%

2.5%

0.7%

0.4%

0.2%

13

Law of large numbers

Arithmetical mean of large number of the statistically

distributed additive components “is stabilized” with the growth

of this number.

Theory of sets

Set is a totality of various elements

conceived integrally.

(A (A (BB) C) C)v v vv v

Sn= 1—n

n

i=1∑x

i

limSn=µ

n –› ∞

Fx= 1[1+erf( x-µ )]——2 2√ 2

∂

MATHEMATICS

a+b=b+a

INSURANCE SOLVES TASKS OF ANY COMPLEXITY DEGREE WITH MATHEMATICAL EXACTNESS.

eiπ=-1

G=8πT

Gaussian distributionDistribution of sums

of random variables tends to normal.

π = 3.1415926535...

a>b & b>c =› a>c

Fx= 1[1+erf( x-µ )]

KEY PERFORMANCE INDEXESBy the results 2013, the Company demonstrated confident growth of collections and stability of financial performance indexes:• insurance premium for 38.5 billion rubles was signed as com-

pared to that of 34.8 billion rubles, collected in 2012• insurance compensations for the amount of 18.5 billion rubles

were paid that is 935 million rubles more than in 2012• net loss ratio, as the main parameter, characterizing the insur-

ance portfolio quality and — re-insurance coverage, as well as reasonableness of the tariffs used, made up 56.4%

• profit before taxation made up 419.5 billion rubles• profit after tax made up 293.9 million rubles• return on equity made up 4%

CapitalThe Company own capital by the results of 2012 exceeded 7.8 bil-lion rubles and made up 20.5% in the balance liabilities structure. Structurally the capital is distributed as follows by the results of 2013:• authorized capital – 3,200 million rubles (42.6% of equity) • additional capital – 1,128 million rubles (15.5%) • reserve capital – 260 million rubles (3.1%) • undistributed profits – 3,223 billion rubles (38.8%)

Actual solvency margin exceeds the standard by 1.9 billion ru-bles. The excess makes up 31.4%.

Insurance ReservesThe established structure and amounts of insurance reserves ad-equately reflect the Company insurance liabilities. The insurance reserves amount makes up 26.4 billion rubles with the share in the balance liabilities making up 69.5%.

KEY PERFORMANCE INDEXES

16


By the results of 2013, structurally the capital is distributed as follows:• unearned premium reserve — 13 billion rubles (49.2% of the

insurance reserve amount)• loss reserve – 12.7 billion rubles (48.0%) • equalization provision – 0.73 billion rubles (2.8%)

VSK is a profitable Company in all spheres. The result became pos-sible thanks to regular monitoring of tariffs, portfolio quality and balanced reinsurance coverage.

Actuarial PolicyThe Company actuarial policy is aimed to achieve maximal insur-ance business profitability in the long-term period via implemen-tation of the tariff policy accepted in VSK with unconditioned performance of the liabilities undertaken by the Company and the standards of the regulatory bodies for solvency and financial sta-bility.

Actuarial service main activities are:• tariffication of new insurance products• the Company portfolio quality monitoring in the available in-

surance products and business spheres• assessment of the Company insurance liabilities based on the

modern actuarial method• assessment of reinsurance coverage of the Company portfolio,

determination of optimal self-retention level and fair reinsur-ance price

• insurance compensations amount, insurance reserves and in-surance portfolio quality forecast for the purposes of budget planning

The classical as well as original approaches and methods are applied within the specified insurance types. Namely, the multidimensional analysis technology is widely used to analyze the initial data (OLAP – cubes), the regression models are used for the budget planning pur-poses, the approaches using generalized linear model are applied for rate making. Large data bulks are being processed using modern server SQL – technologies.

The special type of the actuarial policy is operation within profes-sional unions of insurers and, namely, to generate the measures on the macroeconomic stabilization of the insurance market in the con-ditions of braking down of the economic growth.

17


Priority ActivitiesThe Company’s strategy is directed to increase the capitalization and to rise in profitability. The Company continues to increase the effectiveness of its activity by improvement of the structure of the insurance portfolio, increase of marginal auto business and optimization of acquisition costs under the portfolio of MTPL in loss making segments as well as by reduction of the level of ad-ministrative costs due to increase of performance of the back of-fice and middle office procedures.

Insurance Portfolio CoverageRisks reinsurance is one of the key factors to ensure the Compa-ny financial stability. One of the most effective risk reinsurance systems in the Russian insurance market is created in VSK. The Company analyses the activities and financial situation of the re-insurance companies carefully and cooperates with the most reli-able of them.

At the moment VSK has more than 15 obligatory agreements en-suring comprehensive and high quality portfolio coverage. The agreements are placed with leading western reinsurers, including Swiss Re, Munich Re, Hannover Re, Partner Re, Gen Re, SCOR, Alli-anz, Lloyd’s syndicates etc.

Outgoing reinsurance premiums in 2013 made up 1,763 million rubles. Effectiveness of reinsurance coverage is proved by high volume of compensations received from the re-insurers for large losses, paid by the Company to the insured and to the re-insured. Thus, in 2013 VSK received 255 million rubles as reinsurance com-pensation.

Assets managementThe investment strategy choice is caused by the objectives set to the Company, including the main ones in part of assets manage-ment:• ensuring required solvency and, accordingly, high assets liquid-

ity• ensuring investments recoverability, and, accordingly, minimi-

zation of different risks, accompanying investment activities• ensuring the competitive level of profitability of the invest-

ment portfolio

18

Centralized assets management is being implemented in the Com-pany. By the results of 2013 VSK income from investment activi-ties made up 1.9 billion rubles.

Active market portfolio management is performed in the Com-pany, that supposes both high quality fundamental analysis, designed for medium-term and long-term prospect, and current technical analysis, allowing to implement short-term speculative strategies.

The Company Bank portfolio is diversified by the number of banks and terms. This ensures its high liquidity and rather low risk of losses in case of some banks bankruptcy The portfolio is to 88% formed of instruments with the banks, listed in TOP-50 by assets amounts and international rating agencies ratings.

VSK has a centralized cash flow management system. All the transactions in the Company branches are controlled by the cen-tral treasury. There established remaining funds limits for the op-erating accounts of each of the branches, daily consolidation of amounts on the head company accounts is performed.

The tasks of receipt of investment income are solved by combin-ing main key lines in asset management:• via observance of the established standards for risks assess-

ment based on the methods, agreed and approved by the Com-pany financial committee with the establishment of limits for the amounts and terms of placement with the counter-agent banks

• via assessment of allocation effectiveness from the point of view of the volume and quality of counter-business from banks, leasing companies and funding the most profitable portfolios broken down by banks and branches

• with consideration of building and management the current liquidity

• via centralization of cash flows among the largest network partner-banks

• upon achievement of maximum possible profitability rates un-der the conditions of the current market environment

• via realization of high level of effective management of mar-ket portfolio of securities based on the strategic vision of the market, operating solving of the tactic tasks, monitoring and risk control, continuous exploration and realization of the in-vestment and speculative possibilities at the financial mar-kets considering the existing standards and CB restrictions.


19

E=mc2

F1=G

m1• m2

r2

g = 9.80665 m/s2

FA=pgV

Principle of universal gravitation

Mutual attractive force functions between any pair

of bodies in the Universe.

Archimedes' principle

The volume of the body immersed within the liquid is equal to the

volume of the liquid, which was displaced by it.

a = F—m

F=kN

pV=C

Law of motion

Body acceleration is in direct proportion to the equal

in effect forces applied to it and is in reverse

proportion to its mass.

PHYSICS

PHYSICAL LAWS CANNOT BE VIOLATED – EVERYTHING IN OUR WORLD IS PERMANENTLY INFLUENCED BY THE PHYSICAL FORCES. INSURANCE MAY ELIMINATE THE NEGATIVE CONSEQUENCES OF THEIR EFFECT.

INSURANCE RESULTS

Insurance typesProperty insurance for enterprisesBeing one of the leaders of corporate customers’ insurance market, VSK holds a considerable share of the enterprise property insur-ance in the segment. The Company takes active measures to de-velop the sales of property insurance lines for enterprises via its own branches and agents; the work with major federal companies is being extended.

Continuing the work with power, petrochemical companies, the enterprises of transport engineering, major pharmaceutical hold-ings, VSK also actively develops its presence in new market seg-ments. The comprehensive insurance programs for retail sector, fitness centers, medical institutions, and enterprises of restaurant and hotel business were developed and successfully implemented in 2013.

Traditionally, VSK is a leader on insurance of pledged property and property provided in leasing, and the long-term partner’s relations and joint work on perfection of services rendered to common cus-tomers promote it.

VSK keeps long-term partner’s relationships with its key custom-ers and has engaged new important customers. We render insur-ance to the following entities:• metallurgic, coal, light industry enterprises: Izhora Pipe plant

CJSC, Taganrog Metallurgic Plant OJSC, Ruzaevka Glass Plant CJSC, ElectroStalKonstruktsiya LLC, Metalservice OJSC, Magni-togorsk metallurgical complex OJSC

• enterprises of agricultural sector and food industry: Sinergia OJSC, Miratorg APKh, Velikolukskiy meat processing plant OJSC, Krasnaya Zarya Confectionery, Poultry factory Novgorodskaya LLC, Prodimex – Holding LLC, Alekseevskiy Bacon CJSC, Food In-gredients LLC, Agropromkomplektatsiya Agrarian holding

• bank sector companies: Sberbank of Russia OJSC, Central Bank of the Russian Federation, the First Czech-Russian bank, Voz-rozhdeniye Bank OJSC, Petrocommerce Bank

INSURANCE RESULTS

RUB

2.9 bln

PREMIUM

S

PAYMENTS

RUB

1.4 bln

22

• pharmaceutical companies: NPF Materia Medica Holding LLC, NPF Katren CJSC, ROSTA CJSC

• Machine building enterprises: Uralvagonzavod FGUP, Kirovskiy plant OJSC, Perm Motor plant OJSC

• power, gas, chemical and petrochemical industrial enterprises: Stroygazmontazh LLC, Himvolokno Shekinskoe OJSC, SANORS Petrochemical holding, RAO East Power Systems OJSC, Sakha-linenergo OJSC, Yakutskenergo OJSC, OJSC of Energy and elec-trical power Magadanenergo, Gazstroy LLC

• as well as major customers as: Festival LLC, Ust-Luga Company OJSC, ALIDI-Logistics CJSC, RENDER LLC, Everest CJSC, Salute Tourist hotel complex CJSC, Centrum Park Kaluga CJSC, Vostok-Service-Spetscomplex CJSC, Perfect consulting LLC, PETROLE-SPORT OJSC, Molniya clock plant in Cheliabinsk OJSC, Express-Retail LLC (Х5 Retail Group), Exima JSFEC CJSC.

Portfolio structure in enterprise property insurance (except cars)

Last year VSK actively developed the technologies of business pro-cesses automation: WEB-platform was developed on enterprise prop-erty insurance and automated calculating tools for insurance types.

The Company amended the legal entities’ property insurance rules. The methodological insurance basis was considerably reviewed and supplemented, which permitted to maximally adapt VSK prod-ucts and services to the needs of our customers. And compliance with the highest international standards permitted to develop work with major insurance brokers and to successfully participate in tender and bidding procedures.

INSURANCE RESULTS

57.9%

21.9%

13.3%

6.9%

Property of enterprises

Specialized equipment

Variable shelf stock at warehouse

Financial risks

23

The constant maintenance of the high professional level of the em-ployees of all Company’s branches by way of active remote train-ings permits VSK to secure the maximal professional approach to work with the customers.

Agricultural risks insuranceVSK is holding stable leading position in the traditional agricul-tural insurance market. Agricultural crops insurance, perennial plantings, animals insurance (including birds and fish) are per-formed within the frames of this type of insurance. In 2013 more than 1,000 agricultural enterprises and farmers in 71 regions of the Russian Federation became the Company customers. More than 1,800 insurance agreements were concluded with them. Many years of cooperation link the Company with such largest enter-prises as Miratorg APKh, AVK Exima CJSC, Russky Losos CJSC, Pri-oskolye Group of Companies, CoPITANIYA Agro-Industrial Holding, Mortadel Firm LLC, Otrada Gen LLC, Velikolukskiy Agro-Industrial Holding etc.

Besides agricultural risks insurance under the commercial rules, the Company also conducts agricultural insurance with state sup-port within Federal Law dated July 25, 2011 No. 260-FZ “On State Support in the Sphere of Agricultural Insurance and on Amend-ment to the Federal Law “On Agriculture Development”. Basing on the practical experience, specialists of VSK take active part in the development of proposals on perfection of the regulatory and legal basis, governing the system of agricultural insurance with state support.

VSK is a strategic partner of the banks providing loans to agri-cultural and industrial enterprises including: Sberbank of Russia OJSC, Rossiysky Selskokhozyastvenny Bank OJSC, Vozrojdenie OJSC, Gasprombank OJSC, Vnesheconombank Group, VTB OJSC, etc. The Company considers all the requirements of the credit organi-zations to the conditions of insurance protection provision in its work.

VSK insurance product line allows securing insurance coverage, which conforms to the highest demands of our Insured. Here any of the existing insurance products may be rapidly adapted to in-dividual needs of the customer or peculiarities of its production.

INSURANCE RESULTS

RUB

0.2 bln

PREMIUM

S

PAYMENTS

RUB

0.1 bln

24

The Company engages the independent experts being the special-ists in the sphere of crop growing and animal breeding to appraise more objectively the actual state of the facilities declared for in-surance as well as when settling losses. Such specialists possess not only theoretical knowledge, but also the required practical experience in these spheres.

One of the most important aspects, the Company pays special at-tention to each year, is reliable reinsurance coverage of risks ac-cepted for insurance. During many years VSK has been cooperating with the world leading reinsurance companies, which reliability was proved not only by the highest ratings, but also by the experi-ence of real compensations paid. Thus, the obligatory re-insurance agreements were in force in 2013, which secured the protection of Company’s portfolio on insurance of crops of the agricultural cultures and animals.

Protfolio structure in agricultural risks insurance

INSURANCE RESULTS

96.9%

3.1%

Livestock animals

Agricultural crops

25

Construction and assembly risk insurance2013 has become the year of the most efficient work on insurance of construction and assembling risks and constructors’ liability for VSK Insurance House. Insurance premium collections for these in-surance types made up 1,616 million rubles.

The scope of sales of insurance products of the construction and assembling risks gained the largest result in the history of VSK, namely 1,281 million rubles; facilities in various branches of econ-omy were insured.

In 2013 VSK insured the most expensive construction facility in its history – Gornaya karusel (Mountain Carousel) Sports and Tour-ist Complex and complex of ski jumps К-125, К-95 (Sochi, Krasnaya Polyana).

The other major insurance facilities of construction and assem-bling risks insurance were:• construction of power unit of branch of Quadra OJSC – Ry-

azanskaya regionalnaya generatsiya (Ryazan regional genera-tion)

• reconstruction of Moscow channel infrastructure facilities, 2nd stage, reconstruction of Kuzminsk hydroengineering complex

• arrangement of Thermokarst gas-condensate field for the peri-od of industrial operation

• reconstruction of the multifunctional student complex of P.I. Chaykovsky Moscow State Conservatory

• construction of vacuum unit of oil refining station in Ryazan Oil Refinery

• construction of the main cash settlement center of the Main Administration of the Bank of Russia in Novosibirsk Region

The insured objects of the road construction included: the recon-struction of the part of highway М-5 Ural in the Republic of Bas-hkortostan, construction of a part of bypass road in Omsk, major repair of Kola highway in the Republic of Karelia, etc. 2013 was a record-breaking year not only due to the collection of insurance premiums, but due to the payment of insurance indemnity. The payments made amounted to over 224 million rubles.

VSK is still keeping leading positions in the civil liability insur-ance of self-regulating organizations members, designers and construction surveyors. The premiums accrued under the liability insurance policies of the builders made up 334 million rubles.

Due to the amendments of the RF Town-Planning Code and amend-ments of civil liability insurance, VSK has conducted the inter-re-gional conference for the first time, having invited the represen-tatives of builders’ SRO management. The representatives of VSK

INSURANCE RESULTS

RUB

1.6 bln

PREMIUM

S

PAYMENTS

RUB

0.2 bln

26

took an active part in the work of the Financial Risks and Insur-ance Committee of the National Builders’ Union (NOSTROY).

An important event in the work with self-regulating organizations was the awarding of the VSK branch in Saint-Petersburg with the Winner’s Certificate in the category of “The Best Insurance Com-pany of Russia on operations with construction self-regulating organizations” (according to SRO rating) of II degree of Saint-Pe-tersburg Stage of the National Competition of the Russian builders “Stroymaster – 2013”.

Portfolio structure in Construction and Assembly Risks Insurance

Aviation risks insuranceDespite the strong competition and further consolidation of the aviation insurance market, in 2013 IOJSC VSK kept on systemat-ic development steadily retaining the leadership positions in this line of business.

The total volume of insurance premiums for this type amounted to 950 million rubles. The payments made over 129 million rubles.

As of today, the Company's customers include over 100 airlines and aviation enterprises of the Russian Federation, as well as of the neighboring countries and beyond. In addition to the Russian airline carriers and domestic aviation enterprises, VSK provides insurance coverage to aircrafts from CIS countries, Baltic coun-tries, Middle East countries, Africa, Australia and a number of oth-er states. Over thousand insurance agreements were concluded.

INSURANCE RESULTS

79.3%

20.7%

Insurance of construction and assembling risks

Builders’ liability

RUB

1.0 bln

PREM

IUM

S

RUB

0.1 bln

PAYM

ENTS

27

INSURANCE RESULTS

VSK customers are offered both complex insurance programs, cov-ering property risks for aviation enterprises, and individual insur-ance products intended for all kinds of aviation risks coverage. VSK provides insurance coverage of air flights to almost every re-gion of the world. VSK Insurance Policy is duly recognized by all states.

VSK has valid aviation risk reinsurance agreements related to air-crafts hull insurance with up to 20 million euro coverage, as well as liability insurance up to USD 650 million, including “worldwide coverage”. Thanks to this reinsurance program of ours, other Rus-sian and CIS insurers are provided with an opportunity to reinsure almost any aviation risks in VSK.

Portfolio structure in aviation risks insurance

Space risks insuranceFrom the very beginning of its business activity, the Company has been taking part in risks insurance of space industry. VSK makes it to the TOP FIVE of the major Russia space insurers, while also being one of the leading insurers involved in insuring launches of all military and civil spacecrafts in Russia. VSK Insurance House has been a permanent member of the Association of Aviation and Space Insurers since 1995.

A valid proof of the Company leadership position in space risks insurance sector is the fact that 172 space risks insurance agree-ments were signed in 2013. Portfolio growth in terms of compre-hensive space risks insurance continued in 2013.

92.4%

7.0% 0.6%

Aviation CNC insurance

Aviation liability

Aviation accident insurance

RUB

0.1 bln

PREMIUM

S

PAYMENTS

RUB

0.1 bln

28

The customers who entrusted our Company with insurance cover-age of their high-tech projects include the leading organizations, institutes and production enterprises of aerospace industry, such as: the Russian Space Forces, Strategic Missile Troops, Roskosmos, OJSC "NPO Energomash" named after V. P. Glushko, FSUE "NPO named after S. A. Lavochkin", OJSC "RSC Energia named after S. P. Korolev", OJSC "ISS named after M. F. Reshetnev, FSUE "Space Center named after M. M. V. Khrunichev", FSUE "Progress Space Cen-ter" and others.

An undoubted VSK advantage of insurance coverage at all stages of space units development, production, transportation and op-eration, as well as insurance of ground infrastructure personnel, third party liability insurance during space activities, along with accident insurance of SRS personnel of Ministry of Emergency Situ-ations of Russia during search and rescue operations.

The Company also continues to actively participate in the interna-tional space risk insurance.

Portfolio structure in space risks insurance

INSURANCE RESULTS

91.8%

8.2%

Space risks

Third-party liability insurance as a result of rocket and space activitySpace-rocket transportation insurance

0.03%

29

Cargo and carriers’ liability insuranceVSK actively cooperates with defense contractors, agro-industrial enterprises, food industry enterprises as well as commercial banks in the segment of cargo and carriers’ liability insurance. Sales and underwriting policy permits not only to deliver the sales plan but to create a sufficient reserve to settle losses, including under in-surance agreements, concluded with negative indexes or high loss level. Therefore VSK guarantees stability to its customers when recovering their financial losses.

In 2013 active work for making cargo insurance agreements with the transport and forwarding companies continued. VSK contin-ued and extended its cooperation with such large companies as ITEKO LLC, Alidi Enterprise LLC, LTK LLC, RTL LLC, TES-Yug LLC, Logisticheskiye resheniya (Logistic solutions) LLC, Evrotech LLC, FNS CIS LLC and many others.

In 2013 special attention was paid to the work with pharmaceu-tical enterprises. This work resulted in concluding of a number of agreements with the largest pharmaceutical companies of the Russian Federation: IRVIN LLC, Akrikhin LLC, Novosiboblpharm and many others.

The company continued to cooperate in Agro-Industrial Sector with Miratorg Group of Companies in insurance of all production chain of the holding: from carriage of the expensive equipment for industrial complexes, insurance of the large import supplies of animals on the territory of the RF up to the insurance of carriage of the finished products for the end user.

In 2013 VSK concluded new and extended the existing agreements for special cargo with the following large enterprises applying the accumulated experience and paying great attention to the insur-ance in military-industrial complex, namely: FSUE “NPO named after S.A. Lavochkin”, MIC “NPO mashinostroeniya”, MIC “Oboron-prom” JSC, Uralvagonmash named after F.E. Dzerzhinskyi Scientif-ic-Production Corporation” JSC, Burevesnik CSII JSC.

On January 01, 2013 the Law “On compulsory civil liability insur-ance of the carrier for the damage to the life, health, property of passengers” (CLIC) came into force. The law is applied to all the types of passenger carriages, except taxis, and subway has a special status. The active work permitted VSK to hold the share of 6% in collections in the new market segment. The largest VSK insured are: PAK-Invest CJSC (Kazan), Tikhoretskoye PATP JSC, Avtokolonna – 2068 JSC, Borskoye PAP MUE, Sakhalinskoye UTT LLC, Khabarovskoye PAP No. 1 MUE, KPATP No. 5 MUE, PATP-1 MUE, Kimrskoye ATP JSC, Yaroslavskaya transport company CJSC.

INSURANCE RESULTS

RUB

1.1 bln

PREMIUM

S

PAYMENTS

RUB

0.3 bln

30

Portfolio structure in cargo and carrier's liability insurance

Legal entities’ liability insuranceIn 2013 VSK was licensed to insure civil liability of owners of rail-way transport. Nowadays the Company is licensed to carry out all types of civil liability envisaged by the Law of the Russian Feder-ation No. 4015-1 “On organization of Insurance Business in the Russian Federation” dated November 27, 1992.

In 2013 the Company continued active work on compulsory insur-ance of civil liability of the owner of hazardous facility for the damage as a result of accident at the hazardous facility and fixed its position at the 3rd place in insurance premiums collections.

VSK, being one of the leaders in professional liability insurance, continued to work on keeping and increasing the cooperation with self-regulating organizations and unions of professional markets, which is confirmed by the presence of more than 40 accreditations for rendering of the services on insurance of the professional lia-bility.

VSK constantly monitors the market needs in products in insur-ance of the civil and professional liability. Based on the results of the analytical work in 2013 the Company brought new combined products on the market in insurance of the legal entities’ property and civil liability for the owners of the trading and business cen-ters as well as hotels and hostels.

INSURANCE RESULTS

42.2%

26.3%

31.5% Cargo

Carriers’ CLICVoluntary insurance of carrier’s liability

RUB

1.3 bln

PREM

IUM

S

RUB

0.1 bln

PAYM

ENTS

31

Being loyal to its regular customers, VSK started the promotional event in 2013 on concluding of the civil liability insurance agree-ments under favorable terms for the damage to the third parties as a result of fire when extending property insurance agreements of the legal entities.

Considering changes in the insurance legislation in 2013, VSK con-ducted methodological work on adapting of its rules to the new requirements.

In 2013 VSK continued its cooperation in the sphere of liability insurance of the manufacturer of goods with such largest enter-prises as: the Corporation of Uralvagonzavod, group of companies “Miratorg”, Krasnyi oktyabr JSC in Saint-Petersburg, 218 Aviation Repair Factory JSC, Uralskiy zavod grazhdanskoy aviatsiyi (Ural Factory of Civil Aviation) JSC and many others.

Portfolio structure in legal entities liability insurance

VSK, being a member of the Russian Nuclear Insurance Pool (RNIP), All-Russian Union of Insurers (ARUI) and National Association of Liability Insurers (NALI), continued an active participation in the operation of unions on making amendments in the regulatory doc-uments, including typical insurance rules developed within the specified professional insurers’ unions.

INSURANCE RESULTS

80.6%

19.4%

CICL of the owners of hazardous facilities

Voluntary insurance of civil liability

32

Motor insuranceIn 2013, the total motor insurance premiums of VSK amounted to 20.9 billion rubles, including 12.5 billion rubles from voluntary motor insurance insurance and 8.4 billion rubles from CMTPL in-surance.

The competitive product line and a wide range of services in the sphere of motor insurance provides the Company’s customers with the possibility to choose an optimal way of insurance protection combined with the price and scope of services when settling in-surance events. The long-term and close cooperation with such large partners as Karkade LLC, Element-Leasing LLC, Evroplan CJSC, RAF-Leasing LLC, Stone-XXI LLC, Sberbank Leasing LLC, Baltiyskiy Leasing CJSC, Sberbank of Russia JSC, Rosselkhozbank JSC, Bank Vozrozhdeniye JSC, Baltiyskiy Bank JSC, Petrocommerz Bank JSC, Moscow Credit Bank JSC, Rusfinance bank LLC and others confirms the high quality of the insurance coverage and effective work in motor insurance.

The well-developed regional network of the Company, strict com-pliance with the incurred obligations as well as effective construc-tion of business processes in motor insurance permit the Company to remain one of the priority partners of the largest manufacturers of cars and auto dealerships. In 2013 the Company continued its active cooperation with the official representatives of Audi, Volk-swagen, Skoda, Seat, Peugeot, Citroen, Ford, Hyundai, KIA, Lada, Honda as well as with such federal dealers as ROLF, Automir, Genser, Major, Nezavisimost, Favorit, Avilon.

During many years VSK is an active participant of the competitions to perform the state orders. The Company’s share in the scope of performance of state orders in the RF motor insurance sector re-veals its dynamic growth. Following the results of the open tender conducted in 2013, the leading Russian companies and enterprises, including the RF, Sberbank of Russia OJSC, Rosselkhozbank OJSC, Petrocommerz Bank OJSC and others became the customers of VSK in motor insurance.

Perfecting its system of methodology and underwriting, the Com-pany prepared the solid foundation in 2013 to start the new prod-uct line in 2014. The company’s insurance products still remain one of the most competitive in the motor insurance market. Thus “Uv-erennyi” product, which permits to completely protect the insured in case of a damage or loss of the vehicle, has a stable demand at the motor insurance market.

INSURANCE RESULTS

RUB

20.9 bln

PREM

IUM

S

RUB

13.0 bln

PAYM

ENTS

33

In 2013 VSK implemented the client and server system for motor in-surance policies execution on the territory of the RF. This software permits to optimize the costs and to control observation of the terms and conditions of the tariff policy of the Company as well as to promptly select the service for the client which conforms to his/her/its needs. Till the end of 2013 almost 90% of motor insurance agreements were concluded via this system, which is integrated into the software of the largest banks, like: Rolf LLC, AA Nezavisi-most LLC, Genser, MegaLabs CJSC, GK Svyaznoy.

Portfolio structure in motor insurance

Property insurance for citizensLast year the line of individuals’ property insurance in VSK once more revealed a high level of profitability and growth rate of the insurance portfolio. Herewith the Company continued to increase its presence in the whole territory of Russia, and the existing product line permitted to actively increase its staff of agents. By the results of 2013 Company is on the 4th place among the insur-ance companies of Russia in terms of the scope of collections in this insurance type, having fixed it at the level above 1.9 billion rubles. The Company’s share in the Russian insurance market of individuals’ property made up 6%. Thus the increase of collections on property of citizens made up 27.4% and exceeded the average market growth (15.8%).

INSURANCE RESULTS

57.1%

40.0%

0.7%1.9% 0.2%

Motor hull

Green card

Motor insurance in case of accidents

MLTP

VTLP

RUB

1.9 bln

PREMIUM

S

PAYMENTS

RUB

0.4 bln

34

To support the dynamic growth of this insurance type, in 2013 the Insurance Terms and Conditions were updated as well as modern-ization of the product and program line, development of new prod-ucts, especially pertaining to box type took place. The activation of works on updating the product line permitted to maximally secure the individual approach to each customer as well as to ar-range the effective interaction with the financial and non-insur-ance partners not only in real property insurance during mortgage crediting. Considering the innovative technologies and the cus-tomers’ needs, VSK actively develops the automation processes of its products. The possibility of remote execution and support of insurance agreements in the interactive environment will permit VSK soon to propose its clients the full-scale insurance “staying at home”, thus having preserved the high service level.

Portfolio structure in property and liability insurance for citizens (except cars)

INSURANCE RESULTS

70.8%

9.9%

9.4%

5.5%1.7% 0.2%

Citizens’ buildings insurance

Risk of title loss insurance

Municipal property insurance

Citizens’ property insurance

Insurance of residential premise owners’ liability

Lender’s Liability insurance

Pets insurance

2.5%

35

Mortgage insuranceIOJSC VSK remains a leader in terms of mortgage insurance ser-vices. In 2013 the company collected over 2.2 billion rubles in this segment.

2013 was marked by the increase of business processes effective-ness in mortgage insurance. The automation of business processes brought the considerable result, which was initiated in 2012 and permitted to considerably reduce the losses in mortgage insur-ance.

VSK once more confirmed the high quality of arrangement of loss settlement procedure in mortgage insurance: the market was demonstrated efficiency and customer-oriented approach when paying insurance benefit to the suffered in case of flood at the Far East in summer and autumn 2013.

The strategic initiative of 2013 is the centralization of the pro-longation portfolio management, which makes up to 65% of VSK collections in mortgage insurance. The expected growth of busi-ness indicators at the background of reduction of losses due to the centralization of the processes states that this initiative, along with the realized initiatives, permits VSK preserve its leadership in mortgage insurance segment.

Voluntary Health InsuranceIn 2013 VSK started a special project “Arrangement of the effec-tive Company’s growth on the Voluntary Health Insurance mar-ket”. The project mainly aims at the increase of VSK share in the market of voluntary health insurance up to 2% with preserving the planned level of loss.

The Company actively realizes the corporate programs of Volun-tary Health Insurance and special programs for employees of the enterprises and organizations of different spheres of activity as well as the individual specialized programs of the voluntary health insurance for individuals (Mogrant, RMA, Antiklesch).

Last year the cooperation agreements in the voluntary health insurance were concluded with many partners including: Tadjik State Insurance Company Tadjiksigurta, Kyrgyz Diaspora, Moldova Diaspora, Russian Mail, Svyaznoy Group.

The staffs of major federal companies became the company’s cus-tomers: Rostechinventarizatsia-Federalnoye BTI FSUE, Russian Standard GC, Svyaznoy GC, Vozrozhdeniye Bank JSC, Rosh-Moskva CJSC, Basalt SPE JSC, BT-Uralvagonmash CJSC and many others.

INSURANCE RESULTS

RUB

1.7 bln

PREMIUM

S

PAYMENTS

RUB

1.0 bln

36

Servicing under earlier concluded General Agreements with Sber-bank of Russia OJSC continued under the programs “Complex” and “Russian Medical Assistance”.

One of 2013 innovations was the implementation of the new in-surance program “Health aid during road traffic accidents” in three versions: “Plus”, “Optima” and “Premium”. This is a special program for individuals with the simplified underwriting system and low price. The program is aimed at medical costs insurance resulting from road accidents on the territory of the RF. The tar-get audience of the program is individuals (RF citizens and foreign subjects) interested in the insurance coverage in case of a road traffic accident.

The distant training courses on the products and technologies of the sales of the voluntary health insurance product line were developed for the sales units to secure the further growth of col-lections in the voluntary health insurance and the project devel-opment.

The approaches to risk-taking for insurance were changed within the perfection of the methodological basis; the tariff rates regu-lations were updated.

The gain in effectiveness of the health insurance and growth of VSK in the market of the voluntary health insurance is a strategi-cally important task. This task is implemented by rendering the qualitative servicing and medical services under voluntary health insurance agreements.

Accident and illness insuranceIn 2013 VSK developed all types of product sale of accident and illness insurance. The share of company at the Russian market of accident and illness insurance made up 6.3%.

During the second half of 2013 all Accident and Illness Insurance Regulations existing in the Company as well as the forms of the documents used when concluding and performing the accident and illness insurance agreements were updated in accordance with the requirements of the new revision of the Federal Law dat-ed November 27, 1992 No. 4015-1 “On organization of insurance business in the Russian Federation”.

To perfect the retail product line, realized via the Company’s agen-cy network, the new product “Accidents during road traffic acci-dents” was developed. The insurance coverage for the following risks is provided within this product: death, disability and tem-porary incapacity for work due to an accident as a result of a road

INSURANCE RESULTS

RUB

5.0 bln

PREM

IUM

S

RUB

1.4 bln

PAYM

ENTS

37

traffic accident (RTA). The need in this product was confirmed by the scope of sales already at the first stage of implementation: during the first six months more than 21,000 insurance agree-ments were concluded.

The product named “Accidents – Car owner”, which was developed earlier, was implemented in 2013 under the modern requirements to conducting business processes in the own front office system of the Company, which permits to engage the sale of insurance policies in the shortest terms in the sales points of the partners, to optimize Company’s costs on insurance agreements concluding and supporting.

VSK continued the cooperation in accident and illness insurance with its large customers, such as: Sberbank of Russia OJSC, Mos-cow Helicopter Works named after M.L. Mil LLC, Vysochayshiy OJSC, Lukoil-Energoseti (Lukoil-Power Networks) LLC. Besides the new important clients for the Company were engaged in 2013, among them it is possible to mark: State Corporation on Organization of Air Movement in the Russian Federation FSUE, Institute of Physics of High Energies State Scientific Center (GNTs IFVE) in Protvino, MRSK of the Center and Volga regions OJSC and many others.

Travel insuranceVSK has been a recognized leader in travel insurance for many years. The experience of VSK guarantees the protection of busi-ness of a tourist organization and the tourist himself/herself. Such noted operators are under the Company’s coverage as: Biblio Travel, TEZ Tour, Pegas Touristic, Labirint, Jet Travel and many others. VSK sells the following products:• civil liability insurance of a tour operator• insurance of medical and other unforeseen expenses• insurance of refusal from/termination of the travel

Due to the balanced pricing policy and qualitative underwriting, the Company has insured the liability of 958 tour operators for the total insured amount of 13.7 billion rubles. VSK manages to keep the loss ratio for this type at the planned level, when the large amount of the insurance companies has to leave the market due to this factor.

In 2013 the amount of the collected insurance premium under the program of travel insurance reached 976 million rubles, by more than 20% vs. 2012. The payments under this program for the past year exceeded 320 million rubles.

INSURANCE RESULTS

RUB

1.0 bln

PREMIUM

S

PAYMENTS

RUB

0.3 bln

38

One of the reasons for strengthening of the positions at the mar-ket is the IT component development. The Company has developed the methods and systems permitting VSK to conduct the effective integration with partners’ systems within the shortest time pos-sible. VSK software permits the employee of the partner organiza-tion to execute the insurance policy automatically when perform-ing his/her direct job duties.

In 2013 the Company started to sell policies under the program for going abroad via the Internet using its corporate site as well as using the resources of its partners.

In 2013 the new revision of the Insurance Rules of Health and Oth-er Unexpected Costs for the persons leaving their permanent res-idence, which permits to reach the qualitatively new service level when settling the insured events.

Portfolio structure in travel insurance

INSURANCE RESULTS

95.5%

4.5%

Accident and illness insurance for persons travelling abroad

Tour operators liability insurance

39

Earth

During the last 500 years the Earth mass increased

by billions of tones due to interstellar dust.

Stars

Nowadays the sky is conventionally divided

into 88 sections, which are stellar constellation.

1 bln t88 constellations

q=a(1-e)

Q=a(1+e)

T = 23h 56m 4.099s

C = 299 792 58 m/s

M = 7.35 · 1022 kg

The First Kepler’s Law

Each planet revolves around the sun over the ellipse, and the Sun

is in one of which focuses.

ASTRONOMY

INSURANCE IS LIKE A PART OF UNIVERSE, WHICH IS STRICTLY ORDERED: THE CLIENTS ARE STARTS, THE AGENTS ARE COMETS AND THE PARTNERS ARE PLANETS. AND ALL OUR ACTIONS ARE INTERCONNECTED AND SUBORDINATED TO THE STRICT LAWS OF ASTRONOMY.

Sales channelsDirect sales in the corporate segmentDirect sales in the corporate segment by the results of 2013 were the most intensive in VSK. The collections of insurance premiums made up over 7.5 billion rubles. The Company has formed the ver-tical of universal clients’ managers for direct sales, which secures a complex approach to detection of the needs, to appraisal of the risks and for the complete satisfaction of the needs of a corporate client in insurance depending on the activity characteristics.

• Construction complex

In 2013 the focus was to insure the construction and assembly risks in the facilities constructed using budgetary investments. The branches conducted regular works in construction and assem-bly risks arrangement with the tender winners for the right to re-alize the construction contracts at the expense of the funds allot-ted by the regions under the federal address investment programs. The similar work was conducted with the contractors of social in-frastructure facilities at the expense of the funds of the regional and municipal facilities: kindergartens, schools, and hospitals.

VSK continued to extend its positions in the insurance of the trans-port construction facilities at the expense of the federal budget. The largest insured facilities of the road construction included: reconstruction of the part of highway M-5 URAL in the Republic of Bashkortostan, the construction of the section of the ring road in Omsk, major repair of the Kola highway in the Republic of Karelia and others. This work resulted in the highest scope of sales of the construction and assembly insurance products in 2013 for the last years – amounting to 1.3 billion rubles.

• Hazardous facilities

Federal Law No. 225, “On Mandatory Insurance of Civil Liability of Owners of Hazardous Facilities for Damages Inflicted by Emer-gencies at Hazardous Facilities” came into force on January 01, 2012 pertaining to the hazardous facilities, which were used at the expense of the budgetary money of various levels. The work in this customer segment envisages the participation in the ten-der procedures on selection of the insurance services supplier. The Company managed to stay on the 3rd place in this insurance mar-ket, both by insurance premium and by the amount of insurance agreements. Herewith VSK share in the hazardous facilities’ insur-ance made up 11%. The largest insured of the Company included CAUSTIC OJSC, Omskiy kauchuk (Omsk rubber substance) OJSC, Magnezit Plant, Amurgaz OJSC, Sias pulp and paper plant OJSC.

INSURANCE RESULTS

42

• Military-industrial complex

Traditionally VSK remains one of the main insurers of the domestic military and industrial complex enterprises. The most demand-ed are the Company’s services to their property insurance, cargo, transport, staff. In 2013 the growth of the military defense enter-prises’ interest increased to the insurance of the most complicated risks, first of all to the insurance of various liability types. The Company’s clients include: Uralvagon zavod Scientific Production Corporation JSC, Ulan-Ude Aviation Plant JSC, Rosvertol JSC, KA-MOV JSC, Moscow helicopter plant named after M.L. Mil JSC, Mos-cow Institute of heating equipment Corporation JSC, enterprises of taktoicheskoye Raketnoye Vooruzheniye (Tactic Missile Arming Corporation) JSC, Almaz-Antey Air Defense Concern JSC, Vega Con-cern JSC, Sozvezdiye Concern JSC.

• Agro-industrial complex and food industry

In 2013 VSK managed not only to preserve such large partners as Miratorg Agro-industrial Company, Synergia JSC, ABK Exima CJDSC, Prodimex-Holding LLC, Russkoye Zerno LLCV, Altay-Invest LLC, but to insure the risks of new partners: TAVROS Managing Company LLC, Damate UK.

Competitive salesVSK is one of the leaders among the leading insurers in the com-petitive sales market.

In 2013 the Company participated in more than 50% of insurance services procurements. VSK was the winner in 35% of all procure-ments, where it participated. By the results of the open competi-tions, VSK concluded the state contracts with the Supreme Court of Russia, the Ministry of Justice of the Russian Federation, the General Prosecutor’s Office, the Investigative Committee of the Russian Federation, and the Federal Security Service of the Rus-sian Federation.

The Company was the winner of the competitions conducted by the authorities of the constituent units of the Russian Federation: Ivanovo Regional Duma, Tula Regional Duma, Government of Nizh-niy Novgorod Region and many others.

VSK renders insurance services under the state contracts to the territorial bodies of the RF Ministry of the Interior in more than twenty constituent bodies of the RF.

Availability of the required material resources, work experience, business reputation, high qualification level of specialists, per-mitted to conclude insurance contracts following results of ten-ders with the leading Russian enterprises and organizations, such

INSURANCE RESULTS

43

as: the Central Bank of the Russian Federation, Sberbank of Russia OJSC, Rosselkhozbank OJSC, Rosneft Oil Company OJSC, Zarubezh-neft OJSC, Rosseti OJSC, Complex power systems CJSC, Power sys-tems of the East RAO JSC as well as enterprises of Rosatom State Corporation on Atomic Power and Rostekhnologiyi State Corpora-tion.

Retail insuranceVSK Insurance House ensures implementation of the full cycle of organization and management of retail sales via its agent channel and customers halls. The retail network, including rendering ser-vices to VIP-customers, secures a full scope of collections, which makes 20% of the insurance portfolio of the Company, which in its absolute value exceeded 7 billion rubles in 2013. The agent sales channel is a basis for the retail business, securing almost 90% of collections in the retail channel. VSK retail network contains over 8 thousand active customers, which average performance amounts to 150 thousand rubles per quarter, including nearly 2.5 thousand of productive agents.

The created agents’ network is not uniform; the Company proposes its “anchor” technologies for each profile. They permit to secure the interest in cooperation and to form loyalty.

VSK proposes the adapted teaching system for the new and de-veloping agents, to whom the agency activity is new trade as well as a temporary or additional earning. Due to this system the agents-beginners already after the first 3 days of teaching may carry out the primary sales of the simple box products.

The professional agents working independently or individual en-trepreneurs having their own network of the dependant agents is a circle of the most loyal agents constantly working with the Com-pany, being VSK network core. These intermediaries may be pro-posed individual terms – in terms of organization of their activity as well as when establishing the remuneration. The “Supervisor” motivation program is envisaged for the agents interested in the complete management of their groups.

Part-time agents, whose primary work secures the customer flow, making their portfolio is insurance connected with the activity of builders, realtors, tourist agents, employees in the sphere of ed-ucation or public services. Such intermediaries mainly need the comfortable servicing system and information system provided by the managers, which are fixed to these agents.

All categories of agents are provided with the possibility to get information in their personal cabinets at the agents’ portal. This web-resource provides the personal information on the terms of

INSURANCE RESULTS

44

the regular contributions under the insurance agreements and re-newal of agreements as well as provides the possibility to check in details of the settlement results.

The option of automated notification of the agents on the loss settlement statuses under their customers’ agreements (if the lat-ter agree) is a new option for the market.

2013 was marked by two main innovations for the “Customers halls” channel and agents network, namely – by the extension of the line due to the alien financial products and the pilot project in use of the mobile acquiring by the agents. The joint project with Sberbank of Russia OJSC started in Moscow and is scaled in 2014.

Affiliate Sales

Bank insuranceBy the results of 2013 VSK is confident and stable in holding the leadership positions at the corporate bank insurance market. The list of the Company’s partner banks contains nearly 600 federal and regional banks, which covers actually the whole list of banks operating at the territory of RF.

The basis of the successful work of VSK at the market of corporate bank insurance is the development of relations with the priority partner banks due to arrangement of the address work with the crediting subdivisions of the banks using the branched network of VSK divisions throughout Russia.

Keeping of VSK leadership positions at the insurance market for property transferred to the banks in pledge was possible due to the increase of share in the priority commercial partner banks due to customer retention having appeared via the banks as well as due to the arranged team work in all the branches to VSK corporate clients.

The complex approach in organization of partnership with the banks permitting to conduct the professional audit of banks and their customers risks, to adapt the insurance products under the needs of the definite customer, to extend the customer basis of the banks-partners due to the VSK corporate customers, the uni-fied conditions and approach to the cooperation with the banks on the whole territory of the RF permit VSK to be a needed, uni-versal and highly-technological partner for most Russian banks.

VSK Insurance House is a member of the Russian Bankers' Asso-ciation and Association of Russian Regional Banks during many years as well as an active participant of discussions in the sphere of protection of banks’ risks and their customers, which permits to

INSURANCE RESULTS

45

constantly perfect the insurance products proposed in this market segment.

The sales of the “Accident and illness insurance of borrowers of small and medium business” product started in 2013 via the web-insurance system. This product, at the background of the active development of crediting market of the subjects of small and medium business, is a high-demand one in the majority of the leading Russian banks.

Leasing companiesIn 2013 VSK retained the leading position in the leasing transac-tions insurance market that is confirmed by the "Expert RA" diplo-ma "Leader in Leasing Transactions Insurance". Another high mar-ket grade is trust on the part of the federal and regional leasing companies that is the result of many years of work with the market leaders, as well as of individual approach with each partner.

VSK provides a reliable insurance coverage to the projects of the leading leasing companies, such as Sberbank Leasing CJSC, Euro-plan CJSC, Karkade LLC, GC Baltic Leasing, Baltinvest LLC, Raif-feisen-Leasing LLC, FB-LEASING LLC, Element Leasing LLC, GTLK JSC, Stone XXI LLC and many others.

VSK offers partnership programmes and solutions, aimed at each leasing company working specifics:• holding joint actions with the equipment and special machin-

ery manufacturers and suppliers• monitoring of property to be leased• installation of software developed for optimization of settle-

ment process and allowing to trace the status of an insurance event on-line from the leasing company office

• development and introduction of standardized products with scoring methods of decision making based on the prompt un-derwriting for small and medium businesses

As a member of "The Incorporated Leasing Association", VSK is actively participating in key activities of the leasing community directed at search for optimal business solutions for the industry.

INSURANCE RESULTS

46

Automotive dealershipsBased on the results 2013 VSK retained its leading position in the automotive dealerships insurance sector thanks to introduction of new customer service technologies, active interaction with the automotive manufacturers and banks, as well as provision of com-petitive insurance products both in price and service terms. VSK actively uses the motor vehicles insurance system with a web in-terface on all the RF area and constantly updated this system. This programme allows optimizing of costs and high quality control of compliance with the Company tariff policies, as well as prompt se-lection of a service meeting the customer's needs.

In 2013 VSK continued active development of cooperation with automotive manufacturers and became one of the developers of "Hyundai Insurance" insurance programme. The Company con-tinued to strengthen its positions also in other insurance pro-grammes, launched earlier, via the representations: Volkswagen, Audi, Skoda, Seat, Ford, Peugeot , Citroen, Hyundai, KIA. Insur-ance programmes with automotive manufacturers support mean special insurance conditions for those purchasing a new car from an official dealer. These programmes are developed with the pur-pose to provide car owners with high quality insurance coverage at beneficial prices. The special joint promos were developed and started for the active promotion of federal programmes with car manufacturers and for sales support with such partners as KIA, Volkswagen, Hyundai.

It must be mentioned that VSK holds the leading positions in the automotive dealership market due to its accreditation with all TOP- 50 banks — auto crediting market leaders. The Company is an active participant and developer of joint programmes with the banks to provide beneficial insurance conditions. In 2013 VSK implemented “Eurostandard” product for lenders of car loans in Setel bank LLC, which permits to receive the insurance coverage during the whole term of loan at the profitable crediting rate. The programs of life insurance of customers started in many federal dealership networks, including within car loan programs of the banks-partners.

INSURANCE RESULTS

47

C9H

13NO

3N

A = 6.02·1023mol-1

DNA

The total length of human DNA

is 16 bln km.

100 trln cells

16 bln km

Cells

The adult body is composed of

approximately 100 trln cells.

C8H

11NO

2

A(II) Rh+

16 bln km

Heart

The heart totally during the life cycle

beats more than 2.5 bln times.

BIOLOGY

INSURANCE IS LIKE AN ORGANISM – THE INTEGRAL BIOLOGICAL SYSTEM, EACH PART OF WHICH IS IMPORTANT FOR THE FULL EFFECTIVE PERFORMANCE.

WBC RBC PLT

2.5 bln beats

INSURANCE TECHNOLOGIES


Claims settlementThe main development vector for VSK claims settlement in 2013 was the perfection of its customer-oriented approach and increase of customers’ loyalty via the reduction of terms for payment of the insurance benefits, increase of the adequate level of payments, notification of customers on the settlement and perfection of the comfort of customer’s communication with the insurer.

The main tool, which permitted to solve the tasks on the reduc-tion of terms and increase of adequate payments of insurance benefit was placing the back office functional on consideration of losses on motor insurance from the Company’s branches into the unified operating center on claims settlement and specialized expert subdivisions. The orientation of the Company’s branches was thus concentrated on the qualitative receipt and servicing of customers.

Within increase of customers’ notification of the stages of a case settlement via SMS and e-mail to notify all the customers having addressed the Company for hull losses settlement. Thanks to the service the customer receives notifications of the following stag-es: assignment of a unique number to the case, sending a referral to the vehicle service station with indication of the address and telephone of the station where the vehicle is supposed to be re-paired, a message about transfer of money to the details, specified by the customer in the application.

VSK partnership relations in the sphere of claims settlement are also being improved to increase the comfortable communication of customers with the Company. The Company partners and coun-terparties include over 26 representations of vehicle manufac-turers in the RF, 2,826 vehicle service stations (most of which are official dealers), 305 independent expert organization, 77 claims adjusters, 57 evacuating services and 130 international and Rus-sian survey companies.

In total in 2013 over 390 thousand insurance cases for the total amount of over 18.5 billion rubles were settled in property, per-sonal, hull, MTPL and liability insurance types.

50


The largest payments in 2013

Month Object Reason

Payment amount, million rubles

January inventories fire 8.9

February trading center fire 8.8

March specialized machinery (excavator) accident 10.9

April ship owner’s liability cargo damage during the sea carriage 10.3

May space craft crush at start 67.4

June ship damage of steering 19.9

July space craft crush 42.2

August monetary cash theft 5.7

Septem-ber

specialized machinery (bulldozer) theft 12.2

October ship owner’s liability cargo damage during the sea carriage 39.6

November hotel complex fire 160.8

December helicopter damage whilst landing 24.9

In 2013 71 insurance companies (the Russian Association of Motor Insurers (RAMI) members) entrusted VSK with settlement of MTPL claims within the frames of representation agreements, including 5 motor CNC cases.

Besides the Company secured the cooperation with RAMI in 2013 within the arrangement of compensations.

A claim settlement system within the framework of "The Green Card" International Bureau VSK provided services to 87 foreign companies, including members of the largest insurance groups, such as Allianz, AXA, BTA, Euroins, HDI, IF P&C, Generali, PZU, See-sam Insurance, Triglav, UNIQA.

51

UnderwritingVSK activity in underwriting is aimed to solve two key tasks, which finally guarantee the high level of service and confidence for the customers: support of the product line, which corresponds to the market demand of the product line and realization of the weighted approaches to the formation of the portfolio for various business lines, which guarantees the high indicators of the company’s fi-nancial reliability.

An important aspect of VSK activity pertaining to underwriting is the orientation to the maximal coverage of the customers’ needs in insurance, therefore each customer may be proposed a wide range of the modern insurance products. If there is an insufficient amount of the standard products, or the customer has a complex demand – VSK may propose individual terms of insurance coverage and their cost. Thus all this is conducted within the shortest terms possible providing the guarantees of the financial support of the proposal, including via the tools for the reinsurance coverage.

The differentiation of product line permits VSK to work in similar effective way in corporate clients’ sector as well as with individ-uals. The retail customers are proposed with a large spectrum of simple, including box products, which permit the customer, which possesses no specialized knowledge, to find out better on the ex-act insurance coverage he/she needs and to minimize the time for the policy purchase.

The Company’s product line is thoroughly documented – the pro-cesses of development of products and their realization by mar-keting network are unified in the unified standards of the internal activity, therefore such “failures”, which may occur during the realization of the insurance products for the customer, are consid-ered a special “insured event”. In order to prevent from the similar events or to solve them as soon as possible, VSK applies the pro-cess of the permanent search of optimization points, which create new possibilities for the customers and increasing the effective-ness of activity of the company itself.

This creates conditions to increase the clients’ confidence in the company and the confidence of the company itself in the future. These two aspects are closely interconnected – it is apparent that only the Company having the high level of financial stability and formalization of activity may during transaction concluding pro-vide the customer with the feeling of protection of his/her inter-ests in case of force-majeure in future.


52

Legal supportWith the purpose of insurants' legal rights and interests’ coverage, as well as in order to exercise insurance activities in strict com-pliance to legislation requirements, VSK established and has been successfully operating for over 22 years the legal support system. That includes personnel of the Legal Dept. of VSK head office and more than 130 lawyers of the Company's far-flung affiliate net-work, most of whom have extensive experience of working in the insurance market.

Main lines of legal support work, it being a significant component of economic security and potential legal risks minimizing, are as follows:• оensuring an appropriate legal status for the whole regional

network of VSK• ensuring legitimacy and justifiability of insurance payments• legal review of the proposed rules of insurance and insurance

agreements, with respect to their compliance with the legis-lation requirements, mutual interests of the insurants and the Company

• timely and high-quality preparation of responses to applica-tions and addresses of citizens and legal entities regarding insurance procedures

• identification and enforcement of legal claims in respect of persons liable for damnification

• management of overdue accounts receivable• identification and prevention of insurance fraud cases• legal assistance to ensure the Company's compliance with leg-

islative requirements related to coverage of clients personal data

• representation and coverage of the Company's interests in reg-ulatory, supervisory and judicial authorities

• participation in activities of expert councils and working groups of national authorities, the National Association of Motor Insurers, the Russian Association of Motor Insurers and the National Association of Liability Insurers

• legal support to the Company whilst participating in tenders related to voluntary and mandatory insurance types


53

VSK customer, having insured their professional or civil liability, received not only insurance coverage in 2013, but legal support on Company’s part.

When entering into insurance agreements with loyal customers, it is a common practice for the lawyer to visit the insured party so that to assist in puzzling out legal peculiarities of insurance busi-ness and to offer recommendations on selection of the optimal insurance coverage option.

At the stage of insurance event settlement the Company lawyers take all measures to solve the disputable issues, and VSK clients can receive qualified legal support in any region of Russia.

This and other measures help VSK to ensure giving maximum con-sideration to insured parties' interests and consecutively reducing the number of disputable situations over the years.

One of the main priorities in Company’s activity in 2013 was the perfection of the litigation on stated claims set to the company under insurance agreements.

This work mainly resulted in the following:• change for reflection in the automated system of consider-

ation of all claims entering the Company, which arise out of the insurance agreement

• analysis of structure of the declared claims, establishing the reason for their occurrence and making management deci-sions, directed to reduce the claims stated under the judicial procedure

• operating detection and response to the need to adjust the available procedures at the pre-judicial and judicial stages

• reduction of terms to pay the court orders, detecting the cases of untimely payment and making managerial decisions to pre-vent from them

The main principle of work of VSK is to do everything possible to prevent from the judicial proceedings with the customers and to solve the possible conflict situation amicably observing principles of law and respect to the rights of the insured as a consumer of the insurance services.


54

2013 became the year of careful attention of controlling and su-pervisory bodies over the activity of the large insurers. This is confirmed by the increased amount of checks conducted by the territorial authorities of the Bank of Russia Financial Markets Ser-vice, the Federal Antimonopoly Service of the Russian Federation, Russian Federal Consumer Rights Protection and Human Health Control Service, Prosecutor’s Office of the RF and others. The pri-ority task of such checks is detection and prevention from the facts of violation of the rights of insured. In the absolute majority of cases, no facts of violation of the legislation in the sphere of insurance activity and protection of the consumers’ rights by the results of activity of branches of VSK IJSC. First of all it confirms the high professional level of Company’s employees and compe-tent organization of the everyday activity based on the strict ob-servation of the requirements of the legislation of the RF.

Due to entry into force of the amendments of the Law of the RF “On Organization of Insurance Business in the RF” since January 21, 2014, a number of measures were carried out in the Company, which are directed to bring the current insurance, investment and financial and economic activity in conformity with the new re-quirements of the legislation of the RF and minimization of the risk of negative consequences for the clients.

Subrogation activitiesOne of the Company's top priorities in 2012 was activity aimed at improvement of detection quality and execution efficiency of subrogation rights. As an outcome of all-inclusive comprehensive approach towards this task, total subrogation-related proceeds amounted to 1.25 billion rubles.

One of the factors contributing to this gain was application of a new technique of subrogation debts recovery, which, in a nutshell, has to do with directing main legal efforts and focusing at the prejudicial stage, thus improving financial outcome, inclusive of reduction of legal expenditures.


55

HR policyVSK HR Policy in 2013 has become a consistent continuation of the Company’s line to develop professional potential of the available staff and increase of the effective work of staff. The Company’s Management has approved the Comprehensive Staff Management Program in 2013-2014 to get to the new quality level of staff man-agement. This program is aimed to develop the traditions and for the considerable technological upgrading, arrangement of Hr management under the implementation of the Corporate Compe-tency Profile, which provides for the stage by stage formation of the unified HR – the cycle, implementation of standards and auto-mation of the main processes of HR management, mastering of all the levels of modern HR – practices by the managers.

As of December 31, 2013, 6,092 persons were employed with VSK branches. Staff reduction as compared to the previous periods with the growth of earned insurance premium was accompanied by the increase of average salary and growth of output in 2012 when compared to 2012 with simultaneous overfulfillment of the planned indicators.

VSK staff number dynamics

The demographic structure of the Company has also changed for the growth of the share of employees and managers aged 30 to 40 (26% – in 2012, 32% – in 2013) – in the age of active implementa-tion of the professional and career plans.


2013

2012

2011

6 092

6 970

7 211

56

VSK Demographic structure as of December 31, 2013

This is the result of staffing policy aimed at studying, develop-ment and career progression of its staff. Totally for 2013 almost 76% of manager vacancies of all levels are filled by the candidates among the VSK staff reserve.

Staff recruitment and positions

The standardization within the Comprehensive program of HR Man-agement started with the implementation of typical organization-al structures and unified reference assigning the internal category of the position. This promoted to the estimation differentiation of the effectiveness and methodology of staff costs budgeting as well as labor remuneration policy under the Company’s activities and staff categories. The method of planning of the need in staff in the Company’s branches was implemented to increase the costs management system effectiveness in 2013 based on the internal benchmarking of the control labor indexes of branched network. Besides the controlling system of the HR system features was im-plemented divided by branches and functional parallels.


2013

2012

2011

Transferred from staff reserve External candidates

76%

61%

55%

24%

39%

45%

Under 30 years old

30 to 40 years old

40 to 55 years old

Over 55

(45%)

(32%)

(19%)

(4%)

57

The changes in the system of labor remuneration and motivation of the employees of branches were made to perfect the labor con-ditions and to motivate the employees of the branches to perfect the labor conditions were made based on the analysis of labor mar-ket considering the intensity of the business tasks of 2013 and financial possibilities of the Company:• the ratio of pay and allowance of branch employees was changed

to increase the guaranteed part of income;• the approach to provide the voluntary health insurance to the

company’s employees was radically changed since 2013 the vol-untary medical insurance is an inseparable part of the employ-ee’s salary package, which scope depends on the position level and is guaranteed within the unified program of the voluntary health insurance;

• the special purpose fund for branches bonus awards was 50% increased relative 2012.

In 2013 the standards of positions of managers and specialists of sales and claim settlement vertical structures were developed and implemented. This permitted to implement the system of annual compulsory (basic attestation) study and appraisal of the staff to support and develop the basic competences of the employees of the sales and claims settlement vertical structure.

This system promotes to the classification of staff at the level re-quired for business, regular control over the level of staff prepara-tion to increase the quality of insurance and service for Company’s clients. 1,704 employees passed the basic attestation study in the scope from 54 to 72 hours depending on the approved program and all types of competence appraisal level in 2013.

Totally 2013 was the year of teaching system reorganization, with the direct participation of the experts in subject fields – the high-ly qualified managers and specialists of functional vertical struc-tures of the Main company:• the corporate knowledge base was created, the new courses and

teaching programs were developed, were implemented the sys-tem for the actuality support of methodological and teaching materials;

• the institute of functioning training specialists was created – 92 specialists and managers, who take an active part in teach-ing;

• the scope of full-time attendance of VSK staff (3,019 persons) and staff of companies – partners (2,610 bank employees and dealer networks) was developed;


58

• due to engagement of professional team of training specialists and creation of the territorial departments for teaching with highly qualified trainers, the role of active teaching methods was increased, including training seminars, field training class-es, case studies, business games;

• The scope of remote studies was increased from 6 thousand persons/courses in 2012 till 33.5 thousand persons/courses in 2013 checking the level of study result;

• based on the software WEB TUTOR 3.0 the teaching procedure was automated, the control system, appraisal of activity and knowledge of teaching participants, tools for feedback and sta-tistics processing under the teaching results was implemented.

Project on Company’s Competence Corporate Model development started in 2013 within the Comprehensive Program of HR Manage-ment. In April 2013, the top managers at their strategic session based on materials received under the interviewing with the best employees, directors of branches and managing staff of the Main Company, selected, defined and described seven Corporate Com-petences: Efficiency, Professionalism, Team Work Competencies, Managerial Effectiveness, Integrity, Creativity, Sociability. This list was approved by the Company’s Management Board as a ba-sis for the development of Corporate Model of Competence with management levelization in 2014. The appraisal of 360 degrees of top managers of the main company in 2013 using the world leader in the development of the higher managers of Center for Creative Leadership, the developing session “Leadership and personal ef-fectiveness” was conducted.

The conference conducted in May in Konakovo River Club was a bright event on the staff development in 2013. This event sum-marized the results of “The Perfect 20 of VSK” project, based on employees’ rating of each functional direction under the results of performance of the target values of KPI. 297 employees, who demonstrated the best results in the project were awarded the winners’ diplomas and received a commemorative, the achieve-ments of the director board of VSK were marked as well as success-ful managerial teams. 350 representatives of VSK within the con-ference with the participation of shareholder and top managers of the Company, shared their experience, summarized and defined the directions of the further Company’s development, conducted teaching and were taught, they actively participated in Sparta-kiad.


59

"Golden staff reserve" project continued in 2013, which started a year before. At present the managers of vertical structures, branch directors, employees of the Main company participate in it. With-in 2.5 months a group of managers of sales verticals of branches undertook an internship and studying in the Main Company and other branches with the subsequent appointment at the positions of the branch director, head of the unified center, extension of the area of liability. The Company started to develop two more proj-ects for the staff reserve this year: “managerial staff reserve” – for fortify the composition of the medium ranking senior executives and “Staff Perspective” – to develop young, talented, initiative specialists and their consolidation in the Company.

In 2013 the Committee for sports and recreation was organized. VSK teams in volleyball and mini-football has multiple times taken prizes in the tournaments for business communities of Moscow. The mini-football tournament was conducted for the first time called “VSK Insurance House Cup” with the participation of the teams of branches, the sports games of various levels were con-ducted within the year at the branches and the Parent Company.

The Company actively develops the directions connected with the employees’ as well as their family members’ creativity. The con-test exhibition of the children creative works “Small country of VSK” was a great tradition, which was twice organized in the whole Company in the New Year’s Eve. Over 500 children participated in the competition in 2013 from 40 branches. 270 children partici-pated in it already for the second year. They created a festive and creative atmosphere for the relatives and their colleagues.


60

Business integrityAn important step at the way of strengthening the cooperation with clients and partners, formation of the corporate identity of staff, mutual responsibility of Company and its’ employees and, respectively, increase of its business authority and effective ac-tivity, was approval of the VSK Corporate Governance Code in July 2013.

The Code describes and states the mission and values, moral prin-ciples and ethical norms of the Company’s entrepreneurial activity, based on the best native and world standards of business ethics, governing the relations with the Russian society, state, colleagues in insurance market, consumers of insurance services, between the Board of Directors, Management Board and all the categories of VSK employees.

The Ethical Committee was created in VSK as an executive body responsible for the realization of the Corporate Governance Code. The Committee’s competence includes the matters of implementa-tion of the provisions of Code in the everyday activity of the Com-pany’s structural subdivisions and control over their observation, the development of recommendations in the sphere of business ethics for managers and employees, prevention of occurrence of conflicts of interests and solution of the disputable situations, organization of events directed to increase the staff loyalty and creation of the favorable moral climate among the staff.

By inclusion of the Norms of Corporate Governance Code as a part of main business factors, securing the successful solution of the statutory objectives, VSK demonstrates its clients and partners as well as its employees the deep and consistent adherence to the highest values of the business relations: reliability, honesty and openness, aiming the common result, respect to each client, part-ner, employee, professionalism and continuous development.


61

RussiaRussia is the largest in the world

considering its territory. Due to the large extension west-to-east the

country has 9 time belts.

The Baikal Lake

Baikal is the first in the world by the volume of the reserves of the

fresh water. Its volume is ap-proximately 19% of the world

reserves of the fresh water.

V=23.6k km3

S=17.1 mln km2

h=5.6 km

53° 13' N 107° 45' E

1: 50 000 000

-273.15 oC

43° 20' 45'' N 42° 26' 55'' E

The Elbrus

The Elbrus is the highest mountain peak in Russia. Considering that the border

between Europe and Asia is ambiguous, Elbrus is often called the highest

European mountain peak.

GEOGRAPHY

INSURANCE PROTECTS IRRESPECTIVE OF THE PECULIA RITIES OF THE EARTH SURFACE RELIEF FORMS: AMONG PLAINS, MOUNTAINS, RIVERS AND LAKES YOU MAY FEEL COMFORTABLE.

120.20

3

STRATEGY OF REGIONAL DEVELOPMENT

STRATEGY OF REGIONAL DEVELOPMENTIn 2013 the measures to strengthen and develop the positions of the regional subdivisions with the simultaneous optimization of the structure of the regional network and reduction of costs for its keeping were conducted. The change to the new standards of the regional network is being performed. The work on perfection of the methodological basis on regional network management, controlling perfection and system of motivation of regional sub-divisions was continued.

Today over 600 branches, divisions and agencies function in the main industrial centers of Russia. They follows the unified stan-dards in servicing in their activity, have the basic rates, service quality and settlement of losses.

Portfolio structure of VSK by districts

47.9%

10.8%

7.4%

7.3%

7.3%

1.3%5.8%

12.3%

Central Federal District

Volga Federal District

Northwestern Federal District

Ural Federal District

Southern Federal District

Siberian Federal District

Far Eastern Federal District

North Caucasian Federal District

64

Central Federal DistrictCentral Federal District covers 3.8% of the territory of the Russian Federation and is the macroeconomic region of the country, which sets pace to the economic development of the whole country. Cen-tral Federal District is not only geographic but as well as financial center of Russia. It covers nearly 40% of the total gross regional product, 21.6% of agricultural and 26.5% of industrial products of the country.

There are 19 branches, 181 divisions and agencies in the Central Federal District. The company is on the 10th place in terms of in-surance premiums in the insurance market of the Central Federal District, taking up 3.4% by the results of 2013.

Major customers of VSK in the region include:

MIRATORG AIH, Elektrodetal Karachevskiy Plant JSC, V.A. Degt-yarev Factory JSC, Agrisovgaz LLC, Signal Instrument factory JSC, Rusenergocapital Managing Company JSC, Volgorechenskrybkhoz (Volgorechensk fishing economy) JSC, Pselskoye LLC, Kursk Plant of large Panel Building Construction named after A.F.Deriglazov JSC, Lipetsk Silica Plant CJSC, Energiya JSC, Inzhavinskaya Poultry Plant CJSC, Agro Vista Tambov LLC, Road Construction Company LLC, Tver carriage works JSC, Revyakinskiy metalworks JSC, Tulach-ermet JSC, Kosogorskiy Metallurgical Factory JSC, INVEST Finan-cial Industrial Company Holding, Smolensk Aviation Factory JSC, Smolensk Branch of Atomtekhenergo FSUE.

Portfolio structure of VSK branches in Central Federal District



MLTP

Accident and illnesses insuranceEnterprises property insurance

(except cars)Voluntary Health Insurance

Property and civil liability Insurance for citizens (except cars)

Construction and assembly risks insurance

Aviation insurance

Travel insurance

Carriers’ cargo and civil liability insuranceObligatory insurance of civil liability

of the harmful facilities’ ownersLegal entities’ civil liability insurance

Agricultural risks insurance

Space risks insurance

35.8%

15.6%

11.3%

8.7%

5.4%

4.5%

4.3%

4.3%

4.0%

2.7%

1.9%

0.7%

0.5%

0.4%

RUB

18.4 bln

PREM

IUM

S

RUB

8.9 bln

PAYM

ENTS

65

Volga Federal DistrictVolga Federal District covers 6% of the territory of the Russian Federation and is one of the leading regions in the country by the industrial development level as well as one of the main agrarian regions of the country.

There are 15 branches, 100 divisions and agencies in the district. The company is on the 3rd place in terms of insurance premiums in the insurance market of the Volga Federal District, taking up 4.3% by the results of 2013.


Izevsk Radio Plant JSC, Sarapulsk Electric Plant JSC, Brinex Group LLC, Mariisky Machine Building Plant JSC, Mordovskaya Mortgage Corporation JSC, Mordovskiy Plant of Bread products JSC, Alidi GC, Iteko Eurasia LLC, Branch of Bashneft oil company – Bashneft Orenburgnefteprodukt, Novotroitsky Cement Plant JSC, Proton – Perm Motors JSC, Solikamsbumprom JSC, Russian Federal Nuclear Centre - All-Russian Scientific Research Institute of Experimental Physics FSUE, Diveevskoye Poultry Plant LLC, Ulyanovskaya Net-work Company JSC, Unified Petrochemical Company JSC, Bash-kiravtodor JSC, Zelezobetonnyye konstruktsii No. 9 (Reinforced Concrete Structures No. 9) LLC, DORRIS JSC, Radio Plant JSC, Kirov Milk Factory CJSC, Mayak Kirov Factory JSC, TechnoVisa LLC, Prom-sintez JSC.

Portfolio structure of VSK branches in Volga Federal District



MLTP

Accident and illnesses insuranceProperty and civil liability Insurance

for citizens (except cars)

Enterprises property insurance (except cars)Voluntary Health Insurance

Obligatory insurance of civil liability of the harmful facilities’ owners

Carriers’ cargo and civil liability insurance


Travel insurance

Legal entities’ civil liability insurance


Aviation insurance

30.2%

27.9%

14.2%

6.2%

5.2%

4.2%

3.8%

3.4%

3.1%

0.7%

0.5%

0.4%

0.2%

RUB

4.8 bln

PREMIUM

S

PAYMENTS

RUB

2.6 bln

66

Northwestern Federal DistrictNorthwestern Federal District covers 10% of the territory of the Russian Federation. The access to Baltic Sea, neighboring Baltic countries and Finland as well as the developed Central District has a positive influence on the economic development of the district.

The following industries are developed in the district, namely forestry, woodworking, pulp and paper, shipbuilding, instrumen-tation, metallurgy and fishing. Northwestern Federal District is a leader in the native sea shipbuilding.

There are 11 branches, 55 divisions and agencies in the district. The company is on the 6th place in terms of insurance premiums in the insurance market of the Northwestern Federal District, taking up 4.7% by the results of 2013.


Brach in Arkhangelsk of ROSMORPORT FSUE, Zvezdochka Center of ship repair JSC, Krasnyi oktyabr JSC, Silovye mashiny (Power machines) Holding, Tikkurila LLC, Vologodskiye lesopromyshlenni-ki (Vologda Timbermen) Group of Companies CJSC, Vokhtozhskiy Wood Processing Plant LLC, Izhorskiy Pipe Plant CJSC, Zelenog-radsk – Trans LLC, Vichi-Trans LLC, Rosmorport State Unitary En-terprise, 123 Aircraft Repair plant JSC, Borovichsky Refractories JSC, Laktis CJSC, Pobeda Agrarian Firm CJSC, ZETO CJSC Holding, Karelstroymekhanizatsiya CJSC, Kondopoga JSC, Lafarzh Non-me-tallic materials and Concrete LLC.

Portfolio structure of VSK branches in Northwestern Federal District



MLTP

Accident and illnesses insurance

Enterprises property insurance (except cars)

Construction and assembly risks insuranceProperty and civil liability Insurance

for citizens (except cars)Voluntary Health Insurance

Carriers’ cargo and civil liability insuranceObligatory insurance of civil liability

of the harmful facilities’ ownersTravel insurance


Aviation insurance


47.1%

17.7%

8.3%

6.4%

5.0%

4.7%

3.2%

2.5%

1.9%

1.4%

1.0%

0.5%

0.3%

RUB

4.1 bln

PREM

IUM

S

RUB

2.1 bln

PAYM

ENTS

67

Ural Federal DistrictUral Federal District covers 10.6% of the territory of the Russian Federation and is one of the richest regions of Russia in mineral recourses. The district accumulates over 65% of native reserves of oil and over 75% of gas reserves. The district possesses a consider-able reserves of ore, titanium magnetite and copper ores, ferrous, precious and rare metals, valuable and semi-valuable stones. The leading economic branches are power engineering, metallurgy and mechanical engineering.

There are 7 branches, 5 divisions and agencies in the district. The company is on the 5th place in terms of insurance premiums in the insurance market of the Ural Federal District, taking up 4.6% by the results of 2013.


Uralvagonzavod Scientific-Production Corporation named after F.E. Dzerzhinsky JSC, NeoKril Company LLC, Geotransgaz CJSC, Fon-ika Group of Companies, Mostostroy-12 LLC, Bakalskoye rudoupra-vleniye (Bakal Ore Administration) JSC, Magnezit JSC, Yuzhural-zo-loto JSC, Kurgankhimmash JSC, Moloko Zauralya LLC, Magnitogorsk Metallurgical Factory JSC, Montazhnik Production Union CJSC.

Portfolio structure of VSK branches in Ural Federal District


MLTP



Enterprises property insurance (except cars)Property and civil liability Insurance

for citizens (except cars)Obligatory insurance of civil liability

of the harmful facilities’ ownersVoluntary Health Insurance


Carriers’ cargo and civil liability insurance

Travel insurance



Aviation insurance

29.8%

28.9%

12.1%

7.5%

5.3%

4.9%

4.1%

3.1%

2.9%

0.8%

0.5%

0.1%

0.03%

RUB

2.8 bln

PREMIUM

S

PAYMENTS

RUB

1.4 bln

68

Southern Federal DistrictSouthern Federal District covers 2.4% of the territory of the Rus-sian Federation, and is the key tourist region. It has a sufficient potential for turning into the resort area of world class within the time. Besides the developed sanatorium and resort branches, the district has a developed agro-industrial complex, agricultural ma-chinery, food processing, metallurgy, chemical and petrochemical industries.

There are 8 branches, 44 divisions and agencies in the Southern Federal District. The company is on the 2nd place in terms of in-surance premiums in the insurance market of the Southern Federal District, taking up 6.8% by the results of 2013.


Kartontara CJSC, Yuzhgasenergy LLC, VTS-Broker Declarant Firm LLC, Elektrospetsmontazh LLC, Armada Loading Company JSC, CAUSTIC JSC, CJSC of employees of KONFIL Public Enterprise, Stroynovatsiya LLC, Betoninvest LLC, Energy and Electrification of Kuban JSC, Independent Power Company of Krasnodar Krai JSC, RN – Tuapsinskiy Oil Refinery LLC, ROSNEFT Oil Company – KUBANNEFTEPRODUKT JSC, Eurodon Group of Companies, Taganrog Metallurgical Plant JSC, ASTON JSC, Yug Rusi Group of Companies, Agrokom Group LLC, Olympstroy Mountain Resort, Center of Tech-nologies Transfer of OMEGA Krasnodar Construction Complex JSC, Branch of Putevi JSC Uzhitse in the RF, Sochi.

Portfolio structure of VSK branches in Southern Federal District


MLTP




Construction and assembly risks insuranceProperty and civil liability Insurance


of the harmful facilities’ ownersCarriers’ cargo and civil liability insurance


Travel insurance



Aviation insurance

31.8%

30.5%

14.8%

5.2%

4.9%

3.7%

3.5%

2.6%

1.4%

0.6%

0.5%

0.3%

0.1%

RUB

2.8 bln

PREM

IUM

S

RUB

1.2 bln

PAYM

ENTS

69

Siberian Federal DistrictSiberian Federal District covers nearly 30% of the territory of the Russian Federation and is a major transportation hub of Russia. The major transient flows of Russia pass through the Siberian Federal District (cargo and passenger carriages) between the Eu-ropean and Asian parts of the country. The district occupies the leading position on the length of inland waterways, railways and highways.

The leading sectors of the economy of the district are: ferrous and non-ferrous metallurgy, power engineering and fuel, forestry and wood processing, chemical and petrochemical industry, ma-chine-building and metalworking.

There are 12 branches, 52 divisions and agencies are operating in the district. The company is on the 5th place in terms of insurance premiums in the insurance market of the Siberian Federal District, taking up 5.1% by the results of 2013.


Mostovik Scientific and production Union LLC, Irtysh Omsk pro-duction Union JSC, Titan Group of Companies CJSC, Kuzbass Fuel Company JSC, Stroyservis CJSC, Kuzbass Food Factory CJSC, Al-tair-Agro LLC, Agrosib-Razdolye LLC, Barnaul Brewery LLC, Vostok LLC, Compass LLC, Baikal Forest Company CJSC, Ulan-Udestalmost CJSC, Nord Imperial LLC, Prefab Building Factory of Tomsk House Building Company LLC, Dubrovskoye CJSC, NK Dulisma CJSC, Ir-kutsk Oil Company LLC.

Portfolio structure of VSK branches in Siberian Federal District


MLTP


Voluntary motor insuranceProperty and civil liability Insurance

for citizens (except cars)Enterprises property insurance (except cars)


Aviation insurance

Voluntary Health InsuranceObligatory insurance of civil liability


Travel insurance



28.0%

20.7%

17.8%

6.5%

6.0%

5.3%

4.2%

3.8%

3.0%

1.8%

1.8%

0.6%

0.4%

RUB

2.8 bln

PREMIUM

S

PAYMENTS

RUB

1.1 bln

70

Far Eastern Federal District Far Eastern Federal District is the largest by area, it covers 36% of the territory of the Russian Federation and is the important chain in the country’s economy.

The leading industries of the Far Eastern Federal District in-clude: mining, gold mining, fishing and forestry, shipbuilding and non-ferrous metallurgy. The district is rich in deposits of hydro-carbons, ferrous, non-ferrous and rare metals.

11 branches, 30 divisions and agencies are operating in the dis-trict. The company is on the 2nd place in terms of insurance pre-miums in the insurance market of the Far Eastern Federal District, taking up 11.6% by the results of 2013.


Amurskiy broiler LLC, Bamstroymekhanizatsiya JSC, Susumanzolo-to (Susumanskiy Ore Mining and Processing Industrial Complex) JSC, Arbat Concern CJSC, Federal State institution "Administra-tion of seaports of the Primorsky Krai" (FSI "ASP of the Primorsky Krai"), Kamchatka Aviation Enterprise State Unitary Enterprise, Sakhalin-Story-Mechanization LLC, Transbunker Holding Company, Universal Leasing Company CJSC, Diamonds of Anabara JSC, Hous-ing and Utility Sector of the Republic of Sakha (Yakutia) State Uni-tary Enterprise, Voskhod Far Eastern production Union FSUE, Far Eastern Center of Shipbuilding and repair JSC, Stroitelnyi Alians Upravleniye mekhanizatsiyi No. 1 (Mechanization Administration Construction Alliance No. 1) CJSC.

Portfolio structure of VSK branches in Far Eastern Federal District


MLTP



Enterprises property insurance (except cars)Property and civil liability Insurance




Travel insurance



Aviation insurance


RUB

2.2 bln

PREM

IUM

S

RUB

0.9 bln

PAYM

ENTS

34.6%

21.8%

11.8%

10.3%

4.6%

3.5%

3.5%

3.1%

3.0%

2.4%

0.5%

0.5%

0.3%

71

North Caucasian Federal DistrictNorth Caucasian Federal District covers nearly 1% of the territory of the Russian Federation. Currently the real economy sector of the North Caucasian Federal District is weakly developed as due to the unstable economic situation and social and political situation it has weak investment attractiveness.

The most developed are the agrarian economic sector and process-ing productions.

8 branches and 10 divisions and agencies function in the district. The company is on the 6th place in terms of insurance premiums in the insurance market of the North Caucasian Federal District, taking up 4.6% by the results of 2013.


DENEB JSC, Dagdiesel JSC, Dagestangazservis LLC, Dorstroyservis LLC, Remgrazhdanrekonstruktsiya Construction and Industrial Company LLC, Spets teplomontazh LLC, Stavropol International Airport JSC, Visma CJSC, AGROMARKET LLC.

Portfolio structure of VSK branches in North Caucasian Federal District


MLTP




Construction and assembly risks insuranceObligatory insurance of civil liability

of the harmful facilities’ ownersProperty and civil liability Insurance

for citizens (except cars)Carriers’ cargo and civil liability insurance


Travel insurance



Aviation insurance

31.2%

25.9%

14.1%

7.7%

7.4%

5.5%

4.4%

2.4%

0.6%

0.4%

0.2%

0.2%

0.01%

RUB

0.5 bln

PREMIUM

S

PAYMENTS

RUB

0.2 bln

72

INFORMATION TECHNOLOGIESIT technologies promote the dynamic development of the Compa-ny. IJSC VSK is one of the technological leaders in the insurance industry and it pays serious attention to the development of IT technologies.

Over the past year, in the framework of the adopted IT strategy, several large-scale projects for the introduction of new and mod-ernization of the existing information services were implemented. After the successful implementation of ERP-system based on Mic-rosoft Dynamics AX in 2012, the Company concentrated its efforts into the increase of quality of IT solutions in the sphere of scales of insurance products (front office solutions) and of actuarial ac-counting (bask office solutions).

One of the major achievements in 2013 was the development of the solution to identify the payments and to work with invoices and insurance documents acceptance reports. The module permitting to considerably increase the data quality and speed of incoming payments processing was drafted and developed, thus permitting to reduce operating costs.

The online training project for the employees based on WebTu-tor system was successfully realized to support high standards of Company in the corporate studies.

In 2013 Company also concentrated its efforts into the further perfection of the interaction with the external partners – at the development of Web-Auto system. The active use of web-technol-ogies permitted to considerably extend the product line, proposed to the partners of the Company concerning motor insurance and to arrange the continuous interaction with the partners under the highest standards.

The Company pays special attention to the direct sales. In 2013 the mechanism of the direct sale of insurance policies was suc-cessfully realized for the travelers abroad at the corporate Com-pany’s site.

The change to the unified contact point was realized for all users of the Company’s IT services, internal as well as external, which permitted to implement the advanced standards of work of sup-port service.

INFORMATION TECHNOLOGIES

73

CHARITABLE ACTIVITIESRealizing its social liability before the society, VSK pays special attention to arrangement of campaigns assisting veterans and disabled, members of families of the defenders of the Motherland; it participates in the programs directed to promote educational and cultural development of children and youth, strengthening of their health.

The charity aid is rendered to the families of the military service-men who died in the performance of duties as well as during coun-terterrorism operations. The sets of school uniform are provided as a gift to the children from these families entering the first form.

The children’s parties and the New Year Eves in the frontier guard posts were organized with the assistance of VSK. The company supported the initiative of the World Ocean Museum in its par-ticipation in the festival of historical ships “Dangeskaya fleet” as an interesting project for the patriotic upbringing of the young people of Kaliningrad region.

Since 1997 the Company has been a regular partner of the regional public foundation "Illustrated Books for Blind Children", and, fol-lowing the tradition during many years, in 2013 a few dozen sets of specialized books were provided to the Fund.

VSK will support the projects and campaigns in the sphere of char-ity and benevolence in 2014 as well as during the previous years; it will promote development of the cultural and national spirit in every possible way.

CHARITABLE ACTIVITIES

74

BALANCE SHEETBalance sheet of IOJSC “VSK” as of December 31, 2013

ASSSETSAs of 31.12.13, million RUB

As of 31.12.12, million RUB


I. Assets

Intangible assets 17 21 20,

Fixed assets 4,577 4,860 4,963

Income yielding investments into tangible assets

- - -

Financial investments (excluding cash equivalents)

22,346 18,094 12,438

Deferred tax assets 89 78 56

Reserves 369 462 363

Value-added tax on acquired assets - - -

Reinsurers' share in insurance reserves for life insurance

- - -

Reinsurer's share in insurance reserves other than life insurance

2,934 2,742 2,919

Accounts receivable 7,112 5,452 5,030

Depot reinsurance premiums - -

Cash and cash equivalents 577 501 649

Other assets 4 5 6

TOTAL IN SECTION I 38,025 32,215 26,444

BALANCE SHEET 38,025 32,215 26,444

LIABILITIESAs of 31.12.13, million RUB



II. Capital and reserves

Authorized capital 3,200 3,200 2,000

Own shares (pies) of treasury stock (members)

- - -

Revaluation of property 1,127 1,166 1,146

Added capital (without revaluation) - - -

Reserve capital 260 232 210

Retained profit (retained loss) 3,223 2,919 2,403

TOTAL IN SECTION II 7,810 7,517 5,759

BALANCE SHEET

75

BALANCE SHEET

LIABILITIESAs of 31.12.13, million RUB



III. Liabilities

Insurance reserves for life insurance - - -

Insurance reserves other than life insurance 26,414 21,989 18,681

Borrowed funds - 450 -

Deferred tax liabilities 14 6 5

Provisions 223 196 -

Premium deposits reinsurers - - -

Accounts payable 3,491 1,979 1,924

Deferred revenues - - -

Other liabilities 73 78 75

TOTAL IN SECTION III 30,215 24,698 20,685

BALANCE SHEET 38,025 32,215 26,444

Profit and loss statement of IJSC “VSK” as of December 31, 2013

Indicatorin 2013,

million RUBin 2012,

million RUB

II. Insurance other than life insurance

Insurance premiums — net reinsurance 35,293 31,996

Insurance premiums under contracts of insurance, co-insurance, reinsurance — total

38,539 34,817

Transferred to reinsurers (1,764) (1,452)

Change of unearned premium reserve — total (1,456) (1,314)

Change of reinsurers' share in reserve (26) (55)

Claims incurred — net reinsurance (19,912) (17,151)

Payments of claims under contracts of insurance, co-insurance, reinsurance — total

(16,647) (15,703)

Costs on loss settlement (843) (570)

reinsurers' share in payments 272 849

Change of loss reserve — total (2,912) (1,605)

Change of reinsurers' share in loss reserve 218 (122)

Change of other insurance reserves (56) (389)

Change of other reinsurance reserves 0 0

76

BALANCE SHEET

Indicatorin 2013,

million RUBin 2012,

million RUB

Allocations of insurance premiums (309) (263)

Expenses on insurance operations — net reinsurance (10,628) (8,174)

acquisition costs (10,043) (7,540)

other costs of insurance operations (673) (711)

reinsurance commission and profit from reinsurance contracts

89 77

Investment income 7,340 7,174

Investment costs (5,812) (5,984)

Other income from insurance other than life insurance 1,391 631

Other costs for insurance other than life insurance (2,226) (1,546)

Result of insurance operations other than life insurance

5,081 6 294

III. Other revenues and expenses, not included in the insurance transactions

Administrative costs (3,741) (4,334)

Other income 2 819 522

Other costs (3,739) (1,702)

Pretax profit (loss) 420 780

Current income tax (138) (257)

including: Permanent tax liabilities (assets) (49) (81)

Change in deferred tax liabilities (8) (2)

Change in deferred tax assets 12 22

Other 8 (21)

Net profit (loss) 294 522

Reliability of the accounting statement of Insurance open joint stock company VSK for the period January 01 to December 31, 2013 is confirmed by JSC "AF "Marillion". PSRN 1027700190253 dated September 5, 2002. Member of SRO NP "Audit Chamber of Russia", PNRE 10301026781.

77

FROM THEORY TO PRACTICE!

More than 600 branches and divisions of VSK apply practically the theory of keeping calm

to their clients all over Russia

CENTER OF CORPORATE INSURANCEFrolov Roman N.Deputy Director General, Head of the [email protected]

CENTER OF RETAIL INSURANCEKamenetskiy Sergey A.Deputy Director General, Head of the [email protected]

CENTER OF PARTNERSHIP SALESBoychenko Iliya A.Deputy Director General, Head of the [email protected]

CENTER OF MOTOR INSURANCEGoncharov Oleg V.Deputy Director General, Head of the [email protected]

CENTER OF VOLUNTARY HEALTH INSURANCEAbramov Andrey N.Deputy Director General, Head of the [email protected]

Ostrovnaya Str., 4, 121552 Moscow, RussiaPhone +7 (495) 785-27-76

www.vsk.ru

vsk insurance house. annual report 2013 eng

Documents

insurance market

property insurance

illness insurance

prop insurance

insurance results

insurance types

motor insurance

mortgage insurance