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					                                                                          Official translation

                  GOVERNMENT OF THE REPUBLIC OF LITHUANIA
                           RESOLUTION No. 1350

        ON THE FINANCIAL STATEMENTS OF INSURANCE COMPANIES

                                      7 November 2000
                                          Vilnius


In accordance with Article 13 of the Law on the Principles of Accounting (Valstybės Žinios,
1992, No. 20-588), the Government of the Republic of Lithuania h a s r e s o l v e d:

1. To approve the following documents (attached hereto):

1.1. Procedure for Drawing Up the Annual Financial Statements of Insurance Companies;

1.2. Recognition of Income and Charges arising out of Insurance Operations;

1.3. Notes on the Main Items in the Annual Financial Statements;

1.4. Minimal Requirements in respect of the Notes to the Financial Statements of Insurance
Companies;

1.5. List of Accounts of Insurance Companies and Notes to the List of Accounts.

2. When drawing up the annual financial statements, insurance companies shall act in
accordance with Government Resolution No. 804 of 27 October 1993 on the annual financial
statements of companies with the rights of a legal person (Valstybės žinios, 1993, No. 58-
1123), where this resolutions does not provide otherwise.

3. To establish that the hereby approved procedure for drawing up the annual financial
statements of insurance companies shall be applied to the annual financial statements for 2001
and subsequent years.




Acting Prime Minister                                                 Andrius Kubilius



Acting Minister of Finance                                            Vytautas Dudėnas
                                                                               APPROVED
                                                                     by Resolution No. 1350
                                                                        of 7 November 2000
                                              of the Government of the Republic of Lithuania


   PROCEDURE FOR DRAWING UP THE ANNUAL FINANCIAL STATEMENTS OF
                      INSURANCE COMPANIES

    I. STRUCTURE OF THE ANNUAL FINANCIAL STATEMENTS OF INSURANCE
                             COMPANIES

1. The annual financial statements of insurance companies (hereinafter referred to as the
“financial statements”) shall comprise:

1.1. balance sheet;

1.2. profit (loss) account;

1.3. appropriation account;

1.4. cash flow statement;

1.5. notes.

2. All insurance companies shall draw up annual financial statements.

3. Annual financial statements shall be drawn up on the basis of data for every financial year,
whereas the balance sheet shall be prepared also on the basis of data for the date of the
company’s foundation and winding-up.

4. At the end of every quarter of a financial year, interim financial statements comprised of
the balance sheet and the profit (loss) account shall be prepared (the appropriation account,
the cash flow statement, and the notes shall not be drawn up and the accounts shall not be
closed).

   II. BASIC REQUIREMENTS FOR THE ANNUAL FINANCIAL STATEMENTS OF
                        INSURANCE COMPANIES

5. Annual financial statements shall be drawn up in accordance with the general principles of
accounting.

6. The data presented in the annual financial statements shall be clear and understandable so
that their potential users can make appropriate decisions.

7. The information presented in the annual financial statements shall be unbiased and reliable.
It shall be prohibited add any assets or misinterpret income or charges.

8. The presentation of economic facts in annual financial statements shall be predetermined
by their actual content and meaning – not just formal requirements.

9. Annual financial statements shall present data for the current accounting year and at least
one preceding year. Where the indicators for the accounting period cannot be compared to
those of the year before due to changes in the accounting methods, information on
                                                                                               2

recalculations shall be given in the notes. For the purpose of comparison, adjusted figures
shall be presented together with the figures calculated on the assumption that the accounting
methods have not changed during the accounting period.

10. Companies are free to publish the forms of their annual financial statements and may
choose not include items for which there is no amount (amounts equal “0”) for the current and
preceding accounting periods.

                                    III. BALANCE SHEET

11. The balance sheet shall disclose all of the company’s assets, equity and liabilities (under
Form D1 presented in Annex 1 hereto).

                               IV. PROFIT (LOSS) ACCOUNT

12. The profit (loss) account shall disclose data on the company’s results of activity for the
accounting period. All of the income earned during the accounting period and related charges
shall be shown in this account. The profit (loss) account shall be comprised of three parts:
technical account for non-life insurance and reinsurance business; technical account for life
assurance and reinsurance business; non-technical account. Income and charges directly
relating to a relevant branch of insurance shall be stated in technical accounts, while income
and charges which are not directly connected with life assurance and non-life insurance
business shall be reported in the non-technical account (under Form D2 presented in Annex 2
hereto).

                              V. APPROPRIATION ACCOUNT

13. Profit or loss brought forward, transfers from reserves, shareholders’ contribution against
losses, transfers to reserves and other appropriation of profit shall be disclosed in the
appropriation account, linking the profit (loss) account with the balance sheet (under Form D3
presented in Annex 3 hereto).

                               VI. CASH FLOW STATEMENT

14. Cash flows during the accounting period from the company’s investment and financial
activities shall be disclosed in the cash flow statement (under Form D4 presented in Annex 4
hereto).

                                         VII. NOTES

15. The notes shall be an integral part of the annual financial statements. The notes shall state
the basic accounting principles and present information supplementing the financial
statements (accounts) and specifying separate items.

16. The notes shall be drawn up in compliance with the requirements of these financial
statements. Insurance companies may present more information than required.

17. The notes shall state all material events which may affect the valuation of the company or
decision-making.

18. Where financial statements have been drawn up inaccurately or improperly, they shall not
be considered rectified by merely disclosing the company’s accounting policies or providing
explanations in the notes.
                                                                                            3

19. The general data about the company and information on the accounting methods
employed in the preparation of the annual financial statements shall be presented at the
beginning of the notes. Where the financial statements have not been prepared in accordance
with the general accounting principles (such as the principles of going-concern, consistency
and accruals), the company’s accounting policies shall be disclosed and the reasons shall be
given. In the event of a change in the accounting methods during the accounting year, the
effect on the company’s economic activity shall be disclosed and explained in the notes and
figures calculated according to the old and new accounting methods shall be presented
therein.

20. The notes shall provide a specification of the actual items on the annual financial
statements.

21. Where appropriate, information presented in the notes to the financial statements shall be
explained in more detail (in this case, detailed explanations shall be given in the notes).




                                     ––––––––––––––––
                                                                                   Annex 1
                                                                                   Form D1

                                                              APPROVED
                                                              by
                                                              _________________________________
                                                              ___________ Minutes No. _________
                                                                 (date)
           ______________________________________________________________
                                         (name of insurance company)
           ______________________________________________________________
                                             (code, head office address)

                                   BALANCE SHEET (in litas)
                                 ____________(date)_______________

                                                                                               Preceding
No.                            Assets                            Codes     Financial year
                                                                                             financial year
A.        INTANGIBLE ASSETS
I.        Formation costs
II.       Research and development costs
III.      Rights acquired
IV.       Goodwill
V.        Prepayments
B.        INVESTMENTS
I.        Land, buildings and other real estate
I.1.      Used by a company for its own activities
I.1.1.    Land
I.1.2.    Buildings
I.1.3.    Construction in progress and prepayments
I.1.4.    Other
I.2.      Other investments in real estate
II.       Investments in affiliated enterprises and
          participating interests
II.1.     Shares in affiliated enterprises
II.1.1.   Listed on the stock exchange
II.1.2.   Not listed on the stock exchange
II.2.     Debt securities issued by, and loans to,
          affiliated enterprises
II.2.1.   Debt securities
II.2.2.   Loans
                                                 Annex 1                                               2

                                                                                        Preceding
No.                               Assets                     Codes   Financial year
                                                                                      financial year
II.3.      Shares in enterprises with which an insurance
           company is linked by virtue of a participating
           interest
II.3.1.    Listed on the stock exchange
II.3.2.    Not listed on the stock exchange
II.4.      Debt securities issued by, and loans to,
           enterprises with which an insurance company
           is linked by virtue of a participating interest
II.4.1.    Debt securities
II.4.2.    Loans
III.       Other financial investments
III.1.     Shares and other variable-yield securities
III.1.1.   Listed on the stock exchange
III.1.2.   Not listed on the stock exchange
III.2.     Debentures and other fixed-income securities
III.2.1.   Government and municipal bonds
III.2.2.   Other corporate securities
III.3.     Units in unit trusts
III.4.     Loans guaranteed by mortgages
III.4.1.   Loans guaranteed by first mortgage
III.4.2.   Loans guaranteed by second mortgage
III.5.     Other loans
III.6.     Deposits with credit institutions
III.7.     Other investments
IV.        Deposits with ceding enterprises
C.         INVESTMENTS FOR THE BENEFIT OF
           LIFE-ASSURANCE POLICYHOLDERS
           WHO BEAR THE INVESTMENT RISK
D.         RECEIVABLES
I.         Receivables from direct insurance operations
I.1.       Policyholders
I.2.       Intermediaries
I.3.       Other
II.        Receivables from reinsurance operations
II.1.      Ceding insurers
II.2.      Reinsurers
II.3.      Intermediaries
II.4.      Other
III.       Other receivables
                                               Annex 1                                             3

                                                                                    Preceding
No.                          Assets                      Codes   Financial year
                                                                                  financial year
E.      OTHER ASSETS
I.      Tangible assets and stocks
I.1.    Vehicles
I.2.    Office equipment, etc.
I.3.    Stocks
I.4.    Prepayments
II.     Cash at bank and in hand
III.    Own shares
IV.     Other assets
F.      ACCRUED INCOME AND DEFERRED
        EXPENSES
I.      Accrued interest and rent
II.     Deferred acquisition costs
II.1.   Deferred acquisition costs arising in non-life
        insurance business
II.2.   Deferred acquisition costs arising in life-
        assurance business
III.    Other accrued income
IV.     Other deferred expenses
        BALANCE SHEET TOTAL
                                               Annex 1                                               4


                                                                                      Preceding
No.               Owners’ equity and liabilities           Codes   Financial year
                                                                                    financial year
A.       CAPITAL AND RESERVES
I.       Subscribed capital
II.      Share premium account
III.     Revaluation reserve
IV.      Other reserves
IV.1.    Legal reserves
IV.2.    Reserves not available for distribution
IV.3.    Reserves available for distribution
V.       Profit or loss brought forward
V.1.     From the preceding accounting year
V.2.     For the current accounting year
B.       FINANCING (GRANTS AND SUBSIDIES)
C.       SUBORDINATED LIABILITIES
D.       TECHNICAL PROVISIONS
I.       Provision for unearned premiums
I.1.     Gross amount
I.2.     Reinsurers’ share (-)
II.      Mathematical technical provision
II.1.    Gross amount
II.2.    Reinsurers’ share (-)
III.     Provision for outstanding claims
III.1.   Gross amount
III.2.   Reinsurers’ share (-)
IV.      Provision for bonuses and rebates
IV.1.    Gross amount
IV.2.    Reinsurers’ share (-)
V.       Equalisation provision
VI.      Other technical provisions
VI.1.    Gross amount
VI.2.    Reinsurers’ share (-)
E.       TECHNICAL PROVISIONS FOR LIFE-
         ASSURANCE POLICIES WHERE THE
         INVESTMENT RISK IS BORNE BY THE
         POLICYHOLDERS
I.       Gross amount
II.      Reinsurers’ share (-)
F.       PROVISIONS FOR OTHER LIABILITIES
         AND CHARGES
I.       Provisions for pensions and similar obligations
                                                Annex 1                                                         5

                                                                                                 Preceding
No.               Owners’ equity and liabilities                 Codes   Financial year
                                                                                               financial year
II.      Provisions for taxation
III.     Other provisions
G.       DEPOSITS RECEIVED FROM
         REINSURERS
H.       LIABILITIES
I.       Liabilities arising out of direct insurance
         operations
I.1.     Liabilities to policyholders
I.2.     Liabilities to intermediaries
I.3.     Other liabilities arising out of direct insurance
         operations
II.      Liabilities arising out of reinsurance operations
II.1.    Liabilities to ceding reinsurers
II.2.    Liabilities to reinsurers
II.3.    Liabilities to intermediaries
II.4.    Other liabilities arising out of reinsurance
         operations
III.     Debenture loans, showing convertible loans
         separately


IV.      Amounts owed to credit institutions
V.       Taxes, social security contributions and other
         liabilities
V.1.     Taxes
V.2.     Social security contributions
V.3.     Wages and salaries
V.4.     Other liabilities
I.       ACCRUED EXPENSES AND DEFERRED
         INCOME
I.       Accrued expenses
II.      Deferred income
         TOTAL OWNERS’ EQUITY AND
         LIABILITIES


Chief Executive Officer
                                                       (signature)                        (full name)
Chief Financial Officer (Accountant)
                                                       (signature)                        (full name)
                                                                                Annex 2
                                                                                Form D2

                                                             APPROVED
                                                             by
                                                             _________________________________
                                                             ___________ Minutes No. _________
                                                                (date)
            ______________________________________________________________
                                           (name of insurance company)
            ______________________________________________________________
                                            (code, head office address)

                             PROFIT (LOSS) ACCOUNT (in litas)
                                    ____________(date)_______________


                                                                                             Preceding
No.                                Items                        Codes     Financial year
                                                                                           financial year
I.         TECHNICAL ACCOUNT FOR NON-LIFE
           INSURANCE BUSINESS
I.1.       EARNED PREMIUMS, NET OF
           REINSURANCE
I.1.1.     Gross premiums written
I.1.2.     Inward reinsurance premiums (-)
I.1.3.     Change in the provision for unearned
           premiums (+/-)
I.1.4.     Change in the provision for unearned
           premiums, reinsurers’ share (+/-)
I.2.       INVESTMENT RETURN TRANSFERRED
           FROM THE NON-TECHNICAL ACCOUNT
I.3.       OTHER TECHNICAL INCOME, NET OF
           REINSURANCE
I.4.       CLAIMS INCURRED, NET OF
           REINSURANCE
I.4.1.     Claims arising from insured events
I.4.1.1.   Claims
I.4.1.2.   Claims settlement expenses
I.4.1.3.   Amounts recovered (-)
I.4.1.4.   Reinsurers’ share (-)
I.4.2.     Change in the provision for outstanding claims
           (+/-)
I.4.2.1.   Gross amount
I.4.2.2.   Reinsurers’ share (-)
                                                (Annex 2)                                             2

                                                                                       Preceding
No.                                Items                    Codes   Financial year
                                                                                     financial year
I.5.       CHANGES IN OTHER TECHNICAL
           PROVISIONS, NET OF REINSURANCE,
           NOT SHOWN UNDER OTHER HEADINGS
           (+/-)
I.5.1.     Gross amount
I.5.2.     Reinsurance share (-)
I.6.       BONUSES AND REBATES, NET OF
           REINSURANCE
I.6.1.     Bonuses and rebates
I.6.1.1.   Gross amount
I.6.1.2.   Reinsurers’ share (-)
I.6.2.     Change in the provision for bonuses and
           rebates (+/-)
I.6.2.1.   Gross amount
I.6.2.2.   Reinsurers’ share (-)
I.7.       NET OPERATING EXPENSES
I.7.1.     Acquisition costs
I.7.2.     Change in deferred acquisition costs (+/-)
I.7.3.     Administrative expenses
I.7.4.     Reinsurance commissions and profit
           participation (-)
I.8.       OTHER TECHNICAL CHARGES, NET OF
           REINSURANCE
I.9.       TECHNICAL RESULT BEFORE THE
           FORMATION OF THE EQUALISATION
           PROVISION
I.10.      CHANGE IN THE EQUALISATION
           PROVISION (+/-)
I.11.      BALANCE ON THE TECHNICAL
           ACCOUNT – NON-LIFE INSURANCE
           BUSINESS
II.        TECHNICAL ACCOUNT FOR LIFE-
           ASSURANCE BUSINESS
II.1.      EARNED PREMIUMS, NET OF
           REINSURANCE
II.1.1.    Gross premiums written
II.1.2.    Outward reinsurance premiums (-)
II.1.3.    Change in the provision for unearned
           premiums (-/+)
II.1.4.    Reinsurers’ share of change in the provision
           for unearned premiums (+/-)
II.2.      INVESTMENT INCOME
II.2.1.    Income from participating interests, with a
           separate indication of that derived from
                                                 (Annex 2)                                             3

                                                                                        Preceding
No.                                  Items                   Codes   Financial year
                                                                                      financial year
            affiliated enterprises
II.2.2.     Income from other investments, with a
            separate indication of that derived from
            affiliated enterprises
II.2.2.1.   Income from land and buildings
II.2.2.2.   Income from other investments
II.2.3.     Value re-adjustments on investments
II.2.4.     Gains on the realisation of investments
II.3.       UNREALIZED GAINS ON INVESTMENTS
II.4.       OTHER TECHNICAL INCOME, NET OF
            REINSURANCE
II.5.       CLAIMS INCURRED, NET OF
            REINSURANCE
II.5.1.     Claims arising from insured events
II.5.1.1.   Claims
II.5.1.2.   Surrender value
II.5.1.3.   Claims settlement expenses
II.5.1.4.   Reinsurers’ share (-)
II.5.2.     Change in the provision for outstanding claims
            (+/-)
II.5.2.1.   Gross amount
II.5.2.2.   Reinsurers’ share (-)
II.6.       CHANGE IN OTHER TECHNICAL
            PROVISIONS, NET OF REINSURANCE,
            NOT SHOWN UNDER OTHER HEADINGS
            (+/-)
II.6.1.     Mathematical technical provision, net of
            reinsurance (+/-)
II.6.1.1.   Gross amount
II.6.1.2.   Reinsurers’ share (-)
II.6.2.     Other technical provisions, net of reinsurance
            (+/-)
II.6.2.1.   Gross amount
II.6.2.2.   Reinsurers’ share (-)
II.7.       BONUSES AND REBATES, NET OF
            REINSURANCE
II.7.1.     Bonuses and rebates
II.7.1.1.   Gross amount
II.7.1.2.   Reinsurers’ share (-)
II.7.2.     Change in the provision for bonuses and
            rebates (+/-)
II.7.2.1.   Gross amount
                                                 (Annex 2)                                             4

                                                                                        Preceding
No.                                 Items                    Codes   Financial year
                                                                                      financial year
II.7.2.2.   Reinsurers’ share (-)
II.8.       NET OPERATING EXPENSES
II.8.1.     Acquisition costs
II.8.2.     Change in deferred acquisition costs (+/-)
II.8.3.     Administrative expenses
II.8.4.     Reinsurance commissions and profit
            participation (-)
II.9.       INVESTMENT CHARGES
II.9.1.     Investment management charges, including
            interest
II.9.2.     Value adjustments on investments
II.9.3.     Losses on the realisation of investments
II.10.      UNREALIZED LOSSES ON
            INVESTMENTS
II.11.      OTHER TECHNICAL CHARGES, NET OF
            REINSURANCE
II.12.      INVESTMENT RETURN TRANSFERRED
            TO THE NON-TECHNICAL ACCOUNT
II.13.      BALANCE ON THE TECHNICAL
            ACCOUNT – LIFE ASSURANCE
            BUSINESS
III.        NON-TECHNICAL ACCOUNT
III.1.      BALANCE ON THE TECHNICAL
            ACCOUNT – NON-LIFE INSURANCE
            BUSINESS
III.2.      BALANCE ON THE TECHNICAL
            ACCOUNT – LIFE-ASSURANCE
            BUSINESS
III.3.      INVESTMENT INCOME
III.3.1.    Income from participating interests, with a
            separate indication of that derived from
            affiliated enterprises
III.3.2.    Income from other investments, with a
            separate indication of that derived from
            affiliated enterprises
III.3.2.1. Income from land and buildings
III.3.2.2. Income from other investments
III.3.3.    Value re-adjustments on investments
III.3.4.    Gains on the realisation of investments
III.4.      INVESTMENT RETURN TRANSFERRED
            FROM THE LIFE-ASSURANCE
            TECHNICAL ACCOUNT
                                               (Annex 2)                                                       5

                                                                                                Preceding
No.                             Items                           Codes   Financial year
                                                                                              financial year
III.5.     INVESTMENT CHARGES
III.5.1.   Investment management charges, including
           interest
III.5.2.   Value adjustments on investments
III.5.3.   Losses on the realisation of investments
III.6.     INVESTMENT RETURN TRANSFERRED
           TO THE NON-LIFE INSURANCE
           TECHNICAL ACCOUNT
III.7.     OTHER INCOME
III.7.1.   Income from financial activities
III.7.2.   Other income
III.8.     OTHER CHARGES
III.8.1.   Financial charges
III.8.2.   Other charges
III.9.     PROFIT OR LOSS ON ORDINARY
           ACTIVITIES
III.10.    EXTRAORDINARY INCOME
III.11.    EXTRAORDINARY CHARGES
III.12.    EXTRAORDINARY PROFIT OR LOSS
III.13.    PROFIT OR LOSS BEFORE TAXES FOR
           THE ACCOUNTING PERIOD
III.14.    TAX ON PROFIT
III.15.    PROFIT OR LOSS FOR THE
           ACCOUNTING PERIOD



Chief Executive Officer
                                                      (signature)                        (full name)

Chief Financial Officer (Accountant)
                                                      (signature)                        (full name)
                                                                                  Annex 3
                                                                                  Form D3


                                                               APPROVED
                                                               by
                                                               _________________________________
                                                               ___________ Minutes No._________
                                                                 (date)
            ______________________________________________________________
                                          (name of insurance company)
            ______________________________________________________________
                                           (code, head office address)

                             APPROPRIATION ACOUNT (in litas)
                                    ____________(date)_______________

No.                            Items                             Codes    Financial year      Preceding
                                                                                              financial year
I.       Profit or loss brought forward from the
         preceding accounting period
II.      Profit or loss for the accounting period
III.     Profit or loss to be appropriated at the end of the
         accounting period
IV.      Shareholders’ contribution against losses
V.       Transfers from reserves
VI.      Profit to be appropriated
VII.     Appropriation of profit:
VII.1.   to legal reserves
VII.2.   to other reserves
VII.3.   dividends
VII.4.   other
VIII.    Profit or loss to be carried forward at the end of
         the accounting period


Chief Executive Officer
                                                      (signature)                           (full name)

Chief Financial Officer (Accountant)
                                                      (signature)                           (full name)
                                                                              Annex 4
                                                                              Form D4


                                                           APPROVED
                                                           by
                                                           _________________________________
                                                           ___________ Minutes No. _________
                                                              (date)
            ______________________________________________________________
                                        (name of insurance company)
            ______________________________________________________________
                                          (code, head office address)

                              CASH FLOW STATEMENT (in litas)
                                ____________(date)_______________

No.                                                                                        Preceding
                                     Items                              Financial year
                                                                                         financial year
I.         CASH FLOWS FROM OPERATING ACTIVITIES (+/-)
I.1.       Insurance and reinsurance premiums received
I.1.1.     Direct insurance premiums
I.1.2.     Reinsurance premiums accepted
I.2.       Co-insurance premiums
I.2.1.     Co-insurance premiums received belonging to the
           insurance company
I.2.2.     Co-insurance premiums received belonging to other
           companies participating in co-insurance
I.3.       Amounts paid to other companies participating in co-
           insurance
I.4.       Amounts received from other companies participating in
           co-insurance
I.5.       Outward reinsurance premiums
I.5.1.     Proportional reinsurance premiums
I.5.2.     Non-proportional reinsurance premiums
I.6.       Amounts paid under insurance and inward reinsurance
           contracts
I.6.1.     Rebates arising from cancellations
I.6.1.1.   Direct insurance
I.6.1.2.   Inward reinsurance
I.6.2.     Claims paid
I.6.2.1.   Direct insurance
I.6.2.2.   Inward reinsurance
                                                 (Annex 4)                                             2

No.                                                                                     Preceding
                                      Items                          Financial year
                                                                                      financial year
I.6.3.     Amounts recovered by recourse and amounts received
           after the realisation of residual assets (-)
I.6.3.1.   Direct insurance
I.6.3.2.   Inward reinsurance
I.6.4.     Surrender value paid
I.6.4.1.   Direct insurance
I.6.4.2    Inward reinsurance
I.6.5.     Claims settlement expenses paid
I.6.5.1.   Direct insurance
I.6.5.2.   Inward reinsurance
I.6.6.     Bonuses and rebates paid to policyholders on maturity
I.6.7.     Bonuses and rebates paid to ceding insurers on maturity
I.7.       Other amounts transferred to reinsurers
I.8.       Other amounts received from reinsurers
I.9.       Other amounts transferred to ceding insurers
I.10.      Other amounts received from ceding insurers
I.11.      Operating expenses paid
I.12.      Taxes paid for ordinary activities
I.13.      Amounts received from other activities
I.14.      Amounts paid for other activities
II.        CASH FLOWS FROM INVESTING ACTIVITIES (+/-)
II.1.      Amounts received from investing activities
II.1.1.    Affiliated enterprises and participating interests
II.1.2.    Shares and other variable-yield securities
II.1.3.    Debentures and other fixed-income securities
II.1.4.    Land
II.1.5.    Buildings
II.1.6.    Loans guaranteed by mortgages
II.1.7.    Other secured loans
II.1.8.    Unsecured loans
II.1.9.    Time deposits with credit institutions
II.1.10.   Other investments
II.2.      Amounts received on maturity or realisation of
           investments
II.2.1.    Affiliated enterprises and participating interests
II.2.2.    Shares and other variable-yield securities
II.2.3.    Debentures and other fixed-income securities
II.2.4.    Land
II.2.5.    Buildings
                                                 (Annex 4)                                         3

No.                                                                                 Preceding
                                       Items                     Financial year
                                                                                  financial year
II.2.6.    Loans guaranteed by mortgages
II.2.7.    Other secured loans
II.2.8.    Unsecured loans
II.2.9.    Time deposits with credit institutions
II.2.10.   Other investments
II.3.      Amounts paid after investments
II.3.1.    Affiliated enterprises and participating interests/
II.3.2.    Shares and other variable-yield securities
II.3.3.    Debentures and other fixed-income securities
II.3.4.    Land
II.3.5.    Buildings
II.3.6.    Loans guaranteed by mortgages
II.3.7.    Other secured loans
II.3.8.    Unsecured loans
II.3.9.    Time deposits with credit institutions
II.3.10.   Other investments
II.4.      Taxes paid on investing activities
II.5.      Amounts received from other investing activities
II.6.      Amounts paid during other investing activities
III.       CASH FLOWS FROM FINANCIAL ACTIVITIES (+/-)
III.1.     Amounts received after the issue of ordinary and
           preference shares
III.2.     Amounts spent for the purchase of own shares
III.3.     Amounts received after the issue of debt securities
           (debentures)
III.4.     Amounts spent for the purchase of debt securities
           (debentures)
III.5.     Loans received
III.6.     Repaid loans
III.7.     Dividends paid
III.8.     Taxes paid on financial activities
III.9.     Amounts received from other financial activities
III.10.    Amounts paid during other financial activities
IV.        INCREASE (DECREASE) IN CASH FLOWS
V.         CASH AND CASH EQUIVALENTS AT THE
           BEGINNING OF THE ACCOUNTING PERIOD
VI.        CASH AND CASH EQUIVALENTS AT THE END OF
           THE ACCOUNTING PERIOD
                                       (Annex 4)                       4


Chief Executive Officer
                                           (signature)   (full name)

Chief Financial Officer (Accountant)
                                           (signature)   (full name)
                                                                               APPROVED
                                                                     by Resolution No. 1350
                                                                        of 7 November 2000
                                              of the Government of the Republic of Lithuania


    RECOGNITION OF INCOME AND CHARGES ARISING OUT OF INSURANCE
                           OPERATIONS

1. Income from insurance operations shall be recognised as earned income and reported in the
annual financial statements only after an insurance service (or part of the service) has been
rendered to the policyholder. Provisions on insurance operations shall be also applied to
inward reinsurance operations.

2. Income from insurance operations shall be recognised on the basis of insurance policies.

3. Single premiums or instalment premiums calculated for a period specified in life-assurance
policies shall be treated as premiums written under life-assurance contracts for the specified
period.

4. Single premiums or instalment premiums calculated for a period specified in non-life
insurance policies shall be treated as premiums written under non-life insurance contracts for
the specified period.

5. Only that part of premiums which relates to the accounting period shall be recognised as
earned income for the accounting period. Written premiums shall be earned and distributed
over the term of insurance contract. Where the term of insurance contract does not coincide
with the term of risk insured, premiums shall be recognised as earned income and calculated
taking into account the term of risk insured.

6. Where the term of insurance contract (insured risk) extends into subsequent accounting
periods, the amount of premiums relating to subsequent periods shall be included in the
provision for unearned premiums. An increase in the provision for unearned premiums during
the accounting period shall reduce income for the same period, while a decrease in the said
provision during the accounting period shall increase such income.

7. Where premiums are received prior to the term of insurance contract (or risk insured if its
term of validity does not coincide with the term of insurance contract), the premiums received
shall be included in prepayments before the contract (or risk insured if the beginning of its
term of validity does not coincide with the beginning of the term of insurance contract) comes
into force.

The provisions of this item concerning the term of risk insured shall not be applied to life-
assurance contracts where the investment risk is borne by the policyholder.

8. Premiums which can be calculated correctly only in the course of subsequent accounting
periods shall be recognised as income after the basic amount of such premiums has been
evaluated. The following requirements shall be adhered to:

8.1. where the basic amount of premium is determined after the insurance contract has been
concluded, it shall be recognised as income during the term of insurance contract (or risk
insured if its term of validity does not coincide with the term of insurance contract). The
adjustable amount of premium shall be recalculated according to the procedure specified in
                                                                                                2

the insurance contract. An increase/decrease in premiums shall not affect income for the
period preceding the final calculation of the adjustable amount of premium;

8.2. where the basic amount of premium cannot be determined after the insurance contract has
been concluded, for the purpose of recognising premiums as income the method of covering
expense or deposits shall be applied until the premium’s basic amount is computed. Where
the method of covering expenses is applied, only that amount of premiums shall be
recognised as income, until the basic amount of premium is computed, which is equal to
evaluated claims charges. Where the method of deposits is applied, neither income from
premiums nor claims charges resulting from respective insurance contracts shall be
recognised as income or charges until the basic amount of premium is computed. After the
basic amount of premium has been determined, income shall be recognised taking into
account the basic amount of premium while the adjustable amount shall be recalculated
according to the procedure specified in the insurance contract. An increase/decrease in
premiums shall not affect income for the period preceding the final calculation of the
adjustable amount of premium.

9. Amounts recovered by recourse and the residual assets received shall not be recognised as
income yielded by the insurance company which has received said amounts and assets, but
they will reduce the company’s charges for the period during which such amounts have been
recovered and assets received.

10. Deposits received from reinsurers resulting from reinsurance transactions shall not be
recognised as income yielded by the insurance company which has received said amounts,
unless the reinsurance contract provides otherwise.

11. Reinsurance commissions and profit participation resulting from reinsurance and
calculated on the basis of the result of such contracts (on profit from the reinsurance portfolio)
shall not be recognised as income received by the ceding insurer, but they shall reduce
operating expenses during the term of insurance contract (or risk insured if its term of validity
does not coincide with the term of insurance contract).

12. Commissions received (receivable) for insurance and reinsurance, net of commissions
received (receivable) from reinsurers, shall be recognised as income during the term of
insurance contract (or risk insured if its term of validity does not coincide with the term of
insurance contract).

13. Expenses resulting from the conclusion and performance of insurance contracts
(commissions to agents, brokers, etc.) shall be recognised in the same accounting period
during which premiums are recognised as earned income.

14. Where the commissions received (receivable) result only from the conclusion of insurance
contracts and do not result from their further servicing, they may be immediately recognised
as income (charges).

15. An increase in technical provisions (except for the provision for unearned premiums)
during the accounting period shall increase the company’s charges for the same period while
their decrease during the accounting period shall reduce such charges.

16. Claims paid in connection with insurance contracts and arising from events which have
occurred in the current and preceding accounting periods shall be recognised as charges for
the period during which the payments were made. Amounts used for the settlement and
                                                                                           3

payment of claims shall not be included in the calculation of the provision for outstanding
claims.

17. Outward reinsurance premiums shall increase the company’s charges during the term of
reinsurance contract.

Where the term of reinsurance contract does not coincide with the term of reinsured risk, the
latter shall be taken into account.

18. Reinsurers’ share of the increase in technical provisions shall reduce the company’s
charges for the accounting period and the said share shall not exceed the amount specified in
reinsurance contracts for the compensation of insurance costs.

19. Where the mathematical technical provision is formed on the basis of net premiums by
using the Zilmer method and adjusting the tariff by the amount of expenses related to the
drawing up of a contract, such expenses shall be immediately written of as charges.

The Zilmer method is used to reduce the mathematical technical provision by the amount of
expenses related to the drawing up of a contract so that such expenses be allocated for the
whole period of contract.




                                    ––––––––––––––––
                                                                                          APPROVED
                                                                                by Resolution No. 1350
                                                                                   of 7 November 2000
                                                         of the Government of the Republic of Lithuania


     NOTES ON THE MAIN ITEMS IN THE ANNUAL FINANCIAL STATEMENTS

                                I. NOTES TO THE BALANCE SHEET

1. Balance sheet item “A. Intangible assets”:

1.1. “A.I. Formation costs”. This item shall comprise costs not charged to income in the
current year but related to the formation of the company, such as further development or
reorganisation costs, formation costs on capital increase, loan issue costs, and capitalised
interest.

Capitalised interest shall comprise financial charges related to the capital borrowed to finance
the construction of tangible fixed assets prior to bringing these fixed assets into actual
operation.

Reorganisation costs. Costs incurred in connection with reorganisation may only be recorded
as an asset if they are clearly defined expenditures related to a substantial modification in the
structure or reorganisation of the company and if they are intended and expected to have a
favourable and durable effect on the profitability of the company.

All expenditures reported in the formation costs shall be amortised within a period of five
years. In so far as the formation costs have not been fully written off, no distribution of profits
(dividends, tantiemes, etc.) shall take place until the amount of the reserves available for
distribution and profits brought forward is at least equal to that of the costs not written off.

1.2. “A.III. Rights acquired”. This item shall comprise patents, licences, “know–how”*, trade
marks and other similar rights. They are defined as a right to use fixed assets (patents,
licences, etc.) belonging to third persons, also as organisational costs incurred when acquiring
these rights from third persons and as “know-how” acquired for valuable consideration.

1.3. “A.IV. Goodwill”. Goodwill shall comprise that portion of the cost of acquiring fixed
assets that exceeds the net value of the assets acquired.

2. Balance sheet item “B. Investments”:

2.1. “B.I. Land, buildings and other real estate”. Buildings shall comprise erected
constructions as well as their fixtures and fittings that the company owns. This item shall also
comprise other real rights held by the company as regards buildings where full consideration
for these rights has been prepaid; leasing and similar rights shall comprise the company’s
long-term rights to use real estate under leasing contracts or other similar contracts provided
that instalments specified in the contract, including interest and ancillary costs, cover the full
amount indicated therein or provided that title to property is transferred to the company after
the contract expires or the contract includes a purchase option for the company.




       * “K n o w - h o w ” – industrial secret, positive experience, technological innovations, special skills, etc.
                                                                                               2

Construction in progress and prepayments shall comprise the value of assets in course of
construction at year’s end, also prepayments on contracts related the construction (acquisition)
of assets.

2.2. “B.II. Investments in affiliated enterprises and participating interests”. This item shall
comprise the company’s shares in affiliated enterprises and enterprises with which the
company is linked by virtue of a participating interest as well as debt securities issued by, and
loans to, these enterprises. Affiliated enterprises and enterprises with which the company is
linked by virtue of a participating interest are those where the insurance company has a
material influence on their financial management or where it has made a long-term
investment. Affiliated enterprises are those where the insurance company holds not less than
50 percent of the voting rights. Enterprises with which the company is linked by virtue of a
participating interest are those where the insurance company holds not less than 20 percent
and not more than 50 percent of the voting rights.

2.3. “B.III. Other financial investments”. This item shall comprise investments not shown
under other headings of Part B.

Item “B.III.2. Debentures and other fixed-income securities” shall also comprise securities
bearing interest the rate of which varies in line with specific factors, for example the interest
rate on the inter-bank market.

Item “B.III.6. Deposits with credit institutions” shall comprise sums the withdrawal of which
is subject to a time restriction. Sums deposited with no such restriction shall be shown under
“E.II. Cash at bank and in hand” even if they bear interest.

2.4. “B.IV. Deposits with ceding enterprises”. This item shall comprise deposits held with a
ceding enterprise to guarantee the settlement of reinsurer’s liabilities.

These amounts may not be combined with other amounts owed by the reinsurer to the ceding
insurer or by the ceding insurer to the reinsurer. Deposits with ceding enterprises may not be
used for any deductions relating to transactions between ceding reinsurers and reinsurers. The
use of deposits with ceding enterprises shall be specified in reinsurance contracts.

3. Balance sheet item “C. Investments for the benefit of life-assurance policyholders who bear
the investment risk”. This item shall comprise investments corresponding to the technical
provision for life assurance policies where the investment risk is borne by the policyholders.
Investments in these assets are made as specified by the policyholders in life assurance
contracts.

4. Balance sheet item “D. Receivables”. Receivables shall be shown separately as receivables
from different operations, such as receivables from insurance operations, receivables from
reinsurance operations, receivables from other operations.

5. Balance sheet item “E. Other assets”. This item shall comprise other tangible assets used
by the company for its own activities which are not covered by other items, also own shares
for which a special reserve must be formed in the amount equal or exceeding the value of
acquired shares.

6. Balance sheet item “F. Accrued income and deferred expenses”. Accrued income shall
comprise amounts which, though earned during the current and preceding accounting periods,
have not yet become receivable. Deferred expenses are amounts that have been paid by the
company during the current and preceding accounting periods but will be recognised as
charges only in the course of subsequent accounting periods.
                                                                                              3

7. Balance sheet item “A. Capital and reserves”:

7.1. “A.I. Subscribed capital”. The amount of registered subscribed capital shall be shown in
this item.

7.2. “A.II. Share premium account”. This item shall comprise the amount by which the issue
price exceeds the nominal value of shares. This premium is based on the fact that the
company’s net assets are larger than the registered subscribed capital at the date of issue of
new shares.

7.3. “A.III. Revaluation reserve”. Revaluation reserve means unrealised surpluses recorded in
the amounts relating to fixed assets, except for intangible assets. A company may revalue its
assets where their value clearly and continuously exceeds their book value.

7.4. “A.IV. Other reserves”. Reserves shall be formed when appropriating profit for the
current accounting year by the decision of the general meeting in accordance with the laws
and legal acts of the Republic of Lithuania as well as the articles of association of an
insurance company.

8. Balance sheet item “B. Financing (grants and subsidies)”. This item shall comprise
subsidies and grants in capital received from state and municipal institutions, organisations
and funds. Investment subsidies that are not related to investments in fixed assets shall be
recorded in the profit (loss) account according to their nature where such subsidies have been
received or according to guarantees of their receipt. Only that amount of subsidies which is
related to income for the accounting period shall be reported.

9. Balance sheet item “C. Subordinated liabilities”. In the event of bankruptcy or winding up,
subordinated liabilities are to be repaid only after the claims of all other creditors have been
met.

10. Balance sheet item “D. Technical provisions”. Technical provisions are typical only of
insurance companies and they are intended to cover liabilities arising out of insurance and
reinsurance contracts. The methods of calculating technical provisions shall be approved by
the Board of the State Insurance Supervisory Authority under the Ministry of Finance. The
gross amount of technical provisions and the reinsurers’ share of technical provisions shall be
shown separately:

10.1. “D.I. Provision for unearned premiums”. The provision for unearned premiums shall
comprise the amount representing that part of gross premiums written which is to be attributed
to income in the course of subsequent accounting periods. The provision for unearned
premiums shall be calculated for each insurance contract or in accordance with the methods
approved by the Board of the State Insurance Supervisory Authority under the Ministry of
Finance. Mathematical or statistical methods may be used where they are expected to give
approximately the same results as individual calculations.

Reinsurers’ share of the provision for unearned premiums shall comprise that part of the
provision for unearned premiums which will be recognised in the course of subsequent
accounting periods as outward reinsurance premiums increasing charges.

10.2. “D.II. Mathematical technical provision”. Mathematical technical provision shall
comprise the amount of mathematically computed liabilities of an insurance company which
represents anticipated claims. This technical provision shall be calculated for each insurance
contract. A summary of the principal assumptions made shall be given in the notes.
                                                                                             4

10.3. “D.III. Provision for outstanding claims”. The provision for outstanding claims shall be
formed in respect of all claims arising from events which have occurred up to the end of the
accounting period, whether reported or not, less amounts already paid in respect of such
claims, also to cover the costs of elimination and administration of insured events in the
course of subsequent accounting periods. This technical provision shall be calculated in
accordance with the methods approved by the Board of the State Insurance Supervisory
Authority under the Ministry of Finance.

Reinsurers’ share of the provision for outstanding claims shall comprise that part of
outstanding claims which will be paid by the reinsurer under reinsurance contracts.

10.4. “D.IV. Provision for bonuses and rebates”. The provision for bonuses and rebates shall
comprise amounts representing an allocation of surplus or profit arising on business as a
whole or a section of business to the extent that such amounts represent a partial refund of
premiums resulting from insurance contracts, also from contracts providing for a reduction of
premiums upon their extension.

10.5. “D.V. Equalisation provision”. Equalisation provision shall be formed in accordance
with the methods approved by the Board of the State Insurance Supervisory Authority under
the Ministry of Finance to equalise fluctuations in loss ratios.

10.6. “D.VI. Other technical provisions”. This item shall comprise technical provisions
formed by an insurance company and not shown under other headings.

11. Balance sheet item “E. Technical provisions for life-assurance policies where the
investment risk is borne by the policyholders”. This item shall comprise that part of technical
provisions which are attributed to life assurance where investments are made for which the
policyholder bears the risk. It shall not be shown under any other technical provisions.

12. Balance sheet item “F. Provisions for other liabilities and charges”. This item shall
comprise provisions other than technical provisions. They are constituted to cover liabilities,
such as pensions, taxation, major maintenance works, etc.).

These provisions are intended to cover those expenses and charges the nature of which is
clearly defined and which on the closing day of the financial year are either likely to be
incurred or certain to be incurred but their amounts are yet to be determined. These provisions
may not be used to adjust the value of assets.

13. Balance sheet item “G. Deposits received from reinsurers”. This item shall comprise
amounts received by an insurance company which are intended under reinsurance contracts to
cover the reinsurers’ share of claims incurred. Deposits received from reinsurers may not be
merged with other amounts, reinsurers’ liabilities to ceding insurers and vice versa. No
deductions shall be made from these amounts if related to transactions between ceding
insurers and reinsurers, unless the reinsurance contract provides otherwise.

14. Balance sheet item “H. Liabilities”. This item shall comprises the liabilities of an
insurance company arising out of insurance or related operations. These amounts may not be
merged with technical provisions.

15. Balance sheet item “I. Accrued expenses and deferred income”. Accrued expenses shall
comprise expenses which, though relating to the current and preceding accounting periods,
will be paid only in the course of subsequent accounting periods. Deferred income means
amounts that have been received during the current and preceding accounting periods but will
be recognised as income only in the course of subsequent accounting periods.
                                                                                               5

                      II. NOTES TO THE PROFIT (LOSS) ACCOUNT

16. The profit (loss) account shall be comprised of three parts: technical account for non-life
insurance and reinsurance business; technical account for life assurance and reinsurance
business; non-technical account.

Income and charges directly relating to a relevant branch of insurance shall be disclosed in
technical accounts. Income and charges that are not directly connected with life assurance and
non-life insurance business shall be disclosed in the non-technical account

17. Profit (loss) account item “I. Technical account for non-life insurance business ”:

17.1. “I.1. Earned premiums, net of reinsurance”:

17.1.1. “I.1.1. Gross premiums written”. This item shall comprise all amounts due during the
accounting period in respect of insurance contracts regardless of the fact that such amounts
may relate in whole or in part to subsequent accounting periods (i.e. irrespective of whether or
not such amounts have been received, earned or will be earned in the course of subsequent
accounting periods). These amounts shall include:

-      premiums calculated for the term of validity of risk insured, including additional
       premiums resulting from insurance contracts;

-      premiums which can be calculated accurately only in the course of subsequent
       accounting periods;

-      insurers’ share of gross premiums written under co-insurance insurance contracts;

-      reinsurance premiums accepted, including portfolio entries;

-      premiums calculated on the basis of cancelled contracts but paid after their renewal.

The following amounts shall be deducted from gross premiums written:

-      premiums under cancelled insurance contracts to the extent that they have been
       refunded or will be refunded to policyholders, also premiums under cancelled
       contracts unpaid by policyholders;

-      premiums for ceding unexpired risks to ceding insurers.

Gross premiums written cannot be reduced by the amount of rebates representing a partial
refund of premiums resulting from insurance contracts, also from contracts providing for the
reduction of premiums upon their extension (such amounts shall be recorded in “Bonuses and
rebates”) or by the amount of commissions paid to intermediaries.

17.1.2. “I.1.2. Outward reinsurance premiums (–)”. This item shall comprise all premiums
paid or payable in respect of outwards reinsurance contracts entered into by an insurance
company.

17.1.3. “I.1.3. Change in the provision for unearned premiums (+/–)”. This item shall
disclose an increase (–) or decrease (+) in the provision for unearned premiums which has to
correspond to the change in the assets and liabilities item “Provision for unearned premiums,
gross amount” on the balance sheet for the accounting period.
                                                                                                6

17.1.4. “I.1.4. Reinsurers’ share of the change in the provision for unearned premiums
(+/–)”. This item shall disclose an increase (+) or decrease (–) in the reinsurers’ share of the
provision for unearned premiums which has to correspond to the change in the assets and
liabilities item “Provision for unearned premiums, reinsurers’ share” on the balance sheet for
the accounting period.

17.2. “I.2. Investment return transferred from the non-technical account”. This item shall
comprise profit from the investment of technical provisions for non-life insurance. The
amount of the investment return to be transferred is calculated by multiplying the investment
return and the following coefficient together:

    Non-life insurance technical provisions / (Gross technical provisions + Equity capital).

The result on the technical account for non-life insurance business shall be increased by the
amount of investment return transferred from item III.6.

17.3. “I.3. Other technical income, net of reinsurance”. This item shall disclose income from
insurance operations not shown under other headings. These amounts shall comprise
commissions for negotiating insurance contracts for other insurance companies, commissions
for co-insurance, delay fees, etc.

17.4. “I.4. Claims incurred, net of reinsurance”. All claims payments and the change in the
provision for outstanding claims (difference between the provision for outstanding claims for
the current accounting year and the provision for outstanding claims for the preceding
accounting year) shall be stated in this item. The following shall be disclosed separately:

17.4.1. “I.4.1.1. Claims”. This item shall cover all payments made during the financial year
on account of claims arising from events which have occurred in the current and preceding
accounting periods.
17.4.2. “I.4.1.2. Claims settlement expenses”. This item shall comprise the company’s
administrative expenses relating to claims settlement and internal costs (salaries to the
personnel of the Claims Settlement Department and other), also expenses relating to third
persons and directly connected with the investigation of claims (remuneration to experts,
additional expenses incurred in the course of investigation and other).
17.4.3. “I.4.1.3. Amounts recovered (–)”. Amounts recovered by recourse and the residual
assets received shall be shown in this item. Amounts recovered are valued on a prudent basis.

17.4.4. “I.4.1.4. Reinsurers’ share (–)”. This item shall comprise claims to be paid by
reinsurers under reinsurance contracts.

17.4.5. “I.4.2.1. Change in the provision for outstanding claims, gross amount (+/–)”. This
item shall disclose an increase (+) or decrease (–) in the technical provision for outstanding
claims which has to correspond to the change in the assets and liabilities item “Provision for
outstanding claims, gross amount” on the balance sheet for the accounting period.

17.4.6. “I.4.2.2. Change in the provision for outstanding claims, reinsurers’ share (–/+)”.
This item shall disclose an increase (–) or decrease (+) in the reinsurers’ share of the technical
provision for outstanding claims which has to correspond to the change in the assets and
liabilities item “Provision for outstanding claims, reinsurers’ share” on the balance sheet for
the accounting period.

17.5. “I.5. Change in other technical provisions, net of reinsurance, not shown under other
headings (+/–)”:
                                                                                                7

17.5.1. “I.5.1. Change in other technical provisions not shown under other headings, gross
amount (+/–)”. Insurance companies shall disclose under this item an increase (+) or decrease
(–) in technical provisions – formed and used in co-ordination with and upon the approval of
the Board of the State Insurance Supervisory Authority under the Ministry of Finance and not
shown under other items on changes in technical provisions – which has to correspond to the
change in the balance sheet item “Other technical provisions, gross amount” for the
accounting period.

17.5.2. “I.5.2. Change in other technical provisions not shown under other headings,
reinsurers’ share (+/–)”. This item shall disclose an increase (–) or decrease (+) in the
reinsurers’ share of other technical provisions not shown under other headings which has to
correspond to the change in the balance sheet item “Other technical provisions, reinsurers’
share” for the accounting period.

17.6. “I.6. Bonuses and rebates, net of reinsurance”. This item shall comprise all amounts
attributable to bonuses and rebates during the accounting period to the extent that they
represent a partial refund of premiums resulting from insurance contracts, also from contracts
providing for the reduction of premiums upon their extension, as well as any change in the
provision for bonuses and rebates. The following shall be disclosed in separate items:

17.6.1. “I.6.2.1. Change in the provision for bonuses and rebates, gross amount (+/–)”. This
item shall disclose an increase (+) or decrease (–) in the provision for bonuses and rebates
which has to correspond to the change in the assets and liabilities item “Provision for bonuses
and rebates, gross amount” on the balance sheet for the accounting period.

17.6.2. “I.6.2.2. Change in the provision for bonuses and rebates, reinsurers’ share (+/–)”.
This item shall disclose an increase (–) or decrease (+) in the reinsurers’ share of the provision
for bonuses and rebates which has to correspond to the change in the assets and liabilities item
“Change in the provision for bonuses and rebates, reinsurers’ share” on the balance sheet for
the accounting period.

17.7. “I.7. Net operating expenses”. This item shall comprise acquisition costs and
administrative expenses. The following shall be disclosed separately:

17.7.1. “I.7.1. Acquisition costs”. This item shall comprise the costs arising from the
conclusion, renewal and servicing of insurance contracts. Acquisition costs shall cover direct
costs and indirect costs.

Direct costs: commissions and other payments to intermediaries; the cost of drawing up
insurance documents; the cost of including insurance contracts in the portfolio; commissions
for co-insurance.

Indirect costs: advertising costs; administrative expenses connected with the conclusion of
insurance contracts; medical examination costs and other.

17.7.2. “I.7.2. Change in deferred acquisition costs (+/–)”. This item shall disclose an
increase (–)or decrease (+) in deferred acquisition costs which has to correspond to the change
in the assets item “Deferred acquisition costs arising in non-life insurance business” on the
balance sheet for the accounting period.

17.7.3. “I.7.3. Administrative expenses”. Administrative expenses shall include the costs
arising from:

-      premium collection (including relevant commissions);
                                                                                                     8

-       portfolio administration;

-       handling of bonuses and rebates;

-       inward and outward reinsurance.

Administration expenses shall in particular include personnel costs, maintenance and
communication costs, other costs (such as amortisation and depreciation costs in so far as
these need not be shown under investment charges, acquisition costs, claims settlement
expenses and other charges).

17.7.4. Profit (loss) account item “I.7.4. Reinsurance commissions and profit participation
(–)”. This item comprises reinsurance commissions and profit participation calculated on the
basis of profit from the reinsurance portfolio.

Reinsurance commissions and profit participation shall be deducted from operating expenses
and reported under a separate item. This item specifies the company’s expenses: it does not
increase income and reduces charges.

17.8. “I.8. Other technical charges, net of reinsurance”. This item comprises the costs of
insurance operations not shown under other headings (such as contributions to mandatory
guarantee funds*, interest on deposits received from reinsurers, and other).

17.9. “I.9. Technical result before the formation of the equalisation provision”. This indicator
shall be calculated as follows: earned premiums, net of reinsurance, on the technical account
for non-life insurance plus investment return transferred from the non-technical account and
other technical income, net of reinsurance minus claims incurred, net of reinsurance, bonuses
and rebates, net of reinsurance, changes in other technical provisions, net of reinsurance, not
shown under other headings, net operating expenses, and other technical charges, net of
reinsurance.

17.10. “I.10. Change in the equalisation provision (+/–)”. The change in the equalisation
provision shall be calculated as the difference between the equalisation provision for the
accounting period and the equalisation provision for preceding accounting periods – change in
the assets and liabilities item “Equalisation provision” on the balance sheet.

17.11. “I.11. Balance on the technical account – non-life insurance business”. This item shall
disclose the interim result on the technical account for non-life insurance business calculated
by deducting the change in the equalisation provision from the technical result before the
formation of the equalisation provision.

18. Profit (loss) account item “II. Technical account for life assurance business”:

18.1. “II.1. Earned premiums, net of reinsurance”:

18.1.1. Profit (loss) account item “II.1.1. Gross premiums written”. This item shall comprise
all amounts due during the accounting period in respect of insurance contracts regardless of
the fact that such amounts may relate in whole or in part to subsequent accounting periods,
i.e. irrespective of whether or not such amounts have been received, also irrespective of
whether or not such amounts have been earned or will be earned in the course of subsequent
accounting periods.

      * Guarantee funds shall mean funds where members are insurance companies and which are formed for
common purposes set forth in their statutes.
                                                                                               9

These amounts shall include:

-      periodic premiums and additional premiums resulting from insurance contracts;

-      single premiums, including annuity premiums;

-      premiums which can be calculated accurately only in the course of subsequent
       accounting periods;

-      insurers’ share of gross premiums written under co-insurance contracts;

-      reinsurance premiums accepted;

-      premiums calculated on the basis of cancelled contracts but paid after their renewal.

The following amounts shall be deducted from gross premiums written:

-      premiums under cancelled insurance contracts to the extent that they have been
       refunded or will be refunded to policyholders, also premiums under cancelled
       contracts unpaid by policyholders;

-      premiums for ceding unexpired risks to ceding insurers.

Gross premiums written cannot be reduced by the amount of rebates representing a partial
refund of premiums resulting from insurance contracts, also from contracts providing for the
reduction of premiums upon their extension (such amounts shall be recorded in “Bonuses and
rebates”) and by the amount of commissions paid to intermediaries.

18.1.2. “II.1.2. Outward reinsurance premiums (–)”. Outward reinsurance premiums shall be
recorded in accordance with the notes on item I.1.2.

18.1.3. “II.1.3. Change in the provision for unearned premiums (+/–)”. Change in the
provision for unearned premiums shall be recorded in accordance with the notes on item I.1.3.

18.1.4. “II.1.4. Reinsurers’ share of the change in the provision for unearned premiums
(+/–)”. Reinsurers’ share of the change in the provision for unearned premiums shall be
recorded in accordance with the notes on item I.1.4.

18.2. “II.2. Investment income”. This item shall disclose investment income of a company
carrying on life-assurance business:

18.2.1. “II.2.1. Income from participating interests”. This item shall comprise income derived
from affiliated enterprises and enterprises with which an insurance company is linked by
virtue of a participating interest.

18.2.2. “II.2.2.1. Income from land and buildings”. This item shall comprise rent for land and
buildings and other similar income.

18.2.3. “II.2.2.2. Income from other investments”. This item shall comprise investment
income such as bank interest, dividends, interest on loans granted, etc.

18.2.4. “II.2.3. Value re-adjustments on investments”. This item shall comprise unrealised
gains on short-term investments.
                                                                                              10

18.2.5. “II.2.4. Gains on the realisation of investments”. This item shall comprise gains
calculated after the realisation of investments.

18.3. “II.3. Unrealised gains on investments”. This item discloses unrealised gains on
investments (value re-adjustements on investments) where the investment risk is borne by the
policyholder.

18.4. “II.4. Other technical income, net of insurance”. Other technical income shall be
recorded in accordance with the notes on I.3.

18.5. “II.5. Claims incurred, net of reinsurance”. Claims incurred shall be recorded in
accordance with the notes on I.4. Profit (loss) account item “II.5.1.2. Surrender value” shall
comprise amounts paid to policyholders after the cancellation of insurance contracts as has
been specified in life assurance contracts;

18.6. “II.6. Change in other technical provisions, net of reinsurance, not shown under other
headings (+/–)”. Change in other technical provisions not shown under other headings shall
be recorded in accordance with the notes on item I.5.

18.7. “II.7. Bonuses and rebates, net of reinsurance”. Bonuses and rebates shall be recorded
in accordance with the notes on I.6.

18.8. “II.8. Net operating expenses”. Expenses relating to insurance operations shall be
recorded in accordance with the notes on item I.7.

18.9. Profit (loss) account item “II.9. Investment charges”. Investment charges of a company
carrying on life-assurance business shall be disclosed in this item:

18.9.1. “II.9.1. “Investment management charges, including interest”. The following
investment management charges shall be included in this item:

-      costs arising from payments to third persons, personnel costs where related to
       investment management;

-      costs relating to buildings and premises which may be included into operating
       expenses, taxes, maintenance costs and other;

-      payments for services rendered by financial institutions;

-      leasing costs arising from the use of premises (buildings) for investing activities.

18.9.2. “II.9.2. Value adjustments on investments”. Unrealised losses on short-term
investments shall be disclosed in this item.

18.9.3. “II.9.3. Losses on the realisation of investments”. This item shall comprise losses
calculated after the realisation of investments.

18.10. “II.10. Unrealised losses on investments”. This item shall disclose unrealised losses on
investments (value adjustments on investments) where the investment risk is borne by the
policyholder.

18.11. “II.11. Other technical charges, net of reinsurance”. Other technical charges shall be
recorded in accordance with the notes on item I.8.
                                                                                              11

18.12. “II.12. Investment return transferred to the non-technical account”. This item shall
comprise profit from the investment of equity capital of a company carrying on life-assurance
business. The amount of the investment return to be transferred is calculated by multiplying
the investment return and the following coefficient together:

                 Equity capital / (Gross technical provisions + Equity capital).

The result on the technical account for life assurance business shall be reduced by the amount
of investment return transferred to item III. 4.

18.13. “II.13. Balance on the technical account – life assurance business”. This item shall
disclose the interim result on the technical account for life-assurance business, calculated as
the difference between the income and charges on the technical account for life assurance
business.

19. Profit (loss) account item “III. Non-technical account”. The result of activities carried out
by insurance companies which is not directly related to insurance (reinsurance) operations
shall be disclosed in the non-technical account. The results (profit or loss) of technical
accounts for non-life insurance and life assurance business shall be transferred to this item:

19.1. “III.1. Balance on the technical account – non-life insurance business”. Technical
profit (loss) transferred from the technical account for non-life insurance business shall be
recorded in this item.

19.2. “III.2. Balance on the technical account – life-assurance business”. Technical profit
(loss) transferred from the technical account for life assurance business shall be recorded in
this item.

19.3. Profit (loss) account item “III.3. Investment income”. This item shall disclose
investment income of a company carrying on non-life insurance business. Investment income
shall be recorded in accordance with the notes on item II.2.

19.4. “III.4. Investment return transferred from the life-assurance technical account”. The
result on the non-technical account shall be increased by the amount transferred from item
II.12 (profit on the non-technical account). This item shall comprise profit from the
investment of equity capital of a company carrying on life-assurance business. The amount of
the investment return to be transferred is calculated by multiplying the investment return and
the following coefficient together:

                Equity capital / (Gross technical provisions + Equity capital);

19.5. “III.5. Investment charges”. Investment charges of a company carrying on non-life
insurance business shall be disclosed in this item. Investment charges shall be recorded in
accordance with the notes on item II.9.

19.6. “III.6. Investment return transferred to the non-life insurance technical account (–)”.
The result on the non-technical account shall be reduced by the amount transferred to item I.2
(profit on the technical account for non-life insurance business). This item shall comprise
profit from the investment of technical provisions for non-life insurance. The amount of the
investment return to be transferred is calculated by multiplying the investment return and the
following coefficient together:

   Non-life insurance technical provisions / (Gross technical provisions + Equity capital);
                                                                                               12

19.7. “III.7. Other income”. This item shall comprise income derived from rendering services
other than insurance services; interest not relating to investments; income arising from the
translation of currency and adjustments in the exchange rate, income from items on the
balance sheet not related to investments, value adjustments, etc.

This item shall also comprise the amount of own construction recognised as income, the
annual amount of grants and subsidies in capital received to finance assets, and the amount of
subsidies in interest.

19.8. “III.8. Other charges”. This item shall comprise charges arising from changes in the
exchange rate, loans received, losses on the balance sheet not related to investments, value
adjustments and other charges not shown under other headings.

19.9. “III.9. Profit or loss on ordinary activities”. This indicator shall be calculated as
follows: balance on the technical account for non-life insurance business plus balance on the
technical account for life assurance business, investment income on the non-technical
account, investment return transferred from the life-assurance technical account, and other
income minus investment charges on the non-technical account, investment return transferred
to the non-life insurance technical account, and other charges.

19.10. “III.10. Extraordinary income”. This item shall comprise income derived from the
write-back of amounts written off on assets, income which does not result from ordinary
activities, also profit from compensations for natural disasters and other unexpected
circumstances, as well as other extraordinary income which does not depend on the
management’s will. Profit received from the business ceded shall be also disclosed in this
item. Amounts by which the result for preceding accounting periods has been mistakenly
reduced shall be also included in this item.

19.11. “III.11. Extraordinary charges”. This item shall comprise charges which do not
depend on the management’s will.

This item shall comprise charges which do not arise from ordinary activities. Such charges
shall include extraordinary amounts written off on formation costs, extraordinary amounts
written off on assets; provisions for extraordinary liabilities and charges; losses resulting from
natural disasters; the amount of extraordinary charges capitalised as reorganisation costs, and
other extraordinary charges. Amounts by which the result for the preceding accounting
periods has been mistakenly increased shall be also included in this item.

19.12. “III.12. Extraordinary profit or loss”. The difference between extraordinary income
and extraordinary charges shall be stated in this item.

19.13. “III.13. Profit or loss before taxes for the accounting period”. This indicator shall be
calculated by adding extraordinary profit or loss to profit or loss on ordinary activities.

19.14. “III.14. Tax on profit”. The amount of tax on profit shall be included in this item. It
shall be calculated in accordance with the Law on Taxes of Profits of Legal Persons and other
legal acts of the Republic of Lithuania, regulating the calculation of tax on profit.
19.15. “III.15. Profit or loss for the accounting period”. This indicator shall be calculated by
deducting tax on profit from profit or loss before taxes for the accounting period.
                                                                                              13

                        III. NOTES TO THE APPROPTIATION ACCOUNT

20. Appropriation account item “I. Profit or loss brought forward from the preceding
accounting period”. This result shall be transferred from the corresponding item on the
balance sheet for the preceding accounting period.

21. Appropriation account item “II. Profit or loss for the accounting period”. This result shall
be transferred from the last item on the profit (loss) account for the current accounting period.

22. Appropriation account item “III. Profit or loss to be appropriated at the end of the
accounting period”. This result shall be calculated as the algebraic sum of the result brought
forward from the preceding accounting period and the result for the accounting period.

23. Appropriation account item “IV. Shareholders contributions against losses”. This item
shall comprise amounts paid by shareholders under the procedure prescribed by the law to
cover losses from the company’s activities.

24. Appropriation account item “V. Transfers from reserves”. This item shall comprise
amounts to be transferred by the decision of the general meeting from reserves for
appropriation as dividends and other allocations.

25. Appropriation account item “VI. Profit to be appropriated”. This result shall be
calculated as the algebraic sum of the result to be appropriated, shareholders’ contribution
against losses and transfers from reserves. Where the calculated sum is negative, “0” shall be
entered in this item and the calculated negative amount shall be transferred to item VIII
(Profit or loss to be carried forward at the end of the accounting period).

26. Appropriation account item “VII. Appropriation of profit”. The appropriation of profit in
accordance with regulatory enactments and the decisions of the general meeting shall be
disclosed in this item.

27. Appropriation account item “VIII. Profit or loss to be carried forward at the end of the
accounting period”. This result shall be calculated as follows: profit to be appropriated minus
amounts appropriated to legal reserves, to other reserves, for dividends and other
appropriations.

                    IV. NOTES ON CASH FLOW STATEMENT ITEMS

28. Cash flow statement item “I. Cash flows from operating activities (+/-)”. The company’s
operating activities include insurance and related operations, also activities other than
investing and financial activities.

29. Cash flow statement item “II. Cash flows from investing activities (+/-)”. Investing
activities shall mean the acquisition and disposal of long-term and short-term investments
other than those classified as cash equivalents.

30. Cash flow statement item “III. Cash flows from financial activities (+/-)”. Financial
activities shall mean activities that affect the company’s equity capital, the amount and
composition of its debts.

31. The cash flow statement reports the inflows and outflows of cash and cash equivalents
during the accounting period. The amount of cash and cash equivalents calculated in the cash
flow statement has to correspond to the change in the amount on the balance sheet during the
same account period.
                                                                                      14

Cash flows shall mean an increase or decrease of cash or cash equivalents.

Cash shall mean cash in hand, in settlement accounts and demand deposits.

Cash equivalents shall mean short-term investments which may be quickly and without great
risk exchanged into a definite amount of cash (cheques and other).

The cash flow statement of an insurance company shall be drawn up by using the direct
method.




                                     ––––––––––––––––
                                                                                 APPROVED
                                                                       by Resolution No. 1350
                                                                          of 7 November 2000
                                                of the Government of the Republic of Lithuania


   MINIMAL REQUIREMENTS IN RESPECT OF THE NOTES TO THE FINANCIAL
               STATEMENTS OF INSURANCE COMPANIES

                                      I. GENERAL PART

1. Information about the insurance company. The notes shall include general information
about the insurance company: the date of its registration, classes of insurance covered,
organisational structure, number of branches and agencies. They shall also specify the general
situation of the company at least during two preceding accounting periods, the conditions of
its performance which may affect the company’s development, any activities relating to such
development, changes in its capital (if any) and reasons for such changes, and the main events
which, though relating to the accounting year, occurred after the date of the balance sheet.

2. Affiliated enterprises and enterprises with which an insurance company is linked by virtue
of a participating interest. The notes shall provide information on affiliated enterprises and
enterprises with which an insurance company is linked by virtue of a participating interest:
names of enterprises and their head offices, the company’s participation in their capital (in
percent), the amount of their equity capital, profit or loss for the accounting period.

                                 II. ACCOUNTING POLICIES

3. Basic principles. The notes shall explain the company’s accounting policies: basic
principles which have been complied with in keeping the company’s accounts and preparing
its financial statements for the accounting year (evaluation of assets, liabilities, equity, income
and charges). In the event that some of the company’s accounting principles have changed
during the accounting period, the details of such a change and its impact on the company’s
results shall be disclosed in respective notes and figures shall be presented calculated on the
basis of previous and new accounting methods.

4. Exceptions. Where the general accounting principles have not been adhered to when
preparing the financial statements (such as the principles of going-concern, consistency,
accruals, etc.), said exceptions shall be stated in the notes and the reasons for such exceptions
and their effect on the financial statements shall be disclosed.

5. Accounting of intangible assets and amortisation. The methods of valuation of intangible
assets, also the method of calculating amortisation and its period shall be stated. This
information shall be disclosed by each category of intangible assets: formation costs, costs of
research and development, etc.

6. Accounting of real estate and depreciation. The methods of valuation of investments in real
estate, also the method of calculating depreciation and its period shall be stated. Where
depreciation of a certain type or item of real estate is not calculated, this shall be disclosed.
The accounting principles applied to repair costs, financial lease, leasing, rent, and hire
purchase shall be specified.

7. Accounting of investments in affiliated enterprises and enterprises with which an insurance
company is linked by virtue of a participating interest. The methods of valuation of
                                                                                               2

investments in affiliated enterprises and enterprises with which an insurance company is
linked by virtue of a participating interest as well as the accounting principles applied to an
increase/decrease, other than temporary, in the value of such investments shall be stated.

8. Accounting of equity investments. The methods of valuation of long-term and short-term
investments in equity securities, the accounting principles and revaluation policies applied to
an increase/decrease, other than temporary, in the value of long-term investments, as well as
the principles of reporting changes in the market value of short-term investments (if short-
term investments are shown at market value or at acquisition or market value, whichever is
lower) shall be disclosed separately.

9. Accounting of investments in debt securities. The methods of valuation of investments in
long-term and short-term debt securities shall be disclosed separately, and the accounting
principles applied to amortised discounts, bonuses, and interest income shall be stated.

10. Accounting of loans issued. The accounting principles applied to loans issued and
provisions for doubtful amounts shall be disclosed.

11. Accounting of time deposits. The accounting principles applied to time deposits with credit
institutions and provisions for doubtful amounts shall be disclosed.

12. Accounting of other tangible assets. The methods of valuation of other tangible assets
(other than investments), also the method and period of their depreciation shall be stated. The
accounting principles applied to repair costs, financial lease, leasing, rent, and hire purchase
shall be specified.

13. Accounting of receivables. The basic methods of valuation of receivables shall be stated,
the principles used for transfers to doubtful amounts and the formation of provisions for
doubtful loans (loans are written off) shall be disclosed.

14. Capital and reserves. The basic principles of formation, valuation and reporting of
reserves shall be stated. The principles of formation of the revaluation reserve (which result of
the valuation of assets shall be included into the reserve, methods of valuation of such assets,
etc.) shall be stated separately.

15. Technical provisions. Information on technical reserves (provision for unearned
premiums, provision for outstanding claims, mathematical technical provision, provision for
bonuses and rebates, equalisation provision, technical provisions for life-assurance policies
where the investment risk is borne by the policyholders, and other – each separately) shall be
disclosed: methods of valuation, new factors affecting the amount of provisions, such as new
products, changes in legislation, changes in the methods of valuation or reporting principles.

Important characteristics of the provision for bonuses and rebates shall be disclosed.

Where statistical and mathematical methods are used in the formation of the mathematical
technical provision, a summary of main conditions shall be presented.

Factors having a material influence on the amount of the reinsurers’ share of technical
provisions (e.g. material changes in reinsurance contracts) shall be specified.

16. Provisions for other liabilities and charges. The principles of formation and accounting
applied to provisions for other liabilities and charges shall be stated.
                                                                                                3

17. Other liabilities. The accounting principles applied to other liabilities (excluding technical
provisions) shall be stated.

18. Premiums written and earned premiums. The principles of the recognition of premiums as
premiums written and earned premiums, also used for the calculation of the reinsurers’ share
shall be stated.

19. Claims incurred. The accounting principles applied to claims, reinsurers’ claims, and
claims settlement expenses shall be stated.

20. Recognition of investment income and charges. The accounting principles applied to
investment income and charges shall be stated, the methods of calculation of the amount of
investment return transferred from the life-assurance technical account to the non-technical
account and investment return transferred from the non-technical account to the non-life
insurance technical account shall be disclosed.

21. Acquisition costs and administrative expenses. Costs treated as acquisition costs shall be
specified and the basic accounting principles applied to such costs and other expenses shall be
disclosed. The principles of attributing acquisition costs and administrative expenses to a
specific insurance policy (class or type of insurance) shall be disclosed.

22. Recognition of other technical income and charges. The principles of the recognition of
other technical income and charges shall be stated.

23. Recognition of other income and charges. The principles of the recognition of other
income and charges shall be stated.

24. Taxes. The basic rates of taxes paid by the company, the principles of their calculation,
also the principles of the calculation of deferred taxes shall be stated. Where taxation affects
the valuation of assets, this shall be specified.

25. Revaluation of foreign currency. The basic principles of revaluation of items denominated
in foreign currency shall be stated. The accounting of gains and losses arising from such
revaluation shall be disclosed.

26. Revaluation of investments. Where there is a material difference between the real and
reported value of investments, the real value and methods of its determination shall be
indicated in the notes. Where investments in the financial statements are stated at market
value, their acquisition value shall be indicated in the notes.

27. Cash flows. The company’s policy concerning the composition of cash and cash
equivalents as regards investment and financial activities shall be disclosed.

                                          III. NOTES

28. The notes shall disclose the content of specific items in the financial statements
(mandatory tables specifying some of the items are attached hereto), while additional
information shall be disclosed in explanations given in the notes. The company shall disclose
more information where the amounts reported in the financial statements are material and
where they may affect the valuation of the company’s situation.

29. Note “Intangible assets”. Changes in the acquisition value, accumulated amortisation and
residual value of intangible assets during the accounting period shall be stated: acquisition
value, disposals and write-offs, extraordinary amounts written off, and write-downs shall be
                                                                                               4

reported. All intangible assets shall be broken down by categories (e.g. formation costs, costs
of research and development, etc.).

It shall be explained which elements comprise formation costs.

Where specific intangible assets have been acquired under leasing contracts, this shall be
shown separately in the notes.

30. Note “Real estate”. Changes in the acquisition value of land, buildings, construction in
progress and other real estate, also changes in accumulated depreciation and residual value
during the accounting period shall be reported. Acquisitions, changes in value, disposals and
write-offs, extraordinary amounts written off, and write-downs shall be shown separately.

Where specific assets have been acquired under leasing contracts, this shall be reported in the
notes.

31. Note “Investments in affiliated enterprises and participating interests”. Change in the
acquisition value and residual value of investments in affiliated enterprises and participating
interests during the accounting period, also acquisitions, changes in value, disposals and
write-offs, and extraordinary amounts written off shall be stated.

32. Note “Equity and debt securities”. Investments in securities, except for those referred to
in point 31 hereof, shall be reported as equity securities, debt securities, long-term and short-
term securities. Changes in such investments during the accounting period, acquisition value,
changes in value, disposals and write-offs, and extraordinary amounts written off shall be
disclosed.

33. Notes “Loans”. The amount of loans issued to policyholders where the policy serves as
the main guarantee shall be stated. The amount of other material loans (without mortgage or
guarantee) shall be also specified.

34. Note “Other investments”. Balance sheet item “B.III.7. Other investments” shall be
specified where the amount reported therein is material.

35. Note “Receivables”. Receivables shall be broken down into receivables from direct
insurance operations, receivables from reinsurance operations, other receivables, also amounts
receivable from policyholders, ceding insurers, reinsurers, intermediaries, affiliated
enterprises and enterprises with which an insurance company is linked by virtue of a
participating interest, senior executives and other related parties, and other amounts receivable
within a period of one year or after a period of one year.

36. Note “Provisions for doubtful amounts”. Changes in the provisions for doubtful amounts
during the accounting period shall be stated: provisions at the beginning of the accounting
period, provisions at the end of the accounting period shall be specified and the reasons for
resulting differences (formation or elimination of provisions) shall be disclosed.

37. Note “Tangible fixed assets, net of investments”. Changes in the acquisition value,
accumulated depreciation and residual value of tangible fixed assets, net of investments,
during the accounting period shall be stated: acquisition value, disposals and write-offs,
extraordinary amounts written off, depreciation calculated and written off shall be specified.
All tangible fixed assets shall be broken down by large categories (e.g. vehicles, office
equipment and other).
                                                                                              5

Where specific tangible fixed assets have been acquired under leasing contracts, this shall be
shown separately in the notes.

Balance sheet item “E.IV. Other assets” shall be specified, where the amount reported therein
is material.

38. Note “Cash at bank and in hand”. The amount of cash and cash equivalents held in hand
and at bank shall be reported. Where cash cannot be received without delay for immediate
use, this shall be stated.

39. Note “Accrued income”. Material amounts of accrued income shall be stated.

40. Note “Deferred expenses”. Material amounts of deferred expenses shall be stated.

41. Note “Shareholders’ equity”. Information on the structure of the company’s equity
capital, its major shareholders (without naming natural persons), and reasons for changes in
the structure of shareholder’s equity shall be disclosed. Classes, number and nominal value of
shares shall be stated, any changes during the accounting period and dividends paid shall be
specified. Where there are debentures, subordinated loans convertible into shares or similar
rights, this shall be reported.

42. Note “Technical provisions”. Information on and amounts of the change in provisions
shall be disclosed.

In the case of the provision for outstanding claims, information on the difference between the
amounts actually paid and the amount of the provision for outstanding claims formed at the
end of the preceding accounting period and broken down by classes of insurance shall be
disclosed where such difference is material. Exceptional claims shall be specified to explain
the larger than usual change in the provision.

In the case of the provision for bonuses and rebates, the amount intended for bonuses and
rebates and the amount intended for the reduction of premiums upon the extension of
insurance contracts shall be indicated separately in the notes.

43. Note “Provisions for other liabilities and charges”. Balance sheet item “F. III. Other
provisions” shall be specified.

44. Note “Other liabilities”. Other liabilities (excluding technical provisions) shall be broken
down into liabilities arising out of direct insurance operations, liabilities arising out of
reinsurance operations, debenture loans, amounts owed to credit institutions, taxes, social
security contributions and other liabilities; liabilities to policyholders, ceding insurers,
reinsurers, intermediaries, affiliated enterprises and enterprises with which the company is
linked by virtue of a participating interest, senior executives and other related parties, and
other liabilities; amounts payable within a period of one year, amounts payable after one year
but before five years, and amount payable after five years. Mortgage debentures, convertible
debentures, convertible subordinated loans and other rights shall be shown separately.
Summary information on interest rates, repayment dates, terms and conditions of contracts,
etc. shall be disclosed.

45. Note “Accrued expenses and deferred income”. Material amounts of accrued expenses
and deferred income shall be specified.

46. Note “Premiums written in life assurance business and result of reinsurance operations”.
Companies carrying on life-assurance business shall indicate gross premiums written and
                                                                                              6

report separately the amounts received as direct premiums and reinsurance premiums
accepted if reinsurance premiums accepted, written premiums, account for 10 percent or more
of gross premiums written. Direct premiums written shall be broken down as follows: (a)
premiums under individual and group contracts; (b) periodic and single premiums; (c)
premiums from non-bonus contracts, premiums from bonus contracts, premiums from
contracts where the investment risk is borne by policyholders. The amounts referred to in
points (a), (b) and (c) shall not be shown separately where they do not exceed 10 percent of
gross direct premiums written.

Direct premiums written shall be broken down into premiums under contracts concluded by
the company in the Republic of Lithuania, EU member states and other countries, expect for
cases where the total amount does not exceed 5 percent of gross premiums written.

The result of reinsurance operations calculated as follows: reinsurers’ share of claims incurred
minus reinsurers’ share of premiums earned plus reinsurance commissions and profit
participation minus other reinsurers’ income plus other reinsurers’ expenses.

47. Note “Result of non-life insurance operations”. Companies carrying on non-life insurance
business shall indicate gross premiums written, gross premiums earned, gross claims incurred,
gross operating expenses and the result of reinsurance operations (this result shall be
calculated as follows: reinsurers’ share of claims incurred minus reinsurers’ share of
premiums earned plus reinsurance commissions and profit participation, minus other
reinsurers’ income plus other reinsurers’ expenses). These amounts shall be broken down into
direct premiums and reinsurance premiums accepted if reinsurance premiums accepted,
written premiums, account for 10 percent or more of gross premiums written and they shall be
shown separately, in the case of direct insurance, by classes of insurance.

Direct premiums written shall be broken down into premiums under contracts concluded by
the company in the Republic of Lithuania, EU member states and other countries, expect for
cases where the total amount does not exceed 5 percent of gross premiums written.

48. Note “Commissions”. The total amount of commissions for direct insurance business shall
be indicated which is broken down by types of commissions: acquisition, renewal, collection,
portfolio management and other.

49. Note “Wages and salaries”. The average number of employees as well as wages, salaries
and other remuneration shall be reported by main categories of personnel.

50. Note “Extraordinary income”. Material amounts of extraordinary income shall be
specified and explanations of their nature shall be given.

51. Note “Extraordinary charges”. Material amounts of extraordinary charges shall be
specified and explanations of their nature shall be given.

52. Note “Tax on profit”. Explanations of the calculation of tax on profit for the accounting
year shall be given. Explanations of the calculation of deferred taxes and change in deferred
taxes for the accounting period shall be also given. Items for the adjustment of profit (loss)
before taxes for the accounting year shall be specified for the calculation of tax on profit for
the accounting year. The effect of taxes on the valuation of assets, results for the year and
future taxation shall be disclosed.

53. Note “Earnings per share”. The calculation of earnings per share shall be specified.
Information on the company’s convertible subordinated loans, debentures, their possible
effect on earnings per share shall be also indicated.
                                                                                            7

54. Note “Related party transactions”. Information on material transactions with related
parties and main conditions of such transactions shall be disclosed.

55. Note “Financial links with senior executives”. Labour-related amounts calculated during
the accounting period in respect of senior executives, company loans to its senior executives
(with indications of interest rates, conditions of contracts and any amounts repaid), assets
transferred to them free of charge, guarantees of any kind issued to them on behalf of the
company, other material amounts calculated in respect of senior executives, and their material
obligations to the company shall be disclosed.

56. Note “Contingent liabilities”. Information on contingent liabilities taken on by the
insurance company shall be disclosed.




                                     –––––––––––––––
                                                               Annex


                                   MANDATORY TABLES


                                   INTANGIBLE ASSETS

                         Items                      Asset category     Total


Acquisition value
At the beginning of the accounting period
Assets acquired
Assets sold and realised (-)
Assets written off (-)
Assets transferred from one item to another +/(-)
At the end of the accounting period
Accumulated amortisation
At the beginning of the accounting period
Calculated
Written back (-)
Write-offs after realisation (-)
Write-offs after annulments (-)
Amortisation transferred from one item to
another +/(-)
At the end of the accounting period
Residual value
At the beginning of the accounting period
At the end of the accounting period
                                                                                2


                                         REAL ESTATE

                                                       Asset category
                         Items                                          Total

Acquisition value
At the beginning of the accounting period
Assets acquired
Assets sold and realised (-)
Assets written off (-)
Assets transferred from one item to another +/(-)
At the end of the accounting period
Revaluation
At the beginning of the accounting period
Increase in value
Decrease in value (-)
Revaluation result written off after realisation (-)
Revaluation result written off after annulment (-)
Revaluation result transferred from one item to
another +/(-)
At the end of the accounting period
Accumulated depreciation
At the beginning of the accounting period
Calculated
Written back (-)
Write-offs after realisation (-)
Write-offs after annulments (-)
Depreciation transferred from one item to
another +/(-)
At the end of the accounting period
Residual value
At the beginning of the accounting period
At the end of the accounting period
                                                                                                3

 INVESTMENTS IN AFFILIATED ENTERPRISES AND PARTICIPATING INTERESTS

                                                                      Enterprises with which a
                                                                       company is linked by
                                         Affiliated enterprises
                                                                      virtue of a participating
                  Items
                                                                               interest
                                       shares   debt securities and   shares   debt securities and
                                                       loans                          loans
Acquisition value
At the beginning of the accounting
period
Assets acquired
Assets sold and realised (-)
Assets written off (-)
Assets transferred from one item to
another +/(-)
At the end of the accounting period
Revaluation
At the beginning of the accounting
period
Increase in value
Decrease in value (-)
Revaluation result written off after
realisation (-)
Revaluation result written off after
annulment (-)
Revaluation result transferred from
one item to another +/(-)
At the end of the accounting period
Residual value
At the beginning of the accounting
period
At the end of the accounting period
                                                                                         4


                               EQUITY AND DEBT SECURITIES

                                            Equity securities          Debt securities
                  Items
                                        long-term    short-term   long-term    short-term
Acquisition value
At the beginning of the accounting
period
Assets acquired
Assets sold and realised (-)
Assets written off (-)
Revaluation result transferred from
one item to another +/(-)
At the end of the accounting period
Revaluation
At the beginning of the accounting
period
Increase in value
Decrease in value (-)
Revaluation result written off after
realisation (-)
Revaluation result written off after
annulment (-)
Revaluation result transferred from
one item to another +/(-)
At the end of the accounting period
Residual value
At the beginning of the accounting
period
At the end of the accounting period
                                                                                                5


                                         RECEIVABLES

                                                                       Amounts receivable
                           Receivables                               within one     after one
                                                                        year          year
Receivables from direct insurance operations:
   from policyholders
   from intermediaries
   from other
Receivables from reinsurance operations:
   from ceding insurers
   from reinsurers
   from intermediaries
   from other
Other receivables
Total

                                                                     Amounts receivable
                           Receivables                            within one     after one
                                                                     year          year
Receivables from affiliated enterprises and enterprises with
which a company is linked by virtue of a participating interest
Receivables from senior executives
Receivables from other related parties
Total


                          PROVISIONS FOR DOUBTFUL AMOUNTS

                                                        Accounting      Preceding accounting
                         Items
                                                          period               period
Balance sheet
Provisions at the beginning of the accounting
period
Decrease of provisions in the accounting period
Increase of provisions in the accounting period
Provisions at the end of the accounting period
Profit (loss) account
Recovered amounts written off previously
Change in provisions in the accounting period
Effect of provisions in the accounting period
6
                                                                                7


                    TANGIBLE FIXED ASSETS, NET OF INVESTMENTS

                                                       Asset category
                         Items                                          Total

Acquisition value
At the beginning of the accounting period
Assets acquired
Assets sold and realised (-)
Assets written off (-)
Assets transferred from one item to another +/(-)
At the end of the accounting period
Revaluation
At the beginning of the accounting period
Increase in value
Decrease in value (-)
Revaluation result written off after realisation (-)
Revaluation result written off after annulment (-)
Revaluation result transferred from one item to
another +/(-)
At the end of the accounting period
Accumulated depreciation
At the beginning of the accounting period
Calculated
Written back (-)
Write-offs after realisation (-)
Write-offs after annulments (-)
Depreciation transferred from one item to
another +/(-)
At the end of the accounting period
Residual value
At the beginning of the accounting period
At the end of the accounting period
                                                                                                                          9


                                                         SHAREHOLDERS’ EQUITY

Changes in shareholders’      Subscribed   Revaluation                        Other     Profit or loss
                                                            Legal reserves                                Other   Total
        equity                  capital    reserve                           reserves   brought forward
At the beginning of the
preceding accounting
period
At the end of the preceding
accounting period
At the end of the
accounting period
                                                                                      10


                                       OTHER LIABILITIES

                                                            Debts payable
                 Creditors                    within one   after one year but   after five
                                                 year      before five years      years
Subordinated liabilities
Deposits received from reinsurers
Liabilities arising out of direct insurance
operations:
   liabilities to policyholders
   liabilities to intermediaries
   other
Liabilities arising out of reinsurance
operations:
   liabilities to ceding insurers
   liabilities to reinsurers
   liabilities to intermediaries
   other
Debenture loans
Amounts owed to credit institutions
Taxes, social security contributions and
other liabilities:
   taxes
   social security contributions
   salaries
   other
Total

                                                            Debts payable
                 Creditors                    within one   after one year but   after five
                                                 year      before five years      years
Liabilities to affiliated enterprises and
enterprises with which an insurance
company is linked by virtue of a
participating interest
Liabilities to senior executives
Liabilities to other related parties
Total
                                                                                   11

        PREMIUMS WRITTEN IN LIFE ASSURANCE BUSINESS AND RESULT OF
                       REINSURANCE OPERATIONS

                               Items                            Premiums written
Direct insurance
Inward reinsurance
Total


                               Items                            Premiums written
Premiums under individual contracts
Premiums under group contracts
Single premiums
Periodic premiums
Premiums from non-bonus contracts
Premiums from bonus contracts
Premiums from contracts where the investment risk is borne by
policyholders


                               Items                            Premiums written
Republic of Lithuania
EU member states
Other countries
Total


Result of reinsurance operations
                                                                                         12


                     RESULT OF NON-LIFE INSURANCE OPERATIONS

                                                                                    Result of
                               Premiums        Premiums     Claims    Operating
             Items                                                                reinsurance
                                written         earned     incurred   expenses
                                                                                   operations
Direct insurance
Inward reinsurance
Total


                                                                                    Result of
                               Premiums        Premiums     Claims    Operating
   Classes of insurance                                                           reinsurance
                                written         earned     incurred   expenses
                                                                                   operations
Total


                                   Items                                 Premiums written
Republic of Lithuania
EU member states
Other countries
Total


                                           COMMISSIONS

                                                            Accounting    Preceding accounting
                     Type of commission
                                                              period             period
Acquisition
Renewal
Collection
Portfolio management
Other
Total


                                           TAX ON PROFIT

                                                            Accounting    Preceding accounting
                           Items                              period             period

Tax on profit for the accounting year
Change in deferred taxes
Total
                                                                                       13

  PROFIT (LOSS) FOR THE ACCOUNTING YEAR BEFORE TAXES AND TAXABLE
                   PROFIT (LOSS) FOR THE SAME PERIOD

                           Items                           Accounting   Preceding accounting
                                                             period            period
Profit (loss) for the accounting year before taxes
Differences
Taxable profit (loss) for the accounting year
Tax on profit for the accounting year




                                        ––––––––––––––––
                                                                                  APPROVED
                                                                        by Resolution No. 1350
                                                                           of 7 November 2000
                                                 of the Government of the Republic of Lithuania


 LIST OF ACCOUNTS OF INSURANCE COMPANIES AND NOTES TO THE LIST OF
                            ACCOUNTS

                 I. LIST OF ACCOUNTS OF INSURANCE COMPANIES

Class I.   Formation costs, intangible assets, investments

10     Formation costs
100    Costs of formation and capital increase
       1000 Costs
       1009 Amortisation (-)
101    Loan issue costs
       1010 Costs
       1019 Amortisation (-)
102    Other formation costs
       1020 Costs
       1029 Amortisation (-)
103    Capitalised interest
       1030 Costs
       1039 Amortisation (-)
104    Reorganisation costs
       1040 Costs
       1049 Amortisation (-)

11     Other intangible assets
110    Research and development costs
       1100 Costs
       1109 Amortisation (-)
111    Rights acquired
       1110 Costs
       1119 Amortisation (-)
112    Goodwill
       1120 Costs
       1129 Amortisation (-)
113    Prepayments

12     Investments in land, buildings and other real estate
120    Used by a company for its own activities
       1200 Land
             12000 Developed land
             12001 Undeveloped land
       1201 Buildings
             12010 Acquisition costs
             12011 Revaluation
             12018 Depreciation (-)
                                                                                      2

             12019 Amounts written off (-)
      1202 Construction in progress and prepayments
      1204 Other
121   Other investments in real estate

13    Investments in affiliated enterprises and participating interests
130     Shares in affiliated enterprises
        1300 Listed on the stock exchange
                13000 Acquisition costs
                13001 Revaluation
                13009 Amounts written off (-)
        1301 Not listed on the stock exchange
                13010 Acquisition costs
                13011 Revaluation
                13019 Amounts written off (-)
131 Debt securities issued by, and loans to, affiliated enterprises
        1310 Debt securities
        1311 Loans
                13110 Loans guaranteed by mortgages
                13111 Other loans
132 Shares in enterprises with which an insurance company is linked by virtue of a
participating interest
        1320 Listed on the stock exchange
                13200 Acquisition costs
                13201 Revaluation
                13209 Amounts written off (-)
        1321 Not listed on the stock exchange
                13210 Acquisition costs
                13211 Revaluation
                13219 Amounts written off (-)
133 Debt securities issued by, and loans to, enterprises with which an insurance company
        is linked by virtue of a participating interest
        1330 Debt securities
        1331 Loans
                13310 Loans guaranteed by mortgages
                13311 Other loans

14    Other financial investments
140   Shares and other variable-yield securities
      1400 Listed on the stock exchange
             14001 Acquisition costs
             14002 Revaluation
             14009 Amounts written off (-)
      1401 Not listed on the stock exchange
             14010 Acquisition costs
             14011 Revaluation
             14019 Amounts written off (-)
141   Debentures and other fixed-income securities
      1410 Government and municipal bonds
             14100 Government bonds
                    141000          Acquisition costs
                    141001          Revaluation
                                                                                             3

                       141009         Amounts written off (-)
               14101 Municipal bonds
                       141010 Acquisition costs
                       141011 Revaluation
                       141019 Amounts written off (-)
       1411 Other corporate securities
              14110 Acquisition costs
              14111 Revaluation
              14119 Amounts written off (-)
142    Units in unit trusts
143    Loans guaranteed by mortgages
       1430 Guaranteed by first mortgage
       1431 Guaranteed by second mortgage
144    Other loans
145    Deposits with credit institutions
146    Other investments

15     Deposits with ceding enterprises

16     Investments for the benefit of life-assurance policyholders who bear the
investment risk
Class II.   Receivables, other assets, accrued income and deferred expenses

20     Receivables from insurance and reinsurance operations
200     Receivables from direct insurance operations
        2000 Policyholders
        2001 Intermediaries
                20010 Affiliated enterprises
                20011 Enterprises with which an insurance company is linked by virtue of a
participating interest
                20012 Other intermediaries
        2002 Other
201 Receivables from reinsurance operations
        2010 Ceding insurers
        2011 Reinsurers
        2012 Intermediaries
        2013 Other

21     Other receivables
210 Affiliated enterprises
211 Enterprises with which an insurance company is linked by virtue of participating
interest
212 Other debtors
         2120 Amounts receivable from the Budget
         2121 Other receivables

22     Tangible assets, stocks and prepayments
220    Vehicles
       2200 Acquisition costs
       2201 Revaluation
       2208 Depreciation (-)
                                                                                       4

      2209 Amounts written off (-)
221   Office equipment
      2210 Acquisition costs
      2211 Revaluation
      2218 Depreciation (-)
      2219 Amounts written off (-)
222   Other equipment
      2220 Acquisition costs
      2221 Revaluation
      2228 Depreciation (-)
      2229 Amounts written off (-)
223   Stocks
      2230 Insurance documents
             22300 Acquisition costs
             22309 Amounts written off (-)
      2231 Other stocks
224   Leasing and similar rights
225   Prepayments
      2250 Prepayments
      2251 Amounts written off (-)

23    Cash at bank and in hand
230   Cash at bank
231   Cash in hand
232   Cash equivalents

24    Own shares

25    Other assets

29    Accrued income and deferred expenses
290   Accrued income
      2900 Accrued interest and rent
      2901 Other accrued income
291   Deferred expenses
      2910 Deferred acquisition costs
             29100 Deferred acquisition costs arising in non-life insurance business
             29101 Deferred acquisition costs arising in life-assurance business
      2911 Other deferred expenses

Class III. Capital, reserves and provisions for liabilities and charges other than those
           arising out of insurance contracts

30    Subscribed capital
300   Ordinary shares
301   Preference shares

31    Share premium account

32    Revaluation reserve

33    Other reserves
                                                                                            5

330    Legal reserves
331    Reserves not available for distribution
332    Reserves available for distribution

34     Profit or loss brought forward
340    Profit brought forward from the preceding accounting year
341    Loss brought forward from the preceding accounting year
342    Profit to be carried forward
343    Loss to be carried forward

35     Financing (grants and subsidies)
350    Grants and subsidies received
351    Grants and subsidies receivable
352    Grants and subsidies transferred to results (-)

36     Provisions for liabilities and charges other than those arising out of insurance
       contracts
360    Provisions for pensions and similar obligations
361    Provisions for taxation
362    Other provisions

39     Consolidated accounts

Class IV. Liabilities

40     Subordinated liabilities
400    Convertible loans
401    Non-convertible loans

41     Technical provisions
410     Non-life insurance provision for unearned premiums
        4100 Direct insurance
        4101 Reinsurance
411 Life assurance provision for unearned premiums
        4110 Direct insurance
        4111 Reinsurance
412 Mathematical technical provision
        4120 Direct insurance
        4121 Reinsurance
413 Provision for outstanding claims
        4130 Direct insurance
        4131 Reinsurance
414 Provision for bonuses and rebates
        4140 Direct insurance
        4141 Reinsurance
415 Equalisation provision
416 Other technical provisions
417 Technical provision for life-assurance policies where the investment risk is borne by
the policyholders
419 Reinsurers’ share of technical provisions (-)
        4190 Provision for unearned premiums
                                                                                              6

              41900 Non-life insurance
              41901 Life assurance
       4191   Mathematical technical provision
       4192   Provision for outstanding claims
       4193   Provision for bonuses and rebates
       4194   Other technical provisions
       4195   Technical provisions for life-assurance policies where the investment risk is
              borne by the policyholders

42     Deposits received from reinsurers
420    Non-life insurance
421    Life assurance

43     Liabilities arising out of direct insurance operations
430    Liabilities to policyholders
431    Liabilities to intermediaries
432    Other liabilities arising out of direct insurance operations

44     Liabilities arising out of reinsurance operations
440    Liabilities to ceding reinsurers
441    Liabilities to reinsurers
442    Liabilities to intermediaries
443    Other liabilities arising out of reinsurance operations

45     Debenture loans
46     Amounts owed to credit institutions
47     Other liabilities
470   Taxes, social security contributions and salaries
      4700 Taxes payable
              47000 Taxes payable
              47001 Amounts to be deducted for the maintenance of the State Insurance
                     Supervisory Authority under the Ministry of Finance
      4702 Social security contributions payable
      4701 Salaries payable
471 Other liabilities
      4710 Amounts payable from appropriated profit
              47100 Dividends and tantiemes for the preceding financial year
              47101 Dividends for the current financial year
              47102 Tantiemes for the current financial year
              47103 Other appropriations from profit
      4711 Liabilities to the company’s senior executives and shareholders
      4712 Liabilities to affiliated enterprises and enterprises with which an insurance
company is linked by virtue of a participating interest
      4713 Other amounts payable

49     Accrued expenses and deferred income
490    Accrued expenses
491    Deferred income

Class V.   Income
                                                                                      7

50    Income from insurance and reinsurance operations
500   Premiums written in non-life insurance business
      5000 Direct premiums written
            50000 Premiums written
            50001 Premiums annulled (-)
      5001 Reinsurance premiums accepted, written premiums
            50010 Premiums written
            50011 Premiums annulled (-)
501   Premiums written in life assurance business
      5010 Direct premiums written
            50100 Premiums written
            50101 Premiums annulled (-)
      5011 Reinsurance premiums accepted, written premiums
            50110 Premiums written
            50111 Premiums annulled (-)

51    Change in the provision for unearned premiums (+/-)
510   Change in the provision for unearned premiums in non-life insurance business
511   Change in the provision for unearned premiums in life assurance business

52    Other technical income
520   Commissions for negotiating insurance contracts for other insurance companies
      5200 Non-life insurance
      5201 Life assurance
521   Commissions for co-insurance
522   Other technical income

53    Investment income
530   Life assurance investment income
      5300 Income from participating interests
      5301 Income from other investments
             53010 Income from land and buildings
             53011 Income from other investments
      5302 Value re-adjustment on investments
      5303 Gains on the realisation of investments
531   Unrealised gains on investments
532   Non-life insurance investment income
      5320 Income from participating interests
      5321 Income from other investments
             53210 Income from land and buildings
             53211 Income from other investments
      5322 Value re-adjustments on investments
      5323 Gains on the realisation of investments

54    Other income
540   Income from financial activities
      5400 Bank interest not related to investments
      5401 Changes in the exchange rate not related to investments
      5402 Other income
541   Other income
                                                                                             8

55    Extraordinary income
550   Write-back of assets written off and depreciated
551   Write-back of provisions for liabilities and charges other than those arising out of
      insurance contracts
553   Other extraordinary income

56    Adjustments on tax on profit and write-back of provisions for taxation
560   Adjustments on tax on profit
561   Transfers from provisions for taxation

57    Accounts for the transfer of investment return
570   Investment return transferred from the non-technical account
571   Investment return transferred to the non-technical account (-)
572   Investment return transferred from the life-assurance technical account
573   Investment return transferred to the non-life insurance technical account (-)

59    Appropriation accounts
590   Profit brought forward from the preceding year
591   Transfers from reserves
592   Loss to be carried forward
593   Shareholders’ contributions against losses

Class VI. Charges

60    Claims incurred and reinsurance charges
600   Claims relating to direct non-life insurance
      6000 Claims arising from insured events
      6001 Claims settlement expenses
      6002 Amounts recovered (-)
601   Claims relating to direct life assurance
      6010 Claims arising from insured events
      6011 Surrender value
      6012 Claims settlement expenses
602   Claims relating to inward reinsurance
      6020 Non-life insurance
            60200 Claims arising from insured events
            60201 Claims settlement expenses
            60202 Amounts recovered (-)
      6021 Life assurance
            60210 Claims arising from insured events
            60211 Surrender value
            60212 Claims settlement expenses
603   Reinsurers’ share of claims (-)
      6030 Non-life insurance
            60300 Claims arising from insured events
            60301 Claims settlement expenses
            60302 Amounts recovered (-)
      6031 Life assurance
            60310 Claims arising from insured events
            60311 Surrender value
            60312 Claims settlement expenses
                                                                                     9

604   Costs of bonuses and rebates
      6040 Bonuses and rebates (non-life insurance)
             60400 Depending on profit
                    604000 Gross amount
                    604001 Reinsurers’ share (-)
             60401 Not depending in profit
                    604010 Gross amount
                    604011 Reinsurers’ share (-)
      6041 Bonuses and rebates (life assurance)
             60410 Depending on profit
                    604100 Gross amount
                    604101 Reinsurers’ share
             60411 Not depending on profit
                    604110 Gross amount
                    604111 Reinsurers’ share
605   Outward reinsurance premiums
      6050 Non-life insurance
      6051 Life assurance
606   Reinsurers’ share of the change in the provision for unearned premiums (+/-)
      6060 Non-life insurance
      6061 Life assurance

61    Changes technical provisions, except for the provision for unearned premiums
      (+/-)
610   Change in the provision for outstanding claims
611   Change in the mathematical technical provision
612   Change in the provision for bonuses and rebates
613   Change in the equalisation provision
614   Change in other technical provisions
615   Change in technical provisions, reinsurers’ share (-)
      6150 Change in the provision for outstanding claims, reinsurers’ share
      6151 Change in the mathematical technical provision, reinsurers’ share
      6152 Change in the provision for bonuses and rebates, reinsurers’ share
      6153 Change in other technical provisions, reinsurers’ share

62    Operating expenses
620   Acquisition costs, non-life insurance
      6200 Commission charges
            62000 Direct insurance
                    620000 Brokers
                    620001 Agents
                    620002 Other
            62001 Reinsurance
      6201 Commissions for co-insurance
      6202 Advertising costs
      6203 Medical examination costs
      6204 Other acquisition costs
621   Acquisition costs, life-assurance
      6210 Commission charges
            62100 Direct insurance
                    621000 Brokers
                    621001 Agents
                                                                                10

                      620002 Other
              62001 Reinsurance
      6211 Commissions for co-insurance
      6212 Advertising costs
      6213 Medical examination costs
      6214 Other acquisition costs
622   Change in deferred acquisition costs (-/+)
      6220 Non-life insurance
      6221 Life assurance
623   Administrative expenses, non-life insurance
      6230 Expenses related to buildings, premises and other assets
              62300 Rent
              62302 Maintenance and repair of buildings
              62303 Electricity, water, heating
              62304 Insurance related to buildings, premises and other assets
              62305 Amortisation and depreciation
              62306 Tax on buildings, premises and other assets
      6231 Personnel costs
              62310 Wages and salaries
              62311 Bonuses
              62312 Personnel training costs
              62313 Pensions
              62314 Social security
              62315 Insurance related to personnel
              62316 Taxes related to personnel
      6232 Other operating expenses
624   Administrative expenses, life assurance
      6240 Expenses related to buildings, premises and other assets
              62400 Rent
              62402 Maintenance and repair of buildings
              62403 Electricity, water, heating
              62404 Insurance related to buildings, premises and other assets
              62405 Amortisation and depreciation
              62406 Tax on buildings, premises and other assets
      6241 Personnel costs
              62410 Wages and salaries
              62411 Bonuses
              62412 Personnel training costs
              62413 Pensions
              62414 Social security
              62415 Insurance related to personnel
              62416 Taxes related to personnel
      6242 Other operating expenses
625   Reinsurance commissions (-)
      6250 Non-life insurance
      6251 Life assurance
626   Profit participation (-)
      6260 Non-life insurance
      6261 Life assurance

63    Investment charges
630   Investment charges, life assurance
                                                                                              11

       6300 Investment management charges, including interest
       6301 Value adjustments on investments
       6302 Losses on the realisation of investments
631    Unrealised losses on investments
632    Investment charges, non-life insurance
       6320 Investment management charges, including interest
       6321 Value adjustments on investments
       6322 Losses on the realisation of investments

64     Other technical charges
65     Other charges
650    Financial charges
       6500 Changes in the exchange rate, not related to investments
       6501 Other charges
651    Other charges

66     Extraordinary charges
660    Extraordinary investment amounts written off
661    Other extraordinary amounts written off
662    Provisions for liabilities and charges other than those arising out of insurance contracts
663    Other extraordinary charges
669    Extraordinary charges capitalised as reorganisation costs (-)

67     Tax on profit
670    Tax on profit for the accounting year
671    Tax on profit for the preceding accounting year
672    Transfers to deferred taxes

69     Appropriation accounts
690    Losses brought forward from the preceding year
691    Transfers to legal reserves
692    Transfers to other reserves
693    Profit to be carried forward
694    Dividends
695    Bonuses for senior executives
696    Other appropriations

                         II. NOTES TO THE LIST OF ACCOUNTS

                  Class I. Formation costs, intangible assets, investments

1. Account 10 “Formation costs” shall be used for the accounting of costs incurred in the
course of the company’s formation (establishment, increase/decrease of capital, formation of
loan capital through loan issues, reorganisation). Only those expenses are recorded in this
account that were not used to earn income during the accounting period.

Reorganisation costs include expenditures incurred during the company’s reorganisation.
They may be treated as part of assets only if they are clearly defined and related to a
substantial modification in the structure or reorganisation of the company and if they are
intended and expected to have a favourable and durable effect on the profitability of the
company.
                                                                                            12

All expenditures, reported as formation costs, shall be amortised within a period of 5 years,
except for capitalised interest on loans intended for the acquisition or construction of fixed
assets which shall be amortised over their estimated useful life and loan issue costs which are
amortised over the term specified in the loan issue contract.

This account shall be debited either after formation work has been performed or at the end of
the accounting period when the capitalised amount of such work is transferred to this account
from respective expenditure accounts – with the actual amount of capitalised formation costs
[K 62, 65, 66].

This account shall be credited:

-      when writing off the amount of formation costs amortised over the accounting period
       (corresponding contrary account) [D 62];

-      when writing off a bigger-than-usual annual amount of amortised formation costs for
       extraordinary reasons (corresponding contrary account) [D 66].

2. Account 11 “Other intangible assets” shall be used for the accounting of the company’s
non-material assets. Such assets include the rights and privileges held by the company for
more than one financial year. These are licences, patents, trade marks, “know-how”, and
goodwill acquired from third persons, also the costs of research and development.

This account shall be debited:

-      after research and development work has been performed or at the end of the
       accounting year when the capitalised amount of such work is transferred to this
       account from respective expenditure accounts – with the actual amount of capitalised
       costs [K 62];

-      when acquiring licences, patents, copyrights, concessions and other long-term rights –
       with the actual expenditure amount [K 11, 23];

-      when advancing the future purchase of intangible assets – with the amount of the
       advance paid [K 23];

-      when writing back the over-amortised amount of intangible assets – with the amount
       written back (corresponding amortisation account) [K 55];

-      when writing off the amortised amount of realised or liquidated intangible assets
       (corresponding amortisation account) [K 11];

-      when purchasing an enterprise – with the expenditure amount by which the purchase
       price exceeds the real value of an enterprise recorded in the accounting books [K 23,
       47].

This account shall be credited:

-      when selling licences, patents, copyrights, concessions and other long-term rights
       [D 21, 23, 47];

-      when writing off the amount of intangible assets amortised over the accounting period
       (corresponding amortisation account) [D 62];
                                                                                            13

-      when writing off a bigger-than-usual annual amount of amortised intangible assets for
       extraordinary reasons (corresponding contrary account) [D 66];

-      after having received prepaid intangible assets [D 11].

3. Account 12 “Investments in land, buildings and other real estate” shall be used for the
accounting of real estate which is managed and used by the company. This account is broken
down by the types of assets used by a company for its own activities and other assets.

This account also comprises real estate managed and used by the company under leasing
contracts and other similar long-term contracts. Title to assets leased under such contracts is
transferred to the leaseholder after the contract expires or the contract includes a purchase
option for the leaseholder.

The value of assets in course of construction at year’s end and prepayments on contracts
related to construction are recorded as construction in progress and prepayments.
Construction costs and prepayments are thus accrued until the construction of real estate is
completed.

This account shall be debited:

-      when acquiring real estate – with the actual amount of acquisition costs [K 12, 21, 23,
       30, 47];

-      after own construction of buildings and other real estate has been completed – with the
       actual expenditure amount of completed construction work [K 12];

-      when revaluating real estate [K 32];

-      after having completed major restructuring and upgrading of assets – with the amount
       of capitalised costs [K 62];

-      after having completed major repairs and renewal of real estate (corresponding
       amortisation account) [K 62];

-      when selling real estate – with the whole depreciation amount accumulated during the
       use of assets by the company (corresponding amortisation account) [K 12];

-      when recovering assets leased under leasing contracts [K 21];

-      when writing back the amounts written off on real estate or over-depreciated amounts
       of real estate (corresponding depreciation account) [K 55];

-      when receiving real estate under leasing contracts – with the amount payable under the
       leasing contract [K 47];

-      when determining the value of own construction at the end of the accounting year [K
       54];

-      when making advance payments to contractors – with the actual amount paid [K 23].

This account shall be credited:

-      when selling real estate [D 12, 21, 23, 47];
                                                                                            14

-      when writing off the amount of real estate depreciated over the accounting period
       (corresponding depreciation account) [D 62, 63];

-      when writing off amounts on assets for extraordinary reasons (corresponding contrary
       account) [D 66];

-      when leasing real estate under leasing contracts [D 21];

-      after having completed the construction of real estate – with the actual costs of such
       assets [D 12];

-      when receiving prepaid assets [D 12].

4. Account 13 “Investments in affiliated enterprises and participating interests” shall be used
for the accounting of investments in affiliated enterprises and enterprises with which the
company is linked by virtue of a participating interest. Affiliated enterprises and enterprises
with which the company is linked by virtue of a participating interest are those where the
insurance company has a material influence on their financial management or where it has
made a long-term investment. Affiliated enterprises are those where the insurance company
holds not less than 50 percent of the voting rights. Enterprises with which the company is
linked by virtue of a participating interest are those where the insurance company holds not
less than 20 percent and not more than 50 percent of the voting rights.

This account shall be debited:

-      when acquiring securities issued by affiliated enterprises and enterprises with which
       the company is linked by virtue of a participating interest – with the actual amount of
       acquisition costs [K 23, 47];

-      when issuing loans to affiliated enterprises and enterprises with which the company is
       linked by virtue of a participating interest – with the amount of provided assets [K 23
       and other assets accounts];

-      when revaluating investments in affiliated enterprises and enterprises with which the
       company is linked by virtue of a participating interest [K 32];

-      when writing back the amounts written off on investments in affiliated enterprises and
       enterprises with which the company is linked by virtue of a participating interest
       (corresponding contrary account) [K 55].

This account shall be credited:

-      when selling securities issued by affiliated enterprises and enterprises with which the
       company is linked by virtue of a participating interest [D 21, 23, 47];

-      when recovering the loans issued – with the amount recovered [D 23];

-      when writing off for extraordinary reasons amounts on investments in affiliated
       enterprises and enterprises with which the company is linked by virtue of a
       participating interest (corresponding contrary account) [D 66].

5. Account 14 “Other financial investments” shall be used for the accounting of investments
not shown in accounts 12, 13, 15 and 16.
                                                                                           15

This account shall be debited:

-      when acquiring securities issued by other enterprises – with the purchase price [K 23,
       47];

-      when placing a time deposit with a bank – by the amount of the deposit [K 23];

-      when issuing loans or making other investments [K 23];

-      when recording an increase in the value of short-term investments [K 53].

This account shall be credited:

-      when selling the securities acquired [D 21, 23, 47];

-      when withdrawing a time deposit [D 23];

-      after having recovered the loans issued [D 23];

-      when the company does not foresee any possibility to withdraw time deposits from a
       bank – with the amount considered to be lost (corresponding contrary account) [D 66];

-      if securities issued by and investments in enterprises are lost due to their bankruptcy
       (corresponding contrary account) [D 66];

-      when recording a decrease in the value of short-term investments [D 63].

6. Account 15 “Deposits with ceding enterprises” shall be used for the accounting of deposits
held with a ceding enterprise to guarantee the settlement of reinsurer’s liabilities.

These amounts may not be combined with other amounts owed by the reinsurer to the ceding
insurer or by the ceding insurer to the reinsurer. Deposits with ceding enterprises may not be
used for any deductions relating to transactions between ceding reinsurers and reinsurers. The
use of deposits with ceding enterprises shall be specified in reinsurance contracts.

This account shall be debited when transferring deposits to the reinsurer [K 23] and credited
when recovering deposits from the reinsurer [D 20, 23].

7. Account 16 “Investments for the benefit of life-assurance policyholders who bear the
investment risk”. This account shall include investments corresponding to the technical
provision for life assurance policies where the investment risk is borne by the policyholders.
Investments in these assets are made as specified by the policyholders in life assurance
contracts.

This account shall be debited:

-      after having acquired assets where investments were made as specified by the
       policyholder [K 23];

-      after an increase in the value of assets where investments were made as specified by
       the policyholder [K 53].

This account shall be credited:
                                                                                            16

-      after having sold assets where investments were made as specified by the policyholder
       [D 23];

-      after a decrease in the value of assets where investments were made as specified by the
       investor [D 63].

         Class II. Receivables, other assets, accrued income and deferred expenses

8. Account 20 “Receivables from insurance and reinsurance operations” shall be used for the
accounting of the amounts receivable from policyholders, ceding insurers, reinsurers and
intermediaries.

This account shall be debited:

-      after having concluded an insurance contract and after the policyholders’ liability to
       pay a premium has been created [K 50];

-      when writing off an amount of doubtful loans (the account Doubtful loans shall be
       debited) – by the amount written off [K 20];

-      after the reinsurers’ liability to pay claims has been created [K 60].

This account shall be credited:

-      when policyholders and other debtors repay their debts – with the amounts received [D
       23];

-      when cancelling premiums written and insurance contracts [D 50];

-      when writing off doubtful loans where the company does not foresee any possibility to
       recover them or when postponing their repayment (corresponding contrary account)
       [D 66];

-      when writing back the amounts written off to the account Doubtful loans (when crediting
       this account) [D 20].

9. Account 21 “Other receivables” shall be used for the accounting of receivables other than
those from policyholders, ceding insurers, intermediaries or reinsurers. Prepaid tax on profit
shall be also recorded herein.

This account shall be debited:

-      when selling assets on credit [K 11, 12, 13, 14, 22, 25];

-      when leasing assets under leasing contracts – with the value of the assets leased [K 12,
       22];

-      when writing off an amount of doubtful loans (debiting the account Doubtful loans) –
       by the amount written off [K 21];

-      when transferring an excess tax amount to the budget – with the amount overpaid [K
       56];

-      when advancing tax on profit [K 23];
                                                                                                17

-      when recording dividends receivable – with the amount receivable [K 53];

-      when entering prepayments for business travels and similar payments (for office
       needs) not shown in other accounts – with the amount paid [K 23];

-      when entering grants and compensations receivable [K 35, 54].

This account shall be credited:

-      when debtors repay their debts – by the amount received [D 23];

-      when writing off doubtful loans where the company does not foresee any possibility to
       recover them or when postponing their repayment (corresponding contrary account)
       [D 66];

-      when writing back the amounts written off to the account Doubtful loans (when crediting
       this account) [D 21];

-      when recovering assets leased under leasing contracts – with the value of the assets
       leased [D 12, 22];

-      when attributing an amount of prepaid tax on profit to expenses relating to tax on
       profit for the accounting period [D 67].

10. Account 22 “Tangible assets, stocks and prepayments” shall be used for the accounting of
other tangible assets (excluding investments) managed and used by the company and
prepayments for such assets. This account shall also include leasing and other rights to said
assets.

Vehicles, office and other equipment as well as similar assets managed and used by the
company under leasing and other similar long-term contracts shall be recorded as leasing and
similar rights. Title to assets leased under such contracts is transferred to the leaseholder after
the contract expires or the contract includes a purchase option for the leaseholder.

The company’s accounting forms, stationery, office equipment and similar assets shall be
treated as stocks.

Amounts advanced for vehicles, office and other equipment, stock and similar assets to be
received by the company later on shall be recorded as prepayments. Prepaid costs accrued on
a regular basis shall not be recorded in this account.

This account shall be debited:

-      when acquiring vehicles, office and other equipment, stocks and similar assets – with
       the actual amount of acquisition costs [K 22, 23, 47];

-      when selling vehicles, office and other equipment, and similar assets (corresponding
       depreciation account) – with the whole depreciation amount accumulated during the
       use of assets by the company [K 22];

-      when receiving assets under leasing contracts – with the amount payable under the
       leasing contract [K 47];

-      when writing back the amounts written off on leased assets or over-depreciated
       amounts of leased assets [K 55];
                                                                                              18

-      when recovering assets leased under leasing contracts [K 21];

-      after having made advance payments for assets and services – with the amount paid [K
       23].

This account shall be credited:

-      when selling vehicles, office and other equipment and similar assets [D 21, 23, 47];

-      when writing off the amount of assets depreciated over the accounting period
       (corresponding depreciation account) [D 62];

-      when writing off amounts on assets for extraordinary reasons (corresponding contrary
       account) [D 66];

-      when disposing of the assets leased [D 21, 23, 47];

-      when writing off the amount of leased assets depreciated over the accounting period
       (corresponding depreciation account) [D 62];

-      when writing off amounts on leased assets for extraordinary reasons (corresponding
       contrary (amounts written off) account) [D 66];

-      when leasing assets under leasing contracts [D 21];

-      after having used stocks – with the amount used [D 36, 62];

-      after having received prepaid assets – with the value of the assets received [D 22];

-      after having recovering an advance – with the amount of the advance [D 23].

11. Account 23 “Cash at bank and in hand” shall be used for the accounting of all cash and
cash equivalents.

This account shall be debited:

-      when entering the increase of cash in hand or at bank – with the amount increased;

-      when recording the acquisition of cash equivalents – with the nominal value.

This account shall be credited:

-      when entering the decrease of cash in hand or at bank – with the amount decreased;

-      when reporting the decrease of cash equivalents – with the amount decreased;

-      after having made a claims payment [D 60];

-      after having paid rebates and bonuses resulting from insurance contracts, also from
       contracts providing for a reduction of premiums upon their extension [D 60].

12. Account 24 “Own shares” shall be used for the accounting of own shares.

This account shall be debited when acquiring own shares – with the actual amount of
acquisition costs [K 23] – and credited when selling own shares [D 23].
                                                                                               19

13. Account 25 “Other assets” shall be used for the accounting of assets not reported in other
accounts.

This account shall be debited:

-       when acquiring assets [K 23, 47];

-       when writing back the amounts written off on assets or over-depreciated amounts of
        assets [K 55].

This account shall be credited:

-       when selling assets [D 21, 23, 47];

-       when writing off the amount depreciated over the accounting period (corresponding
        depreciation account) [D 62];

-       when writing off amounts on assets for extraordinary reasons (corresponding contrary
        account) [D 66].

14. Account 29 “Accrued income and deferred expenses” shall be used for the accounting of
income which, though earned, has not as yet been paid and prepaid expenses. Prepayments for
real estate, vehicles, office and other equipment, stocks and similar assets reported in
corresponding prepayment accounts shall not be included herein.

This account shall be debited:

-       when making advance payments for rent and other services to be received in the
        course of subsequent periods – with the amount paid [K 23];

-       when entering accrued interest and other income for which no amounts have been as
        yet received – with the amount accrued [K 52, 53, 54].

This account shall be credited:

-       after having received prepaid services – with the amount of services rendered [D 62];

-       after having received interest and other income where they have been reported in the
        account Accrued income [D 23].

    Class III. Capital, reserves and provisions for liabilities and charges other than those
                               arising out of insurance contracts

15. Account 30 “Subscribed capital” shall be used for the accounting of registered subscribed
capital.

This account shall be debited when reducing the company’s subscribed capital [K 23, Other
Assets, 34].

This account shall be credited:

-       after having increased the company’s subscribed capital [D 23, 31];

-       after having formed the company’s subscribed capital [D 23];
                                                                                             20

-      after having added the reserves formed to the capital [D 33].

16. Account 31 “Share premium account” shall be used for the accounting of amounts by
which the issue price exceeds the nominal value of shares.

This account shall be debited:

-      when the company purchases its own shares sold in excess of their nominal value –
       with the amount of share premium [K 23];

-      when attributing the share premium to the company’s capital [K 30].

This account shall be credited after having sold the shares issued for a price exceeding their
nominal value – with the amount of share premium [D 23].

17. Account 32 “Revaluation reserve” shall be used for the accounting of an increase in the
value of fixed assets other than intangible assets.

This account shall be debited:

-      when recording the reduced value of fixed assets with the amount of revaluation [K
       12,13, 22];

-      when selling revalued assets [K 12, 13, 22].

This account shall be credited when recording the increased value of fixed assets – with the
amount of revaluation [D 12, 13, 22].

18. Account 33 “Other reserves” shall be used for the accounting of the reserves formed after
the appropriation of profit at the general meeting.

This account shall be debited:

-      when attributing the amount of reserves not available for distribution and other
       reserves to the capital[K 30];

-      when annulling the reserves available for distribution which have been used [K 59].

This account shall be credited:

-      when forming different reserves – with the amount foreseen at the general meeting [D
       69];

-      after the company’s registration when entering the unused balance of the
       organisational fund [D 23, other assets accounts].

19. Account 34 “Profit or loss brought forward” shall be used for the accounting of profit or
loss brought forward from the preceding accounting years or to be carried forward.

This account shall be debited:

-      when entering the loss to be carried forward (debiting the account Loss to be carried
       forward) [K 59];
                                                                                           21

-      when transferring the profit brought forward from the preceding accounting year to
       Account 59 for appropriation (debiting the account Profit brought forward from the
       preceding accounting year) [K 59];

-      when transferring the profit brought forward from the preceding accounting year to the
       account Profit brought forward from the preceding accounting year before drawing up
       subsequent financial statements [K 34].

This account shall be credited:

-      when entering the profit to be carried forward – with the amount foreseen at the
       general meeting [D 69];

-      when reducing the subscribed capital by the amount of loss [D 30];

-      when transferring the loss brought forward from the preceding accounting year to
       Account 69 for appropriation (crediting the account Loss brought forward from the
       preceding accounting year) [D 69];

-      when transferring the loss brought forward from the preceding accounting year to the
       account Loss brought forward from the preceding accounting year before drawing up
       subsequent financial statements [D 34].

20. Account 35 “Financing (grants and subsidies)” shall be used for the accounting of grants
and subsidies received and receivable. Account 352 Grants and subsidies transferred to results
(-) shall be used for the accounting of grants and subsidies used.

This account shall be debited when recording/amortising the annual amount of grants and
subsidies (debiting Account No. 352 Grants and subsidies transferred to results) [K 54].

This account shall be credited:

-      after having received grants and subsidies [D 23];

-      when recording grants and subsidies receivable [D 21].

21. Account 36 “Provisions for liabilities and charges other than those arising out of
insurance contracts” shall be used for the accounting of provisions formed by increasing
charges or reducing income and other (non-insurance) technical provisions. These may be
provisions for pensions, major repairs of own assets, etc. This account shall be also used for
the accounting of deferred taxes.

This account shall be debited:

-      when computing pensions from the company’s pension fund [K 47];

-      when estimating major repair costs [K 47];

-      when determining other liabilities and charges [K 47];

-      when writing off the amounts not used [K 55];

-      when transferring deferred taxes to be paid next year to the account Taxes payable [K
       47].
                                                                                               22

This account shall be credited:

-      when recording anticipated payments for which provisions should be formed [D 62, 66];

-      when recording deferred taxes [D 67].

22. Account 39 “Consolidated accounts” shall be used to close income, expenses,
appropriation of profit (loss), assets, shareholders’ equity and liabilities accounts.

This account shall be debited when closing expenses, appropriation of profit (loss) and assets
accounts [K accounts of class 1, 2, 6] and it shall be credited when closing income,
appropriation of profit (loss), shareholders’ equity and liabilities accounts [D accounts of class
3, 4, 5].

                                      Class IV. Liabilities

23. Account 40 “Subordinated liabilities” shall be used for the accounting of the company’s
debts without a fixed maturity date which are repaid only after the claims of all other creditors
have been met. Such loans are often issued on condition that they will be paid back in the
form of the company’s shares or other assets (i.e. they will be converted into a particular type
of assets in which the creditor is interested). Convertible subordinated loans and other
subordinated loans shall be reported in separate accounts.

This account shall be debited when reporting a decrease in subordinated loans [K 23, other
assets accounts, 30] and credited when recording an increase in subordinated liabilities
[D 23].

24. Account 41 “Technical provisions” shall be debited:

-      when recording a decrease in technical provisions (gross amount) [K 51, 61];

-      when recording an increase in the reinsurers’ share of technical provisions [K 60, 61].

This account shall be credited:

-      when recording an increase in technical provisions (gross amount) [D 51, 61];

-      when recording a decrease in the reinsurers’ share of technical provisions [D 60, 61].

25. Account 42 “Deposits received from reinsurers” shall be debited when returning deposits
to reinsurers [K 23] and credited when receiving deposits from reinsurance [D 23].

26. Account 43 “Liabilities arising out of direct insurance operations” shall be debited:

-      recognising prepaid premiums as premiums written after the insurance contract (risk)
       comes into force [K 50];

-      when the company repays other loans arising out of direct insurance operations [K 23,
       52].

This account shall be credited:

-      when recording premiums advanced before the insurance contract (risk) comes into
       force [D 23];
                                                                                              23

-      when recording the received premiums according to the “covering of expenses” or
       “deposits” method [D 23];

-      when recording other loans arising out of direct insurance operations [D 20, 23, 62,
       64].

27. Account 44 “Liabilities arising out of reinsurance operations” shall be debited:

-      in the case of a decrease in the reinsurers’ share of premiums written [K 60];

-      recognising prepaid reinsurance premiums as premiums written after the reinsurance
       contract (risk) comes into force [K 50];

-      when the company repays other loans arising out of reinsurance operations [K 23, 52].

This account shall be credited:

-      when recording the reinsurers’ share of premiums written [D 60];

-      when recording reinsurance premiums advanced before the reinsurance contract (risk)
       comes into force [D 23];

-      when recording other loans arising out of reinsurance operations [D 20, 23, 62, 64].

28. Account 45 “Debenture loans” shall state the value of debenture loans.

This account shall be debited when redeeming debentures issued earlier [K 23] and credited
after the issue of debentures [D 23].

29. Account 46 “Amounts owed to credit institutions” shall state loans received from credit
institutions.

This account shall be debited when repaying loans – with the amount repaid [K 23] – and
credited upon the receipt of loans [D 23].

30. Account 47 “Other liabilities” shall be used for the accounting of the company’s debts
relating to tax on profit, social security contributions, also taxes deducted from wages and
salaries, amounts deducted for the maintenance of the State Insurance Supervisory Authority,
wages and salaries to be paid and other similar liabilities. This account shall also comprise the
company’s debts relating to dividends, tantiemes, liabilities arising out of leasing contracts,
and liabilities not included in other accounts.

This account shall be debited:

-      after returning security deposits or guarantees – with the amount returned [K 23];

-      after returning prepayments to affiliated enterprises, enterprises with which the
       company is linked by virtue of a participating interest and other enterprises [K 23];

-      when recording a decrease in the company’s liabilities after having rendered prepaid
       services (after income has been earned) – with the value of the services rendered [K
       53, 54];

-      after having sold the company’s assets on which advance payments have been made
       [K 11, 12, 13, 14, 22, 25];
                                                                                             24

-      after having repaid the loans reported in this account – with the amount repaid [K 23];

-      when adjusting the amounts of taxes payable [K 56];

-      when paying out dividends and tantiemes – with the amount paid [K 23];

-      when paying for the subscribed shares of another enterprise [K 12, 22, 23].

This account shall be credited:

-      after having received a guarantee in cash – with the amount received [D 23];

-      after having received prepayments from affiliated enterprises, enterprises with which
       the company is linked by virtue of a participating interest and other enterprises [D 23];

-      when recording prepayments – with the amount prepaid [D 23];

-      upon the date of payment of deferred taxes [D 36];

-      when recording the purchase of different assets on credit and other loans reported in
       this account [D 11, 12, 13, 14, 22, 25, 62, 63, 64, 65, 66];

-      when entering the final dividends, tantiemes and other amounts payable from profit –
       with the amount foreseen at the general meeting [D 69];

-      when calculating pensions [D 36].

31. Account 49 “Accrued expenses and deferred income” shall be used for the accounting of
outstanding expenses incurred during the current and preceding accounting periods, also
income to be earned in the course of subsequent accounting periods.

This account shall be debited:

-      when paying accrued expenses reported in the account [K 23];

-      when rendering prepaid services (earning income) [K 52, 53, 54].

This account shall be credited:

-      when recording outstanding expenses incurred during an accounting period [D 6];

-      when recording income received but not as yet earned – with the amount received [D
       23].

                                       Class V. Income

32. Account 50 “Income from insurance and reinsurance operations” shall be used for the
accounting of direct premiums written and reinsurance premiums accepted.

This account shall be debited:

-      when annulling premiums written upon the cancellation of the insurance contracts [K
       20];
                                                                                              25

-      when closing the account at the end of the accounting period – with the total amount of
       credit balance [K 39].

This account shall be credited after having concluded an insurance contract – when recording
premiums written [D 20, 23].

33. Account 51 “Change in the provision for unearned premiums (+/-)” shall be debited:

-      when recording an increase in the provision for unearned premiums (gross amount) [K
       41];

-      when closing the account at the end of the accounting period – with the total amount of
       credit balance [K 39].

This account shall be credited:

-      when recording a decrease in the provision for unearned premiums (gross amount) [D
       41];

-      when closing the account at the end of the accounting period – with the total amount of
       debit [D 39].

34. Account 52 “Other technical income” shall be used for the accounting of income from
technical insurance operations not reported in other accounts. These amounts shall comprise
commissions for co-insurance, commissions for negotiating insurance contracts for other
insurance companies, delay fees, etc.

This account shall be debited when closing the account at the end of the accounting period –
with the total amount of credit balance [K 39] – and credited when recording earned
commissions and other technical insurance income [D 21, 23, 49].

35. Account 53 “Investment income” shall be used for the accounting of income from
participating interests, dividends received (receivable), interest, earned income from rent, time
deposits, unrealised gains on short-term investments and gains on the realisation of
investments. It shall also comprise unrealised gains on investments where the investment risk
is borne by the policyholder.

This account shall be debited when closing the account at the end of the accounting period –
with the total amount of credit balance [K 39].

This account shall be credited:

-      when recording gains on the realisation of investments [D 21, 23, 47];

-      when recording an increase in the value of short-term investments [D 14];

-      when recording investment income from participating interests [D 21, 23, 29];

-      when recording income from other investments [D 21, 23, 29];

-      after an increase in the value of assets where investments have been made as specified
       by the policyholder [D 16].

36. Account 54 “Other income” shall comprise income from own construction, amounts of
grants and subsidies received which were used over the year and which are recognised as
                                                                                            26

income for the accounting period, amounts of compensation received (receivable) from the
state, gains arising from changes in the exchange rates, also income from services rendered
(other than insurance services).

This account shall be debited when closing the account at the end of the accounting period –
with the total amount of credit balance [K 39].

This account shall be credited:

-      when reporting recognised income from own construction [D 12];

-      when recording the amount of grants and subsidies received which were used during
       the accounting period and which are recognised as income for said period [D 35];

-      when recording amounts of compensation received (receivable) from the state and
       recognised as income for the accounting period [D 21, 23];

-      when recording gains arising from changes in the exchange rate [D 23];

-      when adjusting currency items at the end of the accounting period where gain is made
       from changes in the exchange rate between the litas and foreign currencies during said
       period [D accounts for amounts receivable and payable];

-      when recording other income reported in this account [D 21, 23].

37. Account 55 “Extraordinary income” shall comprise extraordinary income: write-back of
assets written off or depreciated, write-back of provisions (other than technical provisions)
formed during preceding accounting periods, other extraordinary income.

This account shall be debited when closing the account at the end of the accounting period –
with the total amount of credit balance [K 39].

This account shall be credited:

-      when writing back the amounts of assets written off or depreciated/amortised during
       preceding periods [D 11, 12, 13, 14, 20, 21, 22, 25];

-      when writing off a provision formed in the preceding period and not used (or used in
       part) in the current accounting period [D 36];

-      when recording other extraordinary income [D 21, 23].

38. Account 56 “Adjustments on tax on profit and write-back of provisions for taxation” shall
be used for the accounting of adjustments on tax on profit and transfers from deferred taxes at
the end of the accounting period.

This account shall be debited when closing the account at the end of the accounting period –
with the total amount of credit balance [K 39].

This account shall be credited:

-      after having established at the end of the accounting period that the amount of tax on
       profit calculated or paid is excessive – with the amount exceeding the actual tax on
       profit [D 21];
                                                                                             27

-      when writing off the amount of in-excess taxes which does not have to be paid in the
       current financial year [D 47];

-      when writing back the overestimated amount of the provision for deferred taxes [D
       36].

39. Account 57 “Accounts for the transfer of investment return” shall be debited:

-      when recording the investment return transferred to the non-technical account [K 57];

-      when recording the investment return transferred to the non-life insurance technical
       account [K 57].

This account shall be credited:

-      when recording the investment return transferred from the non-technical account [D
       57];

-      when recording the investment return transferred from the life-assurance technical
       account [D 57].

40. Account 59 “Appropriation accounts” shall be used to record the appropriation of profit
(loss) approved at the general meeting: profit brought forward from the preceding year,
transfers from reserves, loss to be carried forward, shareholders’ contributions against losses.

Account 590 “Profit brought forward from the preceding year” shall be debited when closing
it after the appropriation of profit has been approved at the general meeting and reported in
the accounts – with the total amount of credit balance [K 39] – and credited when reporting
the appropriation of profit brought forward from the preceding accounting year – with the
total amount of profit brought forward from the preceding accounting periods [D 34].

Account 591 “Transfers from reserves” shall be debited when closing it after the
appropriation of reserves has been approved at the general meeting and reported in the
accounts – with the total amount of credit balance [K 39] – and credited when reporting
amounts transferred from the reserves available for distribution which were formed and used
during preceding accounting periods (e.g. when covering losses for the accounting period) [D
33].

Account 592 “Loss to be carried forward” shall be debited when closing it after the
appropriation of profit has been approved at the general meeting and reported in the accounts
– with the total amount of credit balance [K 39] – and credited when reporting loss to be
carried forward with the amount to be carried forward [D 34].

Account 593 “Shareholders’ contributions against losses” shall be debited when closing it
after the appropriation of loss has been approved at the general meeting and reported in the
accounts – with the total amount of credit balance [K 39] – and credited with the amount of
shareholders’ contributions received (receivable) against losses [D 21, 23].

                                      Class VI. Charges

41. Account 60 “Claims incurred and reinsurance charges” shall be debited:

-      after a claims payment has been made [K 23];
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-      after having paid rebates and bonuses resulting from insurance contracts providing for
       a partial refund of premiums or insurance contracts providing for a reduction of
       premiums upon their extension [K 23];

-      when recording the reinsurers’ share of premiums written [K 44];

-      when recording a decrease in the reinsurers’ share of the provision for unearned premiums
       [K 41].

This account shall be credited:

-      when recording the reinsurers’ share of claims incurred [D 20];

-      when recording the amounts recovered and residual assets received [D 23, other assets
       accounts];

-      after a reduction in the reinsurers’ share of premiums written [D 44];

-      when recording an increase in the reinsurers’ share of the provision for unearned
       premiums [D 41];

-      when closing the account at the end of the accounting period – with the total amount of
       debit balance [D 39].

42. Account 61 “Changes in technical provisions, except for the provision for unearned
premiums (+/-)” shall be debited:

-      when recording an increase in technical provisions (gross amount) [K 41];

-      when recording a decrease in the reinsurers’ share of technical provisions [K 41].

This account shall be credited:

-      when recording a decrease in technical provisions (gross amount) [D 41];

-      when recording an increase in the reinsurers’ share of technical provisions [D 41];

-      when closing the account at the end of the accounting period – with the total amount of
       debit [D 39].

43. Account 62 “Operating expenses” shall be used for the accounting of acquisition costs
and administrative expenses. These expenses shall be reported by classes of insurance. Where
such expenses cannot be directly attributed, indirect methods of attribution shall be used.

This account shall be debited:

-      when calculating or paying commissions or other fees for intermediation [K 23, 47];

-      when reporting advertising, promotion, demonstration, and presentation costs as well
       as stock-related costs for the accounting period [K 22, 23, 29, 43, 44, 47];

-      when reporting expenses of renting premises [K 23, 29, 47, 49];

-      when reporting insurance costs for the accounting period [K 23, 29];
                                                                                             29

-      when reporting salaries, wages and social security contributions [K 23, 47];

-      when recording depreciation and amortisation of assets [K 10, 11, 12, 22, 25];

-      when forming other provisions (not technical) [K 36];

-      when recording other operating expenses [K 23, 29, 47, 49].

This account shall be credited:

-      when closing the account at the end of the accounting period – with the total amount of
       debit balance[D 39];

-      when recording earned reinsurance commissions and profit participation[D 21, 49];

-      when capitalising operating expenses incurred during the formation or reconstruction
       of fixed assets or the company [D 10, 11, 12].

44. Account 63 “Investment charges” shall be used for the accounting of investment
management charges, unrealised losses on short-term investments and losses on the
realisation of investments. Unrealised losses on investments where the investment risk is
borne by the policyholder shall be also stated.

This account shall be debited:

-      when entering investment management charges [K 23, 47];

-      when entering losses on the realisation of investments [K 12, 13, 14];

-      when recording a decrease in the value of short-term investments [K 14];

-      after a reduction of the value of assets where investment were made as specified by the
       policyholder [K 16].

This account shall be credited when closing the account at the end of the accounting period –
with the total amount of debit balance[D 39].

45. Account 64 “Other technical charges” shall be debited when recording other technical
charges [K 23, 29, 43, 44, 49] and credited when closing the account at the end of the
accounting period – with the total amount of debit balance [D 39].

46. Account 65 “Other charges” shall cover losses arising from changes in the exchange rate,
charges resulting from taking on loans (including interest, commissions, other amounts paid
and payable which are directly related to the receipt of loans), also other charges not shown in
other accounts.

This account shall be debited:

-      when recording loan issue costs [K 23];

-      when reporting losses arising from changes in the exchange rate [K 23];

-      when entering other financial charges [K 23, 47];

-      when entering accrued interest [K 49];
                                                                                           30

-      when adjusting currency items at the end of the accounting period losses are made
       from changes in the exchange rate between the litas and foreign currencies during said
       period [K accounts for amounts receivable and payable].

This account shall be credited:

-      when recording the capitalisation of interest [D 10];

-      when closing the account at the end of the accounting period – with the total amount of
       debit balance [D 39].

47. Account 66 “Extraordinary charges”. This account shall be used for the accounting of
expenses resulting from extraordinary events which do not depend on the company’s
activities.

Account 660 “Extraordinary investment amounts written off” and Account 661 “Other
extraordinary amounts written off” shall be used for the accounting of expenses resulting from
amounts written off on assets for extraordinary reasons.

Account 662 “Provisions for extraordinary liabilities and charges” shall be used for the
accounting of provisions formed by the company to cover liabilities and charges which can be
anticipated but do not depend on the company’s activities.

Account 663 “Other extraordinary charges” shall be used for the accounting of expenses
incurred by the company as a result of accidents, disasters and other unexpected events of any
kind which do not depend on the company’s activities, not shown in other Extraordinary
charges.

Account 669 “Extraordinary charges capitalised as reorganisation costs (-)” shall be used for
the accounting of the amount of extraordinary expenses incurred by the company and
attributable to its reorganisation.

This account shall be debited:

-      when writing off part of the assets for extraordinary reasons – with the amount written
       off [K 10, 11, 12, 13, 14, 15, 20, 21, 22, 25, 29];

-      when reporting expenses incurred by the company during an accident [K 22, 23, 47];

-      when forming provisions for anticipated unusual liabilities and charges – with the
       amount of such provisions [K 36].

This account shall be credited:

-      when closing the account at the end of the accounting period – with the total amount of
       debit balance [D 39];

-      when capitalising extraordinary expenses incurred by the company during
       reorganisation and recorded in accounts for extraordinary charges [D 10].

48. Account 67 “Tax on profit” shall be used for the accounting of expenses relating to tax on
profit.

This account shall be debited:
                                                                                              31

-      when the payment of taxes is postponed [K 36];

-      when calculating tax on profit for the accounting period [K 21, 47].

This account shall be credited when closing the account at the end of the accounting period –
with the total amount of debit balance [D 39].

49. Account 69 “Appropriation accounts” shall be used to record the appropriation of profit
(loss) approved by the shareholders to cover losses brought forward from the preceding year,
to enter transfers to legal and other reserves, to report profit to be carried forward, to record
the dividends announced and bonuses for senior executives.

Account 690 “Losses brought forward from the preceding year” shall be debited when
reporting losses brought forward from preceding periods with the total amount of losses
brought forward [K 34] and it shall be credited when closing the account after the
appropriation of loss has been approved by the shareholders and reported in the accounts [D
39].

Account 691 “Transfers to legal reserves” shall be debited when profit is transferred to legal
reserves [K 33] and credited when closing the account after the appropriation of profit (loss)
has been approved by the shareholders and reported in the accounts [D 39].

Account 692 “Transfers to other reserves” shall be debited when profit is transferred to the
reserves formed by the company [K 33] and credited when closing the account after the
appropriation of profit (loss) has been approved by the shareholders and reported in the
accounts [D 39].

Account 693 “Profit to be carried forward” shall be debited when reporting profit to be carried
forward [K 34] and credited when closing the account after the appropriation of profit (loss)
has been approved by the shareholders and reported in the accounts [D 39].

Account 694 “Dividends” shall be debited when final dividends are reported [K 47] and
credited when closing the account after the appropriation of profit (loss) has been approved by
the shareholders and reported in the accounts [D 39].

Account 695 “Bonuses for senior executives” shall be debited when calculating bonuses
(tantiemes) for senior executives [K 47] and credited when closing the account after the
appropriation of profit (loss) has been approved by the shareholders and reported in the
accounts [D 39].

Account 696 “Other appropriations” shall be debited when profit is used for charity and
purposes not shown in other accounts for profit appropriation [K, various assets accounts] and
credited when closing the account after the appropriation of profit (loss) has been approved by
the shareholders and reported in the accounts [D 39].

                                       Final provisions

50. The list of accounts of insurance companies shall indicate the number of account, name of
account and classification – which may be used in administering the accounts of insurance
companies. The list of accounts is not mandatory. Each insurance company shall draw up an
individual plan of accounts taking its own needs into consideration. The plan shall be
approved by the company’s chief executive officer or chief financial officer (accountant).
Where the numbers of accounts or their description given in an individual plan of accounts
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differ from those provided in the present list of accounts, such descriptions shall be approved
together with the individual plan.

Classes 7, 8, 9 have not been described herein. Insurance companies shall decide on their use
when drawing up individual plans of accounts.

The present list of accounts does not present a detailed break-up of accounts into sub-accounts
by classes of insurance. The sub-accounts shall be used taking into consideration the
company’s activities.




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