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14MIC - Millennium Insurance Company LimitedFinancial Statements 2017Results and dividensassets2017 ( )2016 ( )16.146.48811.854.651Land and buildings400.568423.087Properties for rent13.003.4007.437.500Other financial rovision for unearned premiums12.489.74712.807.057Claims ebtors arising out of direct insurance rs arising out of reinsurance operations10.552.9744.674.357Other debtors13.468.4204.123.929Subrogation and .514.163--TOTAL ASSETS164.923.509139.280.802liabilities2017 ( )2016 ( )32.723.83319.361.166Called up share capital21.172.45010.000.000Profit and loss ovision for unearned premiums – gross amount68.573.20467.300.651Claims outstanding – gross 8.097.782Creditors arising out of direct insurance operations1.509.080834.847Creditors arising out of reinsurance 858795.123164.923.509139.280.802TOTAL InvestmentsTOTAL Reinsurers’ share of technical provisionsTOTAL DebtorsOther assetsCash at bank and in handPrepayments and accrued incomeDeferred acquisition costs – gross amountsOther prepayments and accrued incomeCapital and reservesTechnical provisionsDeposits received from reinsurersCreditorsOther creditors including taxation and socials securityAccruals and deferred incomeTOTAL liabilities

MIC - Millennium Insurance Company LimitedFinancial Statements 2017Cash-flowNet cash inflow fromoperating activitiesTaxation PaidNet cash inflow beforefinancinGEquity dividends paidto shareholdersNet cash inflow2017 ( )2016 ( 960.690--14.992.15026.960.690Results and dividensThe Company’s profit for the financial year after taxation was 2.190.217 (2016: 3.022.435). No dividends were declaredduring the year and the retained profit of 2.190.217 has beentransferred to reserves, for a total amount of 32.723.833including capital and reserves.Solvency MarginThe Solvency Margin gives a greater degree of guarantee andsolidity to the group of measures that, in the long term, shapeMIC s technical and economic balance.In 2017, under Solvency II regulations, MIC has a Minimum CapitalRequired ratio of 379% and 112% of SCR (Solvency CapitalRequirement) at the year end.Schönbrunn Palace, Vienna (Austria).15

04.NOTESTO THE FINANCIALSTATEMENTSBrandenburg Gate, Berlin (Germany).

MIC - Millennium Insurance Company LimitedFinancial Statements 201704. NOTES TO THE FINANCIAL STATEMENTS04.1 ACCOUNTING POLICIESThese financial statements have been preparedunder the historical cost convention, as modified forinvestments at fair value through profit and loss. Thefinancial statements have also been prepared underthe accounting policies set out below, applicablelegislation and in accordance with Gibraltar AccountingStandards.The legislation applied in the preparation of thesefinancial statements includes the Companies Act 2014,the Financial Services (Insurance Companies) Actand the Insurance Companies (Accounts Directive)Regulations 1997.1.1. Premiums writtenPremiums written relate to total premiums receivable forinsurance contracts entered into during the accountingperiod, together with any differences between thebooked premiums for prior years and those previouslyaccrued, and include estimates of premiums due butnot yet receivable or notified to the Company, except aforecast to cancel them.Decennial policies which involve a number of buildingsas part of a single construction project, often referredto as “Group Policies” are deemed to have gone onrisk when individual buildings within the constructionproject are completed.1.2. ReinsuranceOutward reinsurance premiums are accounted for inthe same accounting period as the related insurancebusiness.1.3. Unearned premiumsUnearned premiums represent the proportion ofpremiums written in the year that relate to the unexpiredterms of the policies in force at the balance sheet date,calculated on a time apportioned basis.1.4. Pre-paid insurance policiesDeposits on insurance policies which have not yetcome on risk are accounted for as deferred income.Reinsurance and brokerage commission paid onpre-paid policies that have not yet come on risk areaccounted for as deferred expenses.1.5. Acquisition costsAcquisition costs comprise brokerage and servicecompany acquisition costs incurred on insurancecontracts written during the financial year. They arespread over a period equivalent to that over which thepremiums on the underlying business are earned.Prepaid policies that are yet to come on risk are stillliable to pay brokerage commission on a percentagebasis of the prepaid policy premium.Deferred acquisition costs represent the proportionof acquisition costs incurred in respect of unearnedpremiums at the balance sheet date.1.6. Processing costsProcessing costs are included within net operatingexpenses and comprise service company chargesincurred in handling insurance contracts written duringthe financial year. This charge incorporates claimshandling charges. They are spread over a periodequivalent to that over which the premiums on theunderlying business are earned.Deferred processing costs represent the proportionof processing costs incurred in respect of unearnedpremiums at the balance sheet date.17

18MIC - Millennium Insurance Company LimitedFinancial Statements 20171.7. LeviesLevies payable to the Spanish authorities for theinsurance compensation scheme and natural disasterfund are recognised within net operating expenses.1.8. Claims incurredClaims incurred represents claim payments adjusted for themovement in the outstanding claims liability, net of salvageand subrogation recoveries. Reinsurance recoveries areaccounted for in the same accounting period as the claimsfor the related business being reinsured.assets. For salvage recoveries, the amount recognisedis the amount that can be reasonably recoveredfrom the disposal of the property. For subrogationreimbursements, the amount recognised is the amountthat can reasonably be expected to be recovered fromthe action against the liable third party.1.11. Profit commissionThe outstanding claims liability is measured as thevalue of expected future payments relating to claimsincurred at the reporting date. The expected futurepayments include those in relation to claims reportedbut not yet paid or not yet paid in full and claimsincurred but not reported (“IBNR”) and the anticipateddirect and indirect claims handling costs.Under some reinsurance contracts entered into bythe Company, the Company is entitled to slidingscale or profit commission depending on the overallresult derived on the line of business covered bythat particular reinsurance contract. The Companymay also be required to pay a profit commission toits agents. Given that the overall result generated bythe Company is subject to significant uncertainty asall claims data may not be known until subsequentperiods, the company can find it difficult to estimatesliding scale and profit commission (see note two,critical accounting estimates).1.9. Reinsurance recoveries1.12. Taxation and deferred taxReinsurance recoveries in respect of claims incurredbut not reported are assumed to be consistent with thehistorical pattern of such recoveries, adjusted to reflectchanges in the nature and extent of the Company’sreinsurance programme over time. An assessmentis also made of the recoverability of reinsurancerecoveries having regard to market data on the financialstrength of each of the reinsurance companies.Provision is made at the applicable rate for corporationtax payable on profit for the year, as adjusted for taxpurposes.The reinsurers’ share of claims incurred in the profitand loss account reflects the amount received orreceivable from reinsurers in respect of those claimsincurred during the year. Reinsurance liabilities areprimarily premiums payable for reinsurance contractsand are recognised in the profit and loss account as“Outward reinsurance premiums” when due.1.10. Salvage and subrogationrecoveriesSome insurance contracts permit the Company tosell (usually damaged) property acquired in settling aclaim (for example, salvage). The Company may alsohave the right to pursue third parties for payment ofsome or all costs (for example, subrogation). Salvageand subrogation recoveries are included in otherSpanish capital gains tax is payable on certainrealised gains on investments.Deferred tax is recognised in respect of all timingdifferences that have originated but not reversedat the balance sheet date. Timing differences aredifferences between the taxable profits and the resultsas stated in the financial statements that arise fromthe inclusion of gains and losses in tax assessmentsin periods different from those in which they arerecognised in the financial statements.Deferred tax is measured on a non-discounted basis,using the tax rates that are expected to apply in theperiods in which the timing difference are expected toreverse based on tax rates and laws that have beenenacted by the balance sheet date.1.13. Insurance premiumtax and leviesInsurance premium taxes and levies (IPS, Clea and

MIC - Millennium Insurance Company LimitedFinancial Statements 2017Consorcio) are based on a percentage of Net WrittenPremiums, where Net Written Premiums are the actualinsurance premium written in the year. Gross premiumswritten are recognised net of insurance premium taxeswhereas levies are recognised as direct insurancecosts within operating expenses.when the rights to receive cash flows from theinvestments have expired or have been transferredand the Company has transferred substantially all risksand rewards of ownership. Investments at fair valueare carried at the bid price. Loans and receivables arecarried at amortised cost using the effective interestmethod.1.14. Trade receivablesDividend income from financial assets is recognised inthe income statement as part of other income when theCompany’s right to receive payments is established.Trade receivables are recognised initially at fairvalue and subsequently measured at amortised costusing the effective interest method, less provisionfor impairment. A provision for impairment of tradereceivables is established when there is objectiveevidence that the Company will not be able to collectall amounts due according to the original terms of thereceivables.1.15. Financial instrumentsThe company classifies its financial assets in thefollowing categories:Loans and receivablesLoans and receivables and investments at fair valuethrough profit and loss account. The classificationdepends on the purpose for which the financialassets were acquired. Management determines theclassification of its financial assets at initial recognition.Loans and receivables are non-derivative financialassets with fixed or determinable payments that arenot quoted in an active market. The Company’s loansand receivables comprise debtors and cash at bankand in hand in the balance sheet.Investments at fair value through profit and lossaccountInvestments at fair value through profit and loss arefinancial assets that are principally acquired for thepurpose of selling in the short term and are recordedwithin “other financial investments” on the balancesheet.1.16. Recognition and measurementRegular purchases and sales of financial assets arerecognised on the trade-date - the date on whichthe Company commits to purchase or sell the asset.Investments are initially recognised at fair value plustransaction costs. Financial assets are derecognisedThe market values of quoted investments are basedon current bid prices. If the market for a financialasset is not active (and for unlisted securities), theCompany establishes fair value by using valuationtechniques. These include the use of recent arm’slength transactions, reference to other instrumentsthat are substantially the same, discounted cash flowanalysis, and option pricing models.The amount of the asset only increases with the amountthat the original had had if the deterioration had notoccured.1.17. Impairment of assetsFinancial assetsThe Company assesses at each balance sheet datewhether there is objective evidence that a financialasset is impaired. A financial asset is impaired andimpairment losses are incurred only if there is objectiveevidence of impairment as a result of one or moreevents that have occurred after the initial recognition ofthe asset (a ‘loss event’) and that loss event (or events)has an impact on the estimated future cash flows ofthe financial asset that can be reliably estimated.Objective evidence that a financial asset is impairedincludes observable data that comes to the attention ofthe Company about the following events:(i) significant financial difficulty of the issuer ordebtor;(ii) a breach of contract, such as a default ordelinquency in payments;(iii) it becoming probable that the issuer or debtor willenter bankruptcy or other financial reorganisation;(iv) the disappearance of an active market for thatfinancial asset; or19

20MIC - Millennium Insurance Company LimitedFinancial Statements 2017(v) observable data indicating a measurabledecrease in the estimated cash flow from thosefinancial assets.If there is objective evidence that an impairment losshas been incurred on trades and other receivables,the amount of the loss is measured as the differencebetween the asset’s carrying amount and the presentvalue of estimated future cash flows (excluding futurecredit losses that have been incurred) discounted atthe financial asset’s original effective interest rate.The carrying amount of the asset is reduced and theamount of the loss recognised in the profit and lossaccount.If in a subsequent period, the amount of theimpairment loss decreases and the decrease canbe related objectively to an event occurring after theimpairment was recognised (such as improved creditrating), the previously recognised impairment loss isreversed and the amount of the reversal is recognisedin the profit and loss account for the period.Non-financial assetsAssets that have an indefinite useful life are not subjectto amortisation and are tested annually for impairment.Assets that are subject to amortisation are reviewedfor impairment whenever events or changes incircumstances indicate that the carrying amount maynot be recoverable. An impairment loss is recognisedfor the amount by which the asset’s carrying amountexceeds its recoverable amount. The recoverableamount is the higher of an asset’s fair value less coststo sell and value in use. For the purposes of assessingimpairment, assets are grouped at the lowest levelsfor which there are separately identifiable cash flows(cash-generating units).Any impairment is recognised in the profit and lossaccount in the period in which the loss occurs. If anexternal event gives rise to a reversal of the impairmentloss, the reversal is recognised in the profit and lossaccount by increasing the carrying amount of the assetin the period in which it occurs. The carrying amountof the asset will only be increased to the amount thatit would have been had the original impairment notoccurred.The amount of teh asset only increases with theamount that the original has had if the deteriorationhad not occured1.18. Investment returnInvestment return comprises all investment income,realised investment gains and losses and movementsin unrealised gains and losses, net of investmentexpenses, charges and interest.Dividends are recorded on the date on which theshares are quoted ex-dividend and include theimputed tax credits. Interest and expenses areaccounted for on an accruals basis.Realised gains and losses on investments carried atmarket value are calculated as the difference betweennet sales proceeds and purchase price. Movementsin unrealised gains and losses on investmentsrepresent the difference between the valuation at thebalance sheet date and their purchase price or, ifthey have been previously valued, their valuation atthe last balance sheet date, together with the reversalof unrealised gains and losses recognised in earlieraccounting periods in respect of investment disposalsin the current period.Investment return is recorded in the non-technicalaccount.1.19. Fixed assetsThe cost of fixed assets is their purchase cost,together with any incidental expenses of acquisition.Depreciation is calculated so as to write off the costof tangible fixed assets, less their estimated residualvalues, on a straight-line basis over the expecteduseful economic lives of the assets concerned. Theprincipal annual rates used for this purpose are:Building: 47 years (over the term of the lease)Computer equipment: 4 years1.20. Operating leasesRentals payable under operating leases are charged tothe profit and loss account as incurred over the leaseterm.

MIC - Millennium Insurance Company LimitedFinancial Statements 20171.21. Foreign currency traslation1.23. Other financial investmentsThe estimation of claims incurred but not reported(“IBNR”) is generally subject to a greater degree ofuncertainty than the estimation of the cost of settlingclaims already notified to the Company, where moreinformation about the claim event is generally available.Claims IBNR may often not be apparent to the insureruntil many years after the event giving rise to the claimhas happened. Classes of busin

This ranking has been elaborated from the following data: Insurance Market evolution Statistic as of December 2017. ICEA Association (Investigación Cooperativa de Entidades Aseguradoras), February 2018. Nº Entity PremiumsGrowth Market issues direct (euros) share 1. MIC-MILLENNIUM Insurance Company Limited 13.254.167,101,92%21,87% 3.