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ANNUAL REPORT
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Wo r l d w i d e l e a d e rin assistance servicesand travel insurance
ANNUA L R E PORT 2004
Mondia l Ass i s tance Group wou ld l i ke to thanka l l i t s s ta f f fo r the i r k ind par t i c ipa t ion in thei l l u s t r a t i o n s i n t h i s a n n u a l r e p o r t
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7,600 dedicated employees
turnover of 1.1 billion euros, +10.5%
operating result of 44.6 million euros, +84%
net profit of 23.1 million euros, +48%
Contents
Editorial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Worldwide Market leader . . . . . . . . . . . . . . . . . . . . . . .6
International presence . . . . . . . . . . . . . . . . . . . . . . . .10
Region by region . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Group structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Review of operations . . . . . . . . . . . . . . . . . . . . . . . . .18
Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . .20
Notes to the consolidated financial statements . . . . . . . .23
Report of the statutory auditors . . . . . . . . . . . . . . . . . .32
Financial statements of Elmonda . . . . . . . . . . . . . . . . .33
Notes to the financial statements of Elmonda . . . . . . . . .34
Report of the statutory auditors . . . . . . . . . . . . . . . . . .35
Business years 2002-2004 . . . . . . . . . . . . . . . . . . . . .36
2004
3
Knowledge management : a core principle of Mondial Assistance Group
The availability, transfer and sharing of knowledge through
our people, supported by state-of-the-art IT solutions is a core
priority of our Group. How could we help customers in distress
if we did not possess and could not share the necessary
information with the right people around the globe,
24 hours a day?
Our strongest asset is our people and their skills, competencies,
experience and ideas. In addition to using these advantages
in assisting our customers, it is also crucial to continually enrich
our existing knowledge to anticipate and optimize client
benefits.
As an international company, we increase and share our
knowledge base every minute of the day in every corner of the
world. Developing structures and communication tools, such
as international work groups on various topics, encourages
and cultivates an exchange of the wealth of knowledge,
expertise and best practices amongst our people.
This allows us to guarantee the best solutions for our clients
and their customers and a sustainable, healthy development of
our business. Efficient knowledge management helps us to
gain insight and understanding from our own experience and
reinforces our solidarity and performance. In the future, we
will continue to invest in the knowledge of our employees, our
clients’ needs and our ever-changing society in order to make
life at home or while traveling abroad, even more serene.
4
2004 – a year of excellent performance
In 2004, Mondial Assistance Group, world leader in travel insurance and assistance services, registered very stronggrowth due to its policy of balanced risks applied both internationally and across all business lines. Our innovativeand diversified service offer allowed us to continue to develop our business and, despite a very competitive market,to maintain a leading position in the majority of countries where we are present. Group staff dedication to clientsand their end customers was a key driver for designing new quality solutions and services, and resulted in completesatisfaction and renewed trust from our clientele.
Our healthcare offer, launched at end 2003, was successfully rolled out in 14 countries. Moreover, business unitsaround the world continued to develop value-added healthcare and domestic health services favouring preventionand personal well-being.
As a world premiere, we presented in 2004 our first comprehensive evaluation of 800 clinics and hospitals in 108different countries throughout the world. This database is a concrete, valuable tool for Group doctors that helps themdecide the best possible care for patients wherever they may be.
2004 figures reflect strong growth
In a recovering tourist industry and despite continued uncertainty in the economy, our Group posted a healthy+10.5% increase in turnover to reach 1.1 billion euros, and an 84% increase in operational results. We implementeda dynamic commercial strategy throughout the year, which led to sales growth in both mature and emerging marketsin two of our core business activities - travel insurance and assistance. Several markets (e.g. Australia, UK, Brazil)experienced a spectacular leap in turnover, ranging from +23% to +47%; and some markets, for which turnover isstill relatively small in absolute terms, witnessed even stronger growth. Although Europe contributes the most to Groupturnover, contribution from the Americas and the Asia Pacific region is increasing.Thanks to our ongoing claims control and cost containment policies, Group profitability posted a +48% increase toattain 23.1 million euros.
It is our people, the Group’s greatest asset, and their uncompromising professionalism and multiplicity of skills andtalent which produced these excellent results. By continually anticipating clients’ needs, and demonstrating solidarityand a sense of responsibility when faced with tremendous challenges, not only did Group results flourish in 2004,but its position was strongly reaffirmed as a reliable, caring and top quality leader in its field.
Editorial
Editorial
It is our people, our Group’s greatest asset and their uncom-promising professionalism and multiplicity of skills and talentwhich produced these excellent 2004 results.
”“
5
2005 outlook - sustainable growth
2005 should confirm recovery of the organised tourist industry; however, forecasts for growth in the global economyremain moderate. In this context and given our development capacity, we foresee steady growth of our traditionalbusiness lines. Faced with current demographic changes and more globally with increasing healthcare needs,Mondial Assistance Group intends to become a major player in this new activity. Emerging markets like China areexpected to be particularly dynamic in 2005.
Through the individual and collective efforts of our 7,590 staff members around the world, our human-friendly anddynamic Group will remain dedicated to its clients, partners and shareholders by offering excellent services, and thereby contributing in the best possible way to a healthier economic, social and ecological environment.
Zurich and Paris, April 25, 2005
Detlev Bremkamp Alain DemissyChairman of the Supervisory Board President of the Executive Committee
Worldwide Market Leader
Giving a helping hand through innovative and tailor-made solutions all over the world…
Mondial Assistance Group is the worldwide leader in assistanceservices and travel insurance. Through its international infrastructure, the Group not only provides its corporate clientsa round the wor ld w i t h e f f i c i en t , t a i l o r -made and innovative solutions, but it also offers seamless, personal, real-time assistance to its clients’ customers, anytime, anywhere.
Its international presence and global vision have never diminished the Group’s involvement on a local level, or itshuman dimension. Information, experience and resources areshared to create synergies and efficient operations at allstages of an intervention. Its business model is truly multi-locali.e. the Group’s organisation and offer are adapted to meetlocal needs. The Group’s international contracts for the automotive and tourism sectors perfectly illustrate this model:designed according to corporate client specifications, adapted to local country regulations and market conditions,
they facilitate integrated and cross border solutions. They alsomake it possible to coordinate and manage crisis situationsthousands of miles away.
People: Mondial Assistance Group’s core asset…The Group, which has been expanding internationally for thepast 50 years, now includes a staff of nearly 7,600 dedicatedemployees, spanning five continents, working in 33 operationcentres in 28 countries.Speaking over 40 languages and trained to deliver appro-priate solutions to clients 24 hours a day, 7 days a week, theGroup’s multi-professional staff unites diverse talents andexperiences including assistance coordinators, doctors, nurses, lawyers, network controllers, mechanics, IT professionals,psychologists and specialists in employment support. Theinternational network of 400,000 service providers, accessedby the staff, who work with the Mondial Assistance Group ona contractual basis, include such professionals as doctors,nurses, airline companies, plumbers, electricians, locksmiths,roadside repair agents, car rental agencies, and specialists inhome assistance and child care.
Each member of the Group is committed to the value of helpingothers and lives up to this caring commitment on a daily basisby offering personalised assistance: indeed, each case isunique and deserves to be treated with warmth, understandingand efficiency. Machines and technology support the staff butnever replace it!
The business model is trulymulti-local i.e. the Group’s organisat ion and offer are adapted to meet local needs.
“
Worldwide Market Leader:a reference in quality assistance services and travel insurance
6
”
Key figuresTurnover Operating result Net profit after tax
(Group Share)
23.5 24.2
44.6
1 008.0 995.5
1 099.7
Number of staff
70817506 7590
200
400
600
800
1000
1200
5
10
15
20
25
30
1500
3000
4500
6000
7500
9000
10
20
30
40
50
60
7
Up-to-date technological infrastructures for topquality performance…
Through its continual investment in new technologies, theGroup’s operational teams, whether they receive and handletelephone calls, process and redistribute information or physically intervene at a given site, dispose of a completerange of sophisticated, technological tools and state-of-the-artresources. Investing in these technologies, which include telematics, telemedicine, e-commerce and internet, locationvia GPS/GSM systems, cartography, and electronic transmissionof information, enables the Group to enter and expand inmarkets where services are directly linked to an increasinglymobile population. These tools accelerate the relay of information to service providers operating locally, therebyproviding interactive, flexible, safe and quality services in anycircumstance, in real time.
They also enable the Group to offer a wide range of state-of-the-art travel insurance, assistance and service solutions thereby responding to the changing and specific needs of corporate clients and their customers.
No situation will ever be too great, complex orunusual for the Group to resolve…
Ever attentive to socio-economic and cultural trends, as well asto local market specifications, Mondial Assistance Group continually develops diverse and innovative assistance, travelinsurance and service solutions for all kinds of situations,anywhere, anytime. The Group’s intervention after the tsunamiin South-East Asia, where it sent 20 doctors, repatriated 120injured people and “medicalised” the return home of some3,000 persons, is a clear example of a quick and efficient on-site intervention of its international and local teams. Anotherexample, much closer to home, is the recent, successful launch ofdomestic healthcare services, which make everyday life easier,particularly for the elderly and the physically dependant.
Lines of Business
Travel Insurance and medical assistanceTailor-made travel insurance packages which include medicalassistance and repatriation, itinerary planning and a crisishelp desk available 24/24.
Vehicle assistance and related servicesOn-the-spot roadside assistance, emergency repair, warrantyadministration, and telematics services.
No situation will ever be toogreat, complex or unusual for theGroup to resolve…
”“
Worldwide Market Leader
Domestic health care servicesTele-assistance services for the elderly, in-home temporarychild care, telemedicine services and health managementschemes focusing on solutions for illness prevention and per-sonal well-being.
Property assistanceAssistance in domestic catastrophes such as floods, fires orelectrical damage, home surveillance and protection, andmaintenance schemes for commercial outlets.
CRM and support servicesCustomer relations management, concierge services, andround-the-clock information call centres for public inquiriesregarding new laws, legislation or other public matters.
This look at the Group’s business lines and product offer is farfrom exhaustive. But it demonstrates the flexibility of MondialAssistance Group’s solutions, designed to help its corporateclients and their customers face any situation, simple or complex, anywhere in the world.
Acquiring new corporate clients and building theirloyalty …
Mondial Assistance Group has been actively developing closerelationships with some corporate clients for more than threedecades, and building lasting partnerships is one of its toppriorities. To do this, the Group has implemented a commercialstrategy based on four principles – seamlessness, transparency,tailor-made solutions and long-term commitment. As a result,clients who partnered with the Group 30 years ago areenjoying the long-term benefits of this commitment.
Assistance, travel insurance and service solutions are recognisedas an integral part of our clients’ individual businesses.Solutions are tailor-made, designed with the client’s corporateculture in mind, created and developed together, integratingthe specific and evolving needs of the client’s customers.
Where advantageous to the client, the Group remains invisible, responding in the name of and on behalf of the client.However, the Group can also appear as the of f icial service provider, if this is in the client’s best interest and if regulations so require.
This flexible approach has proven to be highly successful inbuilding loyalty between both corporate clients and their customers, and Mondial Assistance Group and its corporateclients.
This strategic and geographical accompaniment is a fundamental principle on which all long-term partnerships arefounded. It is in this spirit of partnership that MondialAssistance Group looks to build a sustainable, successful future for its clients, their customers and for all its stakeholders.
8
A commercial strategy based onfour principles: seamlessness,transparency, tailor-made solutionsand long-term commitment.
“”
Each case is unique anddeserves to be treated withwarmth, understanding andefficiency.
”“
9
A worldwide network:
33 operation centres in 28 countries
7,600 dedicated employees
400,000 service providers
speaking over 40 languages
delivering 1 intervention every 3 seconds
24 hours a day, 365 days a year
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AFRICAMoroccoReunion Island
THE AMERICASArgentinaBrazilCanadaChileUnited States
Countries with a Group subsidiary
Countries with a commercial Group activity
International presence
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ASIAChinaJapanSingaporeThailand
AustriaBelgiumCzech RepublicFranceGermanyGreeceIrelandItalyPoland
PortugalRussiaSlovak RepublicSpainSwitzerlandThe NetherlandsTurkeyUnited Kingdom
Baltic countriesBulgaria
CroatiaDenmarkFinlandHungaryLebanon
NorwaySloveniaSwedenUkraineUzbekistan
EUROPE
AUSTRALIA
International brands
Region by region
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Subsidiaries continued to benefit from Groupsynergies and accelerated their development inmost markets. The Group's dynamic sales strategypromoted overall growth. Healthcare services,launched at end 2003, got a big boost. 2004 alsowas the year of the Group's first evaluation of 800 clinics and hospitals in 108 countries.Business units worldwide furthered investments ininformation technology and witnessed flourishinge-commerce solutions.
ASIA-PACIFICTeamwork and commitment
The Group, which has five operations in the Asia Pacificregion – Australia, China, Japan, Singapore and Thailand,has developed significantly in the region. Tangible proof ofthis was demonstrated by how quickly and efficiently localsubsidiaries contributed to relief efforts in the wake of theDecember 2004 Tsunami disaster.
Market boom in Australia
Our Australian business enjoyed consistent growth throughout2004. Travel insurance and student healthcare services primarily generated this growth, with e-commerce sales alsocontributing to its overall strong performance. From relativelylimited turnover in 2003, e-commerce sales increased signifi-cantly in 2004. In response to this expanded business,Australia completely reorganised its internal platforms, thereby greatly enhancing its visibility and control of key deliverables.
First local contracts signed in China
2004 was also a very important year for the Group’s fledglingoperation in China. Providing roadside assistance in such a far-reaching and virtually undeveloped environment is challenging, and much of the year was spent developing theinternal and external infrastructures to support these services.Our Chinese operation saw the first tangible results of itsefforts in 2004 with the signing of several local contracts.
Focus on customer base in Japan
Our Japanese entity is currently reinforcing its efforts to ensurethat it secures a solid foothold in this major market in the nearfuture by developing a strong client and end customer base.
Thailand and Singapore develop core operations
Mondial Assistance Thailand emerged from a start-up operationto register encouraging growth in 2004 in both travel insuranceand roadside assistance services. A small operation,Singapore serves the Japanese and Malaysian businesses, aswell as regional and exclusively local accounts.
AFRICA & THE INDIAN OCEAN Healthcare services developed in Reunion Islandand Morocco
The Group’s Reunion Island operation developed a compre-hensive claims management platform for a major bank-insurerclient. It also worked closely with local authorities, exploringthe possibility to offer customers a range of healthcare services, and reinforced tele-assistance services for senior citizens. Due to the closing of the Group’s Mauritius entity mid2004, all Mauritius travel contracts were transferred to
Business units around theworld continued to develop value-added healthcare and domestichealth services.
“”
Region by region
13
nearby Reunion Island. In Morocco, a new contract withgovernment authorities was established which led to increaseddevelopment of its healthcare services offer.
NORTH AMERICAE-technology key growth driver across all segments in the United States
2004 was the strongest year ever for World Access, our U.S.based company. With development in all core markets, itcontinued to post double-digit growth in all major businesslines. E-commerce evolved as the dominant sales method intravel markets, while e-service and e-claims transactions grewacross all segments. World Access launched state-of-the-art,web-based business applications for CRM, Claims, Financialsand HR for both the U.S. and Canada, and created dedicatedteams to promote growth in health care, travel insurance andspecialty markets.
Confident travellers help build Canadian insurancebusiness
2004 proved to be a banner year for travel in Canada, and ourCanadian subsidiary reaped the rewards. The number ofCanadians travelling outside their own provinces progressedthroughout the year, and was supported by the rising value of theCanadian dollar and a better sense of security.The entity impro-ved growth and profitability by expanding its partnerships andproduct offer, and by focusing on the existing client portfolio.By establishing a partnership with a middleware Company,
World Access Canada was able to venture into a new distri-bution channel, and integrate its travel insurance productsdirectly to insurance brokers and their customers through aneasy-to-use online portal.
SOUTH AMERICA Exceptional growth and innovative offers markBrazil’s 2004 performance
Mondial Assistance Brazil delivered outstanding performancein 2004. This unit realised an increase of its annual sales of42% by adding new services to its product offer, maintaininga superior quality of the services it provides, and introducingtechnological innovations. It also implemented two newtechnology-based services: GPS tow-truck tracking and SMSnotification to the insurance broker or agent as soon as a customer requests assistance. Mondial Assistance Brazil alsoevolved toward activity diversification with a new medicalassessment service, which helps life insurance companies intheir risk management.
Cost containment and new client outreach produceexcellent results in Chile
Mondial Assistance Chile buoyed by a strong local economyand a stable political and social situation, achieved excellentresults in 2004 thanks to rigorous cost containment and thesigning of major new agreements. The entity is well placedtoday to confirm its leadership position as a full-range assis-tance service provider in an increasingly competitive market.
THE NEAR MIDDLE EASTReinforcing local partnerships and client loyalty
In 2004, turnover in the Near Middle-East, comprised ofLebanon, Jordan and Egypt increased due to the nurturingand reinforcement of ongoing assistance partnerships. TheGroup signed new contracts with clients in Lebanon, Jordanand Syria.
2004 also was the year of the Group's first evaluation of800 cl inics and hospitals in 108 countries. ”
“
Region by region
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CENTRAL EUROPE All entities strive to optimise operational platforms and buildnew client partnerships, with successful developments inthe healthcare, financial, automotive and travel industries.
2004 Group activities in the region, which encompasses alarge number of countries including Austria, the Czech andSlovak Republics, Slovenia, Croatia, Hungary, Romania,Russia, Poland and Bulgaria, reported excellent performances.The entry into the European Union of Poland, the CzechRepublic, Slovenia and Hungry changed numerous legal regu-lations. And the creation and implementation of a Polish branchoffice enabled a major transfer of skills and knowledge, incitingour clients’ praise and appreciation.
Our Polish entity launcheda new health informationassistance service forhospital networks, andsigned partnerships withmajor financial institu-tions. Slovenia, Bulgariaand Croatia reinforcedtheir local partnershipswith banking and insu-rance clients. Our business prosperedin the Czech Republic
due to product diversification and new partnership agree-ments signed with automotive and leasing customers. The Group also carried out a health-service survey inSlovakia and the Czech Republic in order to assess customers’needs resulting from the countries’ new health reforms, andto subsequently design innovative products to meet theseneeds. New contracts with Russian Insurers and TourOperators reinforced the Group’s market diversificationthere. Turnover significantly increased in Austria, wherethe Rehacare concept, an important range of healthcare services was launched.
NORTHERN EUROPE Travel insurance recovers while region promotes e-commerce solutions
In this region, which includes Switzerland, Germany, Belgium,the Netherlands, the U.K., Ireland and the Nordic countries,the tourism industry slightly recovered in 2004 although theglobal economic situation remained uncertain. As a result, theoverall travel insurance business recovered and several newdistribution channels were opened in Germany andSwitzerland. Entities promoted and developed e-commercesolutions throughout the region.
Belgium and the Netherlands focus on client portfolio management and the development of e-services
Our Belgian subsidiary pursued its strategy of client portfoliomanagement and adapted many products to meet the needsof its clients, particularly in the banking sector. As a result, itachieved a good performance in assistance services. For thefirst time it also offered its clients the possibility to declare theirclaims online. The Netherlands, however, still suffered from a sluggish economic situation. Although this affected travelinsurance sales, it did not stop our Dutch entity from developingspecifically designed extranets for its different partners andclients. Their assistance portfolio has grown both with insurersand within the automotive industry.
Germany builds sales by launching new assistanceproducts and expanding distribution channels
Germany successfully launched a new accident insurancesolution for seniors as well as a disease management productfor customers with diabetes. It also launched a stand-alonehome assistance product offering emergency repair services.Overall turnover increased, especially in travel insurancewhich took advantage of the recovering German tourist industry.New distribution channels such as hotels and e-commercesolutions were launched, via travel providers and low-cost airlines.An annual travel insurance product was also introduced andproved successful among corporate clients and their customers.
New and renewed contracts combined with innovative technology promote strong performancein the UK
Our UK entity strongly performed in the travel insurance busi-ness with the signing of a major contract with a bank insurer,and by renewing a successful contract with a major low-costairline. It also introduced an innovative technology for thedeaf and hearing impaired. Mondial Assistance UK investedin roadside assistance solutions as well. As a result, the UK turnover increased significantly and the country is the secondlargest contributor (after France) to Group turnover. In Ireland,motor assistance services to leading car manufacturers wererenewed and preparations for the development of new business lines were made.
Swiss and Northern European entities reinforcepresence in automotive sector
In Switzerland the number of roadside assistance cases stronglyincreased, due to several new contracts with automobileimporters. The Swiss entity also introduced an annual travelinsurance product and launched two new distribution channels: autility company for home assistance and hotels for travel insurance.
15
The Group increased its market share in the Nordic countriesthrough pan-European automobile manufacturer contracts,and by selling travel insurance products online through low-cost airlines.
MEDITERRANEAN EUROPE With a stronger offer in healthcare, e-commerce, auto-motive partnerships and new services, Group entities -France, Greece, Italy, Portugal, Spain and Turkey - in thisregion performed well in 2004.
French entities register steady growth
France posted strong growth in all business lines and companiesin 2004, and continued to apply strict cost containment measures.Regulations for the French insurance industry changed in 2004,resulting in a separation of the service and insurance activities,and requiring that all processes be adapted accordingly.In the automotive and insurance sectors, we renewed majorcontracts for longer periods, thereby confirming our clients’ trustin us and their desire to be our partners. Mondial AssistanceFrance again proved its innovation capacities through the launchof a retirement service, car warranty assistance for insurers andnew health services. E-commerce flourished in the travel sectorwhere Elvia France launched on-line subscriber services for individuals. France Secours developed new services for mutualinsurance companies, signed new contracts with long and short-term rental car companies, and began commercialisingspecific telematics solutions for automotive manufacturers. Our French tele-assistance and tele-security activities alsoregistered steady growth.
Enhanced healthcare services and e-commercebolster sales in Italy
Our Italian business unit posted very strong turnover growthand exceeded its sales objectives, mainly due to on-line travelinsurance products. It expanded its healthcare offer by launchingtele-assistance and tele-medicine for those recovering after anaccident. And the unit’s e-commerce business accelerated whennew contracts were signed with tour operators and low-cost airlines.
Travel assistance drives development in Spain
Spain also posted strong growth in its traditional business,particularly in travel assistance. Together with a long time travelpartner, a new range of travel protection products was designedand launched for different market segments. The companyalso created a new business model for the launch of its healthassistance services and finished preparations for their implementation in 2005.
Portuguese business expands with new clients andservices across all sectors
Our Portuguese entity showed strong growth in the insuranceand automotive sectors thanks to both new client wins andproduct innovation. New assistance services such as a secondmedical opinion and medical orientation were launched. Inaddition, the company successfully introduced property assistance.
Focus on automotive partnerships consolidatesGreek market presence
Our Greek entity consolidated its market position and pursuedits developments with new partners, especially in the automotivesector. The subsidiary also initiated business in Cyprus, parti-cularly with automotive and travel insurance offers.
CRM development in Turkey
The Turkish market, although still suffering from terroristactions, is developing quickly. A key development area for theTurkish entity was its CRM service offer.
All in all, 2004 was a good year for almost all our worldwideentities which consolidated their developments, especially inhealthcare services. This allowed the Group to reinforce itsposition as global market leader and is an excellent basis tocontinue its growth.
Subsidiaries continued tobenefit from Group synergiesand accelerated their develop-ment in most markets.
”“
Group structure
16
17
Group structure
Holding ELMONDA
Supervisory BoardChairman: Detlev Bremkamp
Delegate Vice-President: François Thomazeau
Members: Thomas Pleines
K. Walter Gutberlet
Share capital: CHF 40,000,000Year of legal foundation: 1999
Executive Committee of the Group
President: Alain Demissy
Members: Ida Luka-Lognoné
Didier Lebret
Jonathan Ansell
Karl-Heinz Jung
Review of Operations
18
Review of Operations for the year 2004
Annual Closing December 31st, 2004: consolidated accounts
Turnover (Premium and Service Revenue)
Mondial Assistance Group's strong growth in turnover of 10.5% (turnover written gross, both insurance premiumsand service fees) to 1,099.7 million euros throughout thetwelve-month period ended on December 31st, 2004,was strongly influenced by more favorable conditions for thetwo main lines of business, travel insurance and automobile assistance. Travel insurance turnover was boosted by 9% and reached ashare of 46% of total turnover. This development was due tothe comeback of the tourism sector to normal, at least prior tothe Tsunami in Asia on December 26, and the notably stronggrowth in Australia. In an environment of almost stagnant new vehicle sales (worldautomobile market +3% in 2004), the need for sophisticatedautomobile assistance led to a growth of turnover of 19% anda share of 43% of total turnover. The third line of business, healthcare services, which was launched in 2003, was further developed and increased itsturnover by 50%.
Geographically speaking, turnover development was particu-larly strong in certain markets. From a regional perspective,growth was registered throughout all regions. The Asia-Pacificregion contributed to overall turnover growth with an increa-se of 24% with respect to 2003, the Americas with +10%,Europe (excluding France) with +13% and France with anincrease of more than 7%.
Fluctuation of currency exchange rates impacted the Group’sturnover also in 2004, resulting in a net decrease of 7.9 millioneuros (stemming from fluctuations of the US dollar, theBrazilian real and the Brit ish pound), compared to a hypothetical situation at constant exchange rates of 2003.
Claims and Expenses
The claims ratio (including claims administration costs, net ofre-insurance) in the insurance business improved to 61.6%(2003: 63.2%), while the claims reserves were up by 13.5%to 126.3 million euros.The impact of the Tsunami disaster on December 26, 2004 ledto claims in Mondial Assistance Group’s retention of 2.7 millioneuros (estimated gross claims before reinsurance amounted to7.0 million euros) for the financial year 2004. Compared to 2003, Mondial Assistance Group’s reportedglobal commission ratio (gross of reinsurance) slightly increasedto 17.2% (both for insurance as well as for service activities). General expenses increased by 5.7% to 409 million euros(2003: 388 million euros). The operating entities succeeded inefficiently retaining control of the expenses despite the stronggrowth of turnover. Thanks to the strong premium increase, the favorable development of the claims, commissions and expenses led to an improved combined ratio of 95.8%(previous year: 97.5%; -1.7 points).
Investments and financial results
On December 31st, 2004 the Group's financial investmentsamounted to 467.2 million euros (2003: 418.6 million euros).The cash and cash equivalents could be successfully reducedto 136 million euros (2003: 173 million euros; - 21.5%), but are considered still relatively high. In 2004, almostall shares in the portfolio were sold in order to further reducethe investment risk. Ordinary investment income increased to 18.4 million euros(2003: 14.0 million euros) as interest rates in the marketsrecovered slightly and due to the higher investment portfolioon fixed interest securities and short term deposits. The sale ofMondial Assistance Group's participation in a French subsi-diary is the main reason for a decrease of the realized result.In addition, the US dollar was further devalued against theeuro. In total, the described effects reduced the financial resultto 10.1 million euros (2003: 16.9 million euros).
19
Result before and after tax, and return on equity
The strong increase of the earned turnover net (+10.2%), animproved administration expenses ratio and the controlledclaims and commissions ratio resulted in almost doubling thenet operating result to 44.6 million euros (2003: 24.2 millioneuros, +84%). Including the lower financial result and theexceptional result of 3.2 million euros (2003: 3.9 millioneuros), profit before taxes attained 51.5 million euros (2003:37.2 million euros, +38.4%). Deducting the high taxes on profitsof 27.8 million euros (previous year: 20.4 million euros),which included exceptional non-recurrent items, profit aftertaxes were increased to 23.1 million euros, compared to previous year’s 15.6 million euros (+48%).
Correspondingly, the return on equity throughout the twelve-month period ended on December 31st, 2004, was substantial-ly increased to 8.7% from 6.0% in 2003 (+45%).
Changes in Group structure
Several changes of the Group structure - such as the creationof new companies, mergers among Group companies or holdings, the sale or closing of companies - have taken placeor been initiated in 2004. Details of the operations can befound in the chapter “Notes to the consolidated financial statements”, starting on page 23 of this report.
The Group’s strong growthin turnover of 10.5%, was stronglyinfluenced by more favorableconditions for the two main linesof business, travel insurance andautomobile assistance. ”
“
Financial Statements
20
Financial StatementsConsolidated Income Statement of Mondial Assistance Group for the Financial Year 2004
in thousand EUR 2004 2004 2004 2003 2003Gross Ceded For own account Gross For own account
INSURANCE AND ASSISTANCE BUSINESSTotal Turnover (Premiums and Service revenue) 1 099 713 15 151 1 084 562 995 487 974 161
Written premiums 900 466 15 151 885 315 820 185 798 859Unearned premium reserve change (25 422) (3 553) (21 869) (10 621) (12 709)Earned premiums 875 044 11 598 863 446 809 564 786 150Claims paid current year (323 679) (4 874) (318 805) (307 344) (302 197)Transferred claims administration expenses (ICHC) CY (119 984) (119 984) (112 798) (112 798)Change in current year reserves (101 275) (8 216) (93 059) (99 408) (98 438)Claims incurred current year (544 938) (13 090) (531 848) (519 550) (513 433)Claims paid previous year (64 117) (1 931) (62 186) (51 327) (45 017)Transferred claims administration expenses (ICHC) PY (7 543) (7 543) (6 247) (6 247)Change in previous year reserves 90 590 3 156 87 434 96 074 90 681Claims incurred previous year 18 930 1 225 17 705 38 500 39 417Other technical income / expenses (17 940) (487) (17 453) (22 984) (22 586)Total Claims (543 948) (12 352) (531 596) (504 034) (496 602)Commission paid (Insurance Business) (164 270) (964) (163 306) (149 233) (143 631)Insurance Margin 166 826 (1 718) 168 544 156 297 145 917Service revenue 199 247 175 302Service income deferred change (1 770) 842Service revenue earned 197 477 176 144Other service income / expenses (20 422) (11 087)Commission paid (Service Business) (19 928) (18 215)Transferred service administration expenses (ISHC) (109 172) (74 194)Service Margin 47 955 72 648Staff costs (258 433) (242 901)Employee participation (3 501) (3 322)IT costs (11 319) (9 624)Telecommunication costs (13 072) (13 587)Fees for group services (1 379) (1 318)Other administration costs (120 936) (116 871)Transfer of ICHC and ISHC 236 699 193 239General Expenses after Transfer (171 941) (194 384)Operating Result 44 558 24 181
FINANCIAL OPERATIONSIncome 21 093 17 553Charges (2 648) (3 550)Ordinary result 18 445 14 003Realised gains 3 399 11 643Realised losses (14 933) (15 040)Realised result (11 534) (3 397)Accounting profits and write-ups 6 088 10 162Accounting losses and write-offs (17) (3 987)Accountancy result 6 071 6 175Exchange rate fluctuation gains 22 748 20 673Exchange rate fluctuation losses (25 628) (20 527)Exchange rate result (2 880) 146Financial Result 10 102 16 927Depreciation on intangible assets (3 343) (3 993)Other income 136 208Other expenses (2) (155)Result before Tax 51 451 37 168Taxes (27 847) (20 384)Result after Tax 23 604 16 784Minority interest in the results (483) (1 166)Group Result 23 121 15 618
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Financial StatementsConsolidated Balance Sheet of Mondial Assistance Group on December 31st, 2004
in thousand EUR 2004 2003ASSETSOutstanding contribution on capital 245 296Goodwill 14 851 18 652Other intangible assets 17 142 13 923Intangible Assets 32 238 32 871Land and buildings 7 914 10 495Other tangible assets 38 061 41 678Tangible Assets 45 975 52 173Shares 20 18 405Fixed-interest securities 400 685 343 374Other Investments 60 247 49 896Securities - available for sale 460 952 411 675Participations 2 722 2 756Mortgages 121 120Loans 3 411 4 014Mortgages and Loans 3 532 4 134Investments 467 206 418 565Accounts receivable - direct business 70 036 72 518Accounts receivable - indirect business 38 458 39 064Accounts receivable from associated companies - current accounts 5 348 5 502Other accounts receivable 115 049 111 550Accounts Receivable 228 891 228 634Deferred acquisition costs 20 286 19 689Cash and Cash equivalents 135 859 173 183Reinsurance deposit 20 983 18 867Other deposits 1 677 2 068Other Assets 22 660 20 935Accrued interest 7 307 6 028Other (prepayments and accrued income) 23 422 18 123Accruals & prepayments 30 729 24 151Deferred taxes - assets 22 802 23 608Total Assets 1 006 646 993 809
SHAREHOLDERS’ EQUITY AND LIABILITIES 2004 2003Share capital 25 509 25 509Additional paid in capital 30 633 30 633Other reserves 189 864 194 147Retained earnings (1 094) (2 254)Net profit for the financial year 23 121 15 618Shareholders’ equity 268 033 263 653Minority interest in shareholders’s equity 4 243 3 863Unearned premium reserves 295 369 265 085Claim reserves 126 259 111 213Other technical provisions 35 647 34 553Technical provisions 457 275 410 851Personnel provisions and similar liabilities 27 671 26 140Provision for income taxes 15 660 17 740Other non-technical provisions 11 955 12 193Non-technical provisions 55 286 56 073Deposits received from reinsurers 2 163 2 274Loans 7 228 11 047Liabilities - direct business 9 554 8 272Liabilities - indirect business 6 435 11 127Liabilities to associated companies - current accounts 1 829 2 577Other liabilities 147 318 179 689Deferred income and deferred service income 25 765 20 504Other liabilities 200 292 235 490Deferred taxes - liabilities 21 517 23 879Total liabilities 738 613 730 156Total shareholders’ equity and liabilities 1 006 646 993 809
Financial Statements
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Financial StatementsCash Flow Statement of Mondial Assistance Group for the Financial Year 2004
in thousand EUR 2004 2003
Net result of the period 23 121 15 618Change in unearned premiums reserve 32 614 3 124Change in claims and claim handling costs 15 046 5 044Change in other technical reserves 1 094 12 300Change in deferred acquisition costs (596) (635)Change in deposits held by others under reinsurance business assumed (2 116) (907)Change in deposits held under reinsurance business ceded (111) 1 871Change in accounts receivable / payable on reinsurance business (4 086) (8 965)Change in loans and advances to banks and customers 603 (599)Change in liabilities to banks and customers 477 (4 325)Change in other receivables and liabilities (37 783) 40 557Change in deferred tax assets / liabilities (2 501) 5 263Adjustments to reconcile amortization of goodwill 2 577 2 317Depreciations 10 370 2 099Other (1 938) 147Cash flow from operating activities 36 771 72 909
Change in securities available for sale* (45 082) (5 388)Change in real estate 3 018 5 409Change in other investments 254 (267)Change in cash and cash equivalents from the acquisition of cons. affiliated companies 34 (2 521)Other (11 059) (2 178)Cash flow from investing activities (52 835) (4 945)
Cash inflow from capital increases 51 0Dividend payouts (19 946) (8 432)Other from shareholder equity and minority interests (1 365) (8 485)Cash flow from financing activities (21 260) (16 917)
Change in cash and cash equivalents (37 324) 51 047Cash and cash equivalents at beginning of period 173 183 122 136Cash and cash equivalents at end of period 135 859 173 183
* including unrealised loss/gain reserves on investments available for sale
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Consolidation scope
The consolidated financial statements of Mondial AssistanceGroup comprise the annual accounts of Elmonda and its subsidiaries, which are prepared in accordance withthe accounting and valuation principles of the MondialAssistance Group. Consolidated subsidiaries are listedfurther in the notes to the consolidated financial statements.
Due to legal requirements in France in the year 2004, two newinsurance companies for assistance activities were founded:Fragonard Assurance S.A. and FS2A S.A. The new companieswill take over the insurance business from Mondial AssistanceFrance S.A. and France Secours International Assistance. The holding company Sacnas Développement S.A., France,merged with Sacnas International S.A., France. ElucydéeS.A., France, was sold on June 30th, 2004.Elvia Travel Insurance International N.V., Netherlands, incorporated a new branch in the United Kingdom.On Mauritius Island, the operation of Mascareignes ServicesAssistance has been closed down and is in liquidation. In Argentina, the company Mercosul Argentina SA ceased itsoperations at the end of the year. In Germany, Mondial Assistance Holding Deutschland,Munich and Mondial Service GmbH, Wiesbaden merged intoMondial Assistance Germany GmbH, Munich.
Consolidation principles
Subsidiaries have been recorded according to the full consolidation method when subject to the majority control ofthe Mondial Assistance Group. All intra-group transactions andbalances have been eliminated.
Interests in joint ventures are recognised by including theaccounts using the proportionate consolidation basis, i.e. byincluding in the accounts under the appropriate financial statement headings the Group's proportion of the joint venturerevenues, costs, assets and liabilities.
Equity investments in which the Mondial Assistance Groupowns at least 20% of the voting rights are accounted for usingthe equity method, except for investments in which theMondial Assistance Group is not able to exercise significantinfluence, in which case, the cost method is used.Investments in which the company owns less than 20%, areaccounted for under the cost method.
The equity and net income attributable to minority shareholders'interests are disclosed separately in the balance sheet andincome statement respectively.
The purchase method of accounting is used for acquiredbusinesses. Companies acquired or disposed of during theyear are included in the consolidated financial statements fromthe date of acquisition or to the date of disposal respectively.
Notes to the consolidated financial statements of Mondial Assistance Group
Notes to the consolidated financial statements
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Foreign currency translation
The Group’s reporting currency is the euro (€). Foreign currency is translated by the method of functional currency. The functional currency for Group companies is always thenational currency, i.e. the prevailing currency in the environmentwhere the enterprise carries on its ordinary activities. In accordance with the method of functional currency, assetsand liabilities are translated at the closing rate on the balancesheet date and expenses and income are translated at theannual average rate in all financial statements of subsidiariesnot reporting in euros. Any translation differences, includingthose arising in the process of equity consolidation, are takento shareholders’ equity without affecting earnings.
Accounting and valuation policies
Information on assetsIntangible assets
Intangible assets include Goodwill and other intangible assetssuch as exclusivity fees and software purchased from others ordeveloped in-house.
Goodwill represents the difference between the purchase price of subsidiaries and the proportionate share of their net assets valued
at the current value of all assets and liabilities at the time ofacquisition. Goodwill is recognised as an asset in the balance sheet.
Intangible assets are measured initially at cost and are recognised if it is probable that the future economic benefitsthat are attributable to the asset will flow to the Group, and thecost of the asset can be measured reliably.
After initial recognition, intangible assets are measured atcost less accumulated amortisation and any accumulatedimpairment losses.Goodwill and other intangible assets are amortised using thestraight-line method over their estimated period of benefit,being 10 years for Goodwill and the estimated useful life forSoftware, with a maximum of 5 years. The Mondial AssistanceGroup periodically evaluates the recoverability of Goodwilland takes into account events or circumstances that warrantrevised estimates of useful lives or that indicate the existenceof an impairment.
Tangible assetsTangible assets include property and other tangible assetssuch as equipment.
Property used for its own use and equipment is stated at cost anddepreciated using the straight-line method over the shorter of theestimated life of the asset or the lease term. Land is depreciatedover 100 years, land and building combined over 50 years andother tangible assets included under the heading “Other assets”over a period of their estimated useful life at the date of purchase.
The Group recognises finance leases as assets and liabilitiesin the balance sheets at amounts equal at the inception of thelease to the fair value of the leased property. Initial direct costsincurred are included as part of the asset. Lease payments areapportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated toperiods during the lease term so as to produce a constant
Exchange rates of principal currencies(against 1 euro) 2004 2003
Balance Sheet Income Statement Balance Sheet Income Statementyear end rate average rate year end rate average rate
Australia (AUD) 1.7489 1.6904 1.6788 1.7402Japan (JPY) 139.8300 134.4559 134.8500 131.0988Brazil (BRL) 3.6206 3.6279 3.6439 3.5184United Kingdom (GBP) 0.7071 0.6787 0.7070 0.6924Switzerland (CHF) 1.5437 1.5660 1.5590 1.5211USA (USD) 1.3640 1.2438 1.2610 1.1321
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periodic rate of interest on the remaining balance of the liability for each period.A finance lease gives rise to depreciation expense for the assetas well as a finance expense for each accounting period. Thedepreciation policy for leased assets is consistent with that forother depreciable assets.
InvestmentsInvestments include securities available for sale, participations,mortgages and loans.
Securities available for sale are accounted for at fair value.Positive and negative differences between market value andcost or amortised cost are included in a separate componentof shareholders’ equity, net of deferred tax. Realised gainsand losses are principally determined by applying the averagecost method.
Accounts receivableThe accounts receivable are carried at nominal value less anynecessary value adjustment.
Deferred acquisition costsDeferred acquisition costs, which are incurred in connectionwith the acquisition or renewal of insurance policies, are capitalised and amortised through the income statement overthe term of the policies.
Cash and cash equivalents This item includes balances with banks payable on demand,cash on hand and bank deposits with a maturity of threemonths or less at the date of purchase.
The carrying amount of cash with banks and cash on handcorresponds to the fair value. Cash funds are stated at theirface value, with holdings of foreign notes and coins valued atyear-end closing.
Deferred tax assetsThe calculation of deferred tax is based on temporary differences between the carrying amounts of assets or liabilitiesin the published balance sheet and their tax basis, and on differences arising from the application of uniform valuationpolicies for consolidation purposes. The tax rates used for thecalculation of deferred taxes are the local rates applicable inthe countries concerned. Anticipated changes are alreadytaken into account as at balance sheet date.
Supplementary information on assetsImpairment of assetsAll assets are reviewed regularly to ensure that no furthervalue adjustments are required. Valuation write-downs arecharged to the income statement if any permanent diminutionin value is identified. Write-downs are based on the relevantestimated recoverable amounts.
Accounting for operating leasesAccounting for equipment and vehicles under operatingleases, whereby the risks and benefits relating to ownership ofthe assets remain with the lessor, are not recorded in thebalance sheet and all related expenses are accounted for inthe income statement in the period they arise.
Notes to the consolidated financial statements
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Information on liabilitiesTechnical provisionsTechnical provisions include unearned premium reserves,claim reserves and other technical provisions.
Premiums written attributable to income of future periods areaccrued under unearned premium reserves. These premiumsare distributed to the current fiscal year and subsequent yearsover the period of the contract for every day that the premiumhas to cover.
Claim reserves are assessed according to local supervisory instances’ requirements, are computed on a case by casebasis and are supplemented by IBNR reserves (reserves forclaims Incurred But Not yet Reported) based on managementand statistical estimates.
Non-technical provisionsThese include personnel provisions and similar liabilities, provision for income taxes and other non-technical provisions.
Pension and similar reserves are calculated taking local circumstances into account as well as expected future trends insalaries and wages, retirement rates and pension increases.
Defined benefit plans are recognised under IAS 19, using the method of accruing actuarial gains and losses.
Provision for income taxes are calculated in accordance withthe relevant local tax regulations.
Other liabilities Other liabilities include deposits received from reinsurers,loans, liabilities direct /indirect business, liabilities with associated companies (current accounts), deferred income,deferred service income and other liabilities. These are reportedat fair value.
Deferred tax liabilitiesThe calculation of deferred tax is based on temporary differences between the carrying amounts of assets or liabilitiesin the published balance sheet and their tax basis, and on differences arising from the application of uniform valuationpolicies for consolidation purposes. The tax rates used for thecalculation of deferred taxes are the local rates applicable inthe countries concerned. Anticipated changes are alreadytaken into account as at balance sheet date.
Information on income statementTurnover Turnover includes insurance premiums and service revenue.
Premiums earnedPremiums written for travel insurance are reported proportio-nately as income over the term of the insurance contract for
every day that the premium has to cover. Unearned premiumsare calculated separately for each policy in order to determinethe portion of premium income that has not been earned.
Claims and service administration expenses(ICHC / ISHC)Claims and service handling costs are assessed according tobusiness management criteria and transferred from the generalexpenses to the claims and service administration expenses,respectively.
Ordinary resultInterest income and interest expenses are recognised on anaccrual basis. Dividends are recognised as income whenreceived. Interest on finance leases is recognised as interestexpenses over the term of the respective lease.
Income TaxesIncome tax expense includes current income taxes and deferredincome taxes. Certain items of income and expense are notreported in tax returns and financial statements in the sameyear. The tax effect of these timing differences is booked asdeferred taxes.
Explanation of the accounting and valuation policies differing from Swiss lawThe most important differences are summarised below.
Shareholders’ equityShareholders’ equity increases overall because investmentsavailable for sale are shown in the balance sheet at marketvalue with the unrealised gains / losses being included underother reserves.
Claim equalisation reservesClaim equalisation reserves and major risk reserves are notallowed under Mondial Assistance Group accounting policybecause they do not represent a present obligation towardthird parties.
Claims reservesClaims reserves tend to be somewhat lower under MondialAssistance Group accounting policy because they are not calculated in accordance with the prudence concept but at thebest estimate of the ultimate cost.
Acquisition costsUnder Mondial Assistance Group accounting policy acquisitioncosts are capitalised and amortised over the term of policy.
GoodwillGoodwill is amortised through income over its estimated useful life under Mondial Assistance Group accounting policy,but not exceeding 10 years.
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Notes to the consolidated financial statements
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Notes to the consolidated financial statements
Valuation reserve securities
in thousand EUR 2004 2003
For comparative information purposes the following has been provided:Fixed-income securities and other investments,Book value (in line with year 2001 valuation principles) 452 391 387 504Market value (as per current year valuation principles) 460 931 393 270Revaluation reserve 8 540 5 766
SharesBook value (in line with year 2001 valuation principles) 16 18 387Market value (as per current year valuation principles) 20 18 405Revaluation reserve 4 18
Intangible and tangible assets
in thousand EUR intangible assets tangible assets real estate Total
Balance value on December 31st, 2003 32 575 41 678 10 495 84 748Exchange rate change (1 140) (221) 0 (1 361)Balance value on January 1st, 2004 31 435 41 457 10 495 83 387
Increase 11 769 22 878 0 34 647Change scope of consolidation 357 (772) 0 (415)Decrease (2 086) (15 850) (3 018) (20 954)Depreciations (9 482) (9 652) 437 (18 697)Balance value on December 31st, 2004 31 993 38 061 7 914 77 968
Real Estate
The capitalised cost of buildings is calculated on the basis of acquisition cost and depreciation over a maximum of 50 years inaccordance with the useful life of the real estate. The gross capitalised values totalled 21.376 million euros at the beginning ofthe year and 18.357 million euros at the end of the year. Accumulated depreciation amounted to 10.881 million euros at thebeginning of the year and 10.443 million euros at the end of the year. No unscheduled depreciation was recorded in 2004.
Tangible Assets
Tangible assets such as equipment, vehicles and hardware are depreciated over 3 to 10 years according to their useful lifes. Thegross capitalised values totalled 106.598 million euros at the beginning of the year and 109.041 million euros at the end of theyear. Accumulated depreciation amounted to 64.918 million euros at the beginning of the year and 69.980 million euros at theend of the year. Expenditures to restore the future economic benefits from the assets are capitalised if they extend the useful life of the asset, otherwise they are recognised as an expense.
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Notes to the consolidated financial statements
Changes in the consolidated shareholders’ equity
in thousand EUR 2004 2003Shareholders’ equity on January 1st 263 653 254 380Exchange rate differences 850 (5 380)Net profit for the financial year 23 121 15 618Elimination of excess reserves - -Unrealised gain reserves on afs investments 1 959 (3 550)Unrealised loss reserves on afs investments 1 138 5 303Dividends to shareholders (20 432) (7 988)Others (2 256) 5 270Shareholders’ equity on December 31st 268 033 263 653
Disclosures of Article 663 a/b CO, supplemented by voluntary information
in thousand EUR if not otherwise indicated 2004 20031. Contingent liabilities 48 335 34 7532. Assets pledged as security for own obligations 129 1293. Leasing obligations 98 329 81 3224. Fire insurance value for tangible assets 76 400 84 181
5. Participations with at least 20% of voting rights or capital share
EUROPE 2004 2003AustriaELVIA Assistance GmbH, Vienna Share capital in ATS 15 000 000 15 000 000Purpose: Assistance and services Share 100% 100%BelgiumSociété Belge d’Assistance Internationale S.A., Bruxelles Share capital in EUR 7 709 000 7 709 000Purpose: Insurance Share 94.10% 94.14%Société Belge de Services Téléphoniques S.A., Bruxelles Share capital in EUR 74 400 74 400Purpose: Services Share 94.39% 94.43%Czech RepublicELVIA Assistance s.r.o., Prague Share capital in CZK 30 000 000 30 000 000Purpose: Services Share 100% 100%FranceMondial Assistance Réunion S.A., Saint Denis (Reunion Island) Share capital in EUR 329 008 329 008Purpose: Services Share 99.86% 98.02%ELUCYDEE S.A., Paris Share capital in EUR 4 387 000 4 387 000Purpose: Services Share 0.00% 99.85%Gestion de Télésécurité et de Services S.A., Chatillon Share capital in EUR 720 000 720 000Purpose: Services Share 99.86% 97.92%France Secours International Assistance S.A., Bagnolet Share capital in EUR 2 745 000 2 745 000Purpose: Services Share 90.98% 90.98%FS2A S.A., Paris Share capital in EUR 37 000Purpose: Insurance Share 90.97%Mondial Assistance France S.A., Paris Share capital in EUR 7 916 400 7 916 400Purpose: Services Share 93.24% 93.24%Fragonard Assurance S.A., Paris Share capital in EUR 37 000Purpose: Insurance Share 93.23%Mondial Assistance S.A.S, Paris Share capital in EUR 20 088 900 20 088 900Purpose: Holding Share 99.99% 99.99%SACNAS International S.A., Paris Share capital in EUR 7 959 936 7 552 576Purpose: Holding Share 99.88% 99.98%SACNAS Développement S.A., Paris Share capital in EUR 3 088 000Purpose: Holding Share 97.94%SAGE S.A., Chatillon Share capital in EUR 22 500 22 500Purpose: Services Share 99.86% 97.92%Société Européenne de Protection et de Services d’Assistance à Domicile S.A., Paris Share capital in EUR 174 750 174 750Purpose: Security and others Share 55.94% 54.85%Société de Services Communs, Paris Share capital in EUR 221 067 221 067Purpose: Services Share 95.14% 95.11%
Notes to the consolidated financial statements
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Germany 2004 2003Mondial Assistance Deutschland GmbH, Munich Share capital in EUR 50 000 40 000Purpose: Services Share 49.94% 49.99%REHACARE GmbH, Munich Share capital in EUR 128 000Purpose: Services Share 24.97%Mondial Assistance Holding Deutschland, Munich Share capital in EUR 2 353 200Purpose: Holding Share 49.99%Mondial Service Deutschland GmbH, Wiesbaden Share capital in EUR 575 000Purpose: Assistance and services Share 49.99%Great BritainMondial Assistance United Kingdom Ltd, Croydon Surrey Share capital in GPB 1 360 940 1 360 940Purpose: Assistance and services Share 99.88% 99.98%World Access Europe Ltd, London Share capital in GPB 100 1 000Purpose: Assistance and services Share 100% 100%GreecePOLY - Assistance & Services A.E., Athens Share capital in EUR 60 000 60 000Purpose: Assistance and services Share 50.94% 50.99%HungaryELVIA Assistance Kft., Budapest Share capital in HUF 3 000 000 78 000 000Purpose: Services Share 100% 100%IrelandAssistance and Services Corporation of Ireland Ltd, Dublin Share capital in EUR 146 050 146 050Purpose: Services Share 99.88% 99.98%ItalyELVIA Service S.r.l., Milan Share capital in EUR 98 000 98 000Purpose: Services Share 100% 100%Mondial Assistance Italia S.p.A., Milan Share capital in EUR 6 708 000 6 708 000Purpose: Insurance and reinsurance Share 100% 100%Permatel S.r.l., Rome Share capital in EUR 95 000 95 000Purpose: Services Share 100% 100%LuxemburgSACNAS Re, Luxemburg Share capital in EUR 5 049 000 5 049 000Purpose: Reinsurance Share 99.99% 99.99%The NetherlandsMondial Assistance B.V., Amsterdam Share capital in EUR 454 000 454 000Purpose: Reinsurance and services Share 100% 100%ELVIA Travel Insurance International N.V., Amsterdam Share capital in EUR 15 999 868 15 999 868Purpose: Insurance Share 100% 100%PolandELVIA Assistance Sp.z o.o., Warsaw Share capital in PLN 3 800 000 3 800 000Purpose: Services Share 100% 100%PortugalAG2S - Asistencia e Gestao Social de Saude S.A., Lisbon Share capital in PTE 75 000 000Purpose: Services Share 21.00%ELVIASSIST Servicos de Assistencia 24 Horas LDA, Lisbon Share capital in EUR 150 000 150 000Purpose: Services Share 100% 100%SpainELVIASeg S.A., Madrid Share capital in EUR 4 209 782 4 209 782Purpose: Assistance and Insurance Share 100% 100%Sociedad Mundial de Asistencia S.A., Madrid Share capital in EUR 210 350 210 350Purpose: Services Share 99.91% 99.98%SwitzerlandELVIA Reiseversicherungs-Gesellschaft AG, Zurich Share capital in CHF 25 000 000 25 000 000Purpose: Insurance and assistance Share 100% 100%TurkeySAT S.A., Istanbul Share capital in TRL 206 785 000 000 206 785 000 000Purpose: Services Share 95.88% 95.98%
AFRICA 2004 2003Mauritius IslandMascareignes Services Assistance Ltd, Port Louis Share capital in MUR 1 103 000 1 103 000Purpose: Services Share 99.99% 59.99%MoroccoISAAF Mondial Assistance S.A., Casablanca Share capital in MAD 50 000 000 50 000 000Purpose: Insurance and assistance Share 41.22% 41.26%
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ASIA PACIFIC 2004 2003AustraliaMondial Assistance Australia Holding (Pty) Ltd, Toowong Share capital in AUD 11 000 000 11 000 000Purpose: Holding Share 100% 100%ETI Australia (Pty) Ltd, Toowong Share capital in AUD 11 000 000 11 000 000Purpose: Services Share 100% 100%ChinaMondial Assistance Beijing Services Co. Ltd., Beijing Share capital in EUR 480 000 480 000Purpose: Services Share 99.99% 99.99%JapanAS NIJUYON K.K. (AS 24), Tokyo Share capital in JPY 75 000 000 75 000 000Purpose: Services Share 89.89% 89.98%SingaporeWorld Access Asia (PTE) Ltd, Singapore Share capital in SGD 2 050 000 2 050 000Purpose: Assistance and services Share 100% 100%ThailandAuto Assist, Bangkok Share capital in THB 20 408 200 20 408 200Purpose: Services Share 44.10% 44.10%
NORTH AMERICA 2004 2003CanadaWorld Access Canada Inc., Waterloo Share capital in CAD 1 394 484 1 394 484Purpose: Assistance and services Share 100% 100%World Access Insurance Broker Ltd, Waterloo Share capital in CAD 1 1Purpose: Insurance broker Share 47.37% 47.37%USATravel Care Inc., Miami Beach Share capital in USD 25 000 25 000Purpose: Assistance and travel agency Share 100% 100%World Access Inc., Richmond Share capital in USD 74 74Purpose: Holding Share 100% 100%World Access Healthcare Services Inc., Richmond Share capital in USD 2 500 2 500Purpose: Assistance and services Share 100% 100%World Access Service Corp., Richmond Share capital in USD 5 000 5 000Purpose: Assistance and insurance agency Share 100% 100%
SOUTH AMERICA 2004 2003ArgentinaMercosul Assistance Argentine S.A., Buenos Aires Share capital in ARS 212 000 212 000Purpose: Services Share 99.99% 100.00%BrazilMercosul Assistance Participacoes Ltda, Sao Bernardo do Campo Share capital in BRL 7 641 918 7 641 918Purpose: Services Share 99.99% 99.99%ChileCAS Brokers S.A., Santiago Share capital in CLP 5 000 000 5 000 000Purpose: Services Share 99.94% 99.97%Compania de Asistencia Sudamericana S.A., Santiago Share capital in CLP 788 840 810 788 840 810Purpose: Services Share 99.96% 99.99%
6. Shareholders with more than 5% votes 2004 2003RAS International N.V., Amsterdam Share 50% 50%AGF Holding S.A., Paris Share 29.8% 29.8%AGF Iart S.A., Paris Share 10.1% 10.1%AGF Vie S.A., Paris Share 10.1% 10.1%
7. Accounts receivable and payable with associated companies (in thousand EUR): 2004 2003Accounts receivable from insurance business 13 334 11 435Deposit retained on reinsurance assumed 19 020 16 728Accounts receivable for services 2 081 3 416Other accounts receivable 1 536 1 620Liabilities from insurance business 2 042 1 631Deposit retained on reinsurance ceded 936 900Rendering of service debts 157 338Other liabilities 1 013 816
Report of the statutory auditors to the general meeting
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Report of the Statutory Auditors to the General MeetingElmonda (Mondial Assistance Group)Zurich - Consolidated Financial Statements 2004
Report of the Statutory Auditors to the General Meeting of
Elmonda (Mondial Assistance Group), Zurich
As Group auditors, we have audited the consolidated financial statements rendered on pages 20 to 31(income statement, balance sheet, cash flow statement and notes) of Elmonda (Mondial Assistance Group)for the year ended December 31st, 2004.
These consolidated financial statements are the responsibility of the Board of Directors. Our responsibilityis to express an opinion on these consolidated financial statements based on our audit. We confirm thatwe meet the legal requirements concerning professional qualification and independence.
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession,which require that an audit be planned and performed to obtain reasonable assurance about whether theconsolidated financial statements are free from material misstatement. We have examined on a test basisevidence supporting the amounts and disclosures in the consolidated financial statements. We have alsoassessed the accounting principles used, significant estimates made and the overall consolidated financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements comply with Swiss law and the consolidation andvaluation principles as set out in the notes.
We recommend that the consolidated financial statements submitted to you be approved.
KPMG Fides Peat
Ian Sutcliffe Rolf BächlerChartered Accountant Swiss Certified AccountantAuditor in Charge
Zurich, April 6th, 2005
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Financial Statements of ElmondaIncome Statement of Elmonda for the Financial Year 2004
in thousand CHF 2004 2003
Financial Income 28 874 34 235General expenses (4 251) (1 203)Profit for the financial year before taxes 24 623 33 032
Taxes (31) (127)Profit for the financial year 24 592 32 905
Balance Sheet of Elmonda of December 31st, 2004
in thousand CHF 2004 2003
ASSETS
Fixed assetsParticipations 398 511 398 511Loans 5 972 5 997Total fixed assets 404 483 404 508
Current assetsCash and cash equivalents 700 8 762Fixed-income securities 14 511 0Receivables 5 816 18 137Accrued income 0 61Total current assets 21 027 26 960
Total assets 425 510 431 468
LIABILITIES AND SHAREHOLDERS’ EQUITY
LiabilitiesAccruals and deferred income 775 295Other liabilities 857 291Total liabilities 1 632 586
Shareholders’ equityShare capital 40 000 40 000Additional paid-in capital 357 000 357 000Legal reserve 977 977Retained earnings 1 309 0Net profit for the financial year 24 592 32 905Total shareholders’ equity 423 878 430 882
Total liabilities and shareholders’ equity 425 510 431 468
Notes to the financial statements of Elmonda
34
Notes to the financial statements of ElmondaDisclosures under Art. 663b CO, supplemented by voluntary information
in thousand CHF (if not otherwise indicated) 2004 2003
1. Participations with at least 20% of voting rights or capital share:Elvia Reiseversicherungs-Gesellschaft AG, Zurich Share capital 25 000 25 000 Purpose: Insurance and assistance Share 100% 100%Mondial Assistance S.A.S, Paris Share capital in thousand EUR 20 089 20 089 Purpose: Holding Share 99.99% 99.99%
2. Long-term liabilities over 3 years
3. Accounts receivable and payable with associated companiesOther accounts receivable 3 276 15 690Other liabilities 556 -
Proposal for the distribution of profits
in thousand CHF 2004 2003Net profit for the financial year 24 592 32 905Foreign Exchange rate difference on dividends - -Balance at the beginning of the year 1 309 -Available profit 25 901 32 905
It is proposed to the Annual General Meeting to allocate this profit as follows:Proposal for dividend distribution 25 901 31 596Allocation to the legal reserves - -Allocation to the special reserves - -Balance carried forward 0 1 309Available profit 25 901 32 905
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Report of the Statutory Auditors to the General MeetingElmonda, Zurich - Financial Statements 2004
Report of the Statutory Auditors to the General Meeting of
Elmonda, Zurich
As statutory auditors, we have audited the accounting records and the financial statements rendered onpages 33 and 34 (income statement, balance sheet and notes) of Elmonda for the year ended December31st, 2004.
These financial statements are the responsibility of the Board of Directors. Our responsibility is toexpress an opinion on these financial statements based on our audit. We confirm that we meet the legalrequirements concerning professional qualification and independence.
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession,which require that an audit be planned and performed to obtain reasonable assurance about whether thefinancial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed theaccounting principles used, significant estimates made and the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the accounting records and financial statements and the proposed appropriation ofavailable earnings comply with Swiss law and the company's articles of incorporation.
We recommend that the financial statements submitted to you be approved.
KPMG Fides Peat
Ian Sutcliffe Rolf BächlerChartered Accountant Swiss Certified AccountantAuditor in Charge
Zurich, April 6th, 2005
Business Years 2002 - 2004
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Income Statement Mondial Assistance Group
in million EUR 2004 2003 2002
Total Turnover (Premiums and Service revenue) 1 099.7 995.5 1 008.0Net earned premiums and service income 1 060.9 962.3 933.9Claims (531.6) (496.6) (463.4)Costs (484.8) (441.5) (447)Operating result 44.6 24.2 23.5Financial result (1) 10.1 16.9 10.2Reallocation of technical interestOther income/expenses and depreciation on intangible assets (3.2) (3.9) (4.1)Result before Tax 51.5 37.2 29.7Taxes (27.8) (20.4) (12.5)Result after Tax 23.6 16.8 17.2Minority interest in the results (0.5) (1.2) (0.1)Group result 23.1 15.6 17.1
Balance Sheet
ASSETS 2004 2003 2002Investments 461.0 411.7 403.2Cash and cash equivalents 135.9 173.2 122.1Accounts receivable 228.9 228.6 240.1Total remaining assets 180.9 180.3 189.3Total assets 1006.6 993.8 954.7
SHAREHOLDERS’ EQUITY AND LIABILITIES 2004 2003 2002Shareholders’ equity 268.0 263.7 254.4Technical provisions 457.3 410.9 383.1Other liabilities 281.3 319.3 317.2Total shareholders’ equity and liabilities 1006.6 993.8 954.7
Key Figures
2004 2003 2002Return on equity 8.7% 6.0% 7.2%Return on earned premiums (before taxes) 4.8% 3.9% 3.2%Combined ratio (2) 95.8% 97.5% 97.5%Growth earned premiums and service income 10.2% 3.0% 10.3%
(1) The financial result includes ordinary, realised, accounting and exchange rate gains.(2) Claims and all costs as a percentage of net earned premiums and service income.
Business Years 2002 - 2004
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www.mondial-assistance-group.com
37 rue Ta i tbou t 75009 Par i s F ranceTe l . +33 (0)1 53 25 53 25 - Fax +33 (0)1 53 25 54 33
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