Globality S.A. Solvency & Financial Condition …

1 Globality Solvency & Financial Condition Report FY 2016 C0 Public Contact Issuer: Chief Financial Officer Edward Costa Tel.: +352 270 444 - 8003 Authors: Charles Pratt, Jochen Geiter, Dr. Holger N her, Sravanti Challa, Thomas Gerspacher Tel.: +352 270 444 - 8033 Level of obligation Directive Valid from 19/05/2017 Status 19/05/2017 Authorized by Board of Directors of Globality Authorized on 19/05/2017 Globality SFCR FY 2016 i Table of Contents Executive Summary .. 1 A. Business and Performance .. 4 Business .. 4 General Information .. 4 Name of the Supervisory Authority responsible for the Financial supervision of the undertaking.

2 5 Shareholder (qualifying holders) in Globality .. 5 External auditor of Globaliy .. 5 Legal Structure of Globality 5 Further information.. 6 Underwriting Performance .. 6 Underwriting Performance as shown in the Financial Statements .. 6 Investment Performance .. 9 Performance of other activities .. 10 Any other information .. 10 B. System of Governance .. 12 General information on the system of governance .. 12 Fit and proper requirements .. 16 Risk management system including the own risk and Solvency assessment .. 17 Internal control system.

3 18 Internal audit function .. 18 Actuarial function .. 19 Compliance Function .. 20 Outsourcing .. 21 Any other information .. 22 C. Risk Profile .. 24 Underwriting portfolio .. 25 Asset portfolio .. 25 Risk strategy: Preliminary remarks .. 26 Underwriting risk .. 27 Strategy & Measures to manage underwriting risks .. 27 Key risk driver / Results of the Standard Formula .. 29 Conclusion / Current Developments / Challenges .. 30 Market risk .. 30 Strategy & Measures to manage market risks .. 31 Key risk driver / Results of the Standard Formula.

4 31 Conclusion / Current Developments / Challenges .. 32 Counterparty Default risk .. 32 Strategy & Measures to manage default risks .. 33 Key risk driver / Results of the Standard Formula .. 33 Conclusion / Current Developments / Challenges .. 34 Liquidity risk .. 34 Strategy & Measures to manage liquidity risks .. 34 Key risk diver .. 34 Conclusion / Current Developments / Challenges .. 35 Operational risk .. 35 Strategy & Measures to manage operational risks .. 35 Key risk driver / Results of the Standard Formula .. 35 Conclusion / Current Developments / Challenges.

5 36 Globality SFCR FY 2016 ii Other material risks .. 36 Strategic risk .. 36 Reputational risk .. 37 Any other information .. 38 Emerging risks .. 38 Human Capital risks .. 38 Valuation for Solvency Purposes .. 40 Assets .. 40 Use of judgements and estimates in recognition and measurement .. 41 Goodwill .. 41 Deferred Acquisition costs .. 41 Intangible Assets .. 42 Deferred Tax Assets .. 42 Pension benefit surplus .. 42 Property, Plant and Equipment held for own use.. 42 Investments .. 43 Insurance and intermediaries receivables.

6 44 Reinsurance receivables .. 45 Receivables (trade, not insurance) .. 45 Cash and cash equivalents .. 45 Any other assets, not shown elsewhere .. 45 Technical provisions .. 46 Description of the methodologies used for the SII purposes .. 46 Uncertainty Associated with the Amount of Technical Provisions .. 48 Solvency II: Methodologies .. 49 General requirements for the calculation of reinsurance recoverables .. 53 Management actions and policy holder 54 Other liabilities .. 55 Alternative methods for valuation .. 56 Any other information.

7 56 E. Capital Management .. 58 Own funds .. 58 Solvency Capital Requirement and Minimum Capital Requirement .. 62 Use of the duration-based equity risk sub-module in the calculation of the Solvency Capital Requirement . 62 Differences between the standard formula and any internal model used .. 62 Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency Capital Requirement .. 62 Any other information .. 63 ANNEX .. 64 Globality SFCR FY 2016 1 Executive Summary The Company, Globality , was founded on 18 October, 2007 and is registered to carry out primary insurance, co-insurance as well as reinsurance in the Health Insurance Sector, registered under Luxembourg law and regulated by the Commissariat aux Assurances, Luxembourg.

8 The purpose of the report is to satisfy the public disclosure requirements under the Financial Services legislation of Luxembourg including the Delegated Regulations of the European Parliament. The elements of the disclosure relate to business performance, system of governance, risk profile, Solvency and capital management. Although gross written premium of 63 million fell 2 million short of plan, the Company performed significantly better than planned at bottom line, profit after tax, actual loss of million versus a planned loss of million, gross of reinsurance.

9 The improved performance translates directly to an equal improvement of the technical insurance result. The forecasted results for 2017 continue to significantly outperform plan in terms of profit after tax. The Company has two reinsurance treaties in place with the ultimate holding company Munich Re. Since 2011, an Excess of Loss agreement, protecting the Company against high severity low frequency claims or large losses and since 1 January 2016, a Quota Share agreement improving the Company s Solvency ratio and future capital requirement.

10 Over the past years, the Board of Management under direction of the Board of Directors put in place significant measures to strengthen the corporate governance framework, including the risk management function, in readiness for Solvency II which became effective 1 January 2016. The system of governance, risk profile, the valuation for Solvency purposes and capital management information are detailed further in this report. In this respect there have been no significant changes in the reporting period. The Company has continually complied with all aspects of the Solvency II regulations having fully implemented its requirements and adhered to all the reporting of quantitative reporting templates (QRTs) since Day 1, 1 January 2016.