Cosmos Insurance Public : 2022 – Solvency & Financial Condition Report (SFCR)

Solvency and Financial Condition Report for 2022

COSMOS INSURANCE COMPANY PUBLIC LTD HEAD OFFICE: 46 Griva Digeni Avenue, 1080 Nicosia POBox 21770, 1513 Nicosia

Q: +357 22 796 000 | F: +357 22 022 000

List of contents

A. Business Performance 7

A.1 Business 7

A.2 Underwriting performance 9

A.3 Investment Performance 12

B. Government System 15

B.1 General information about the government system 15

B.2 Requirements of fit and proper 21

B.3 Risk management system including self-assessment of risk and solvency 22

B.4 Self Assessment of Risk and Solvency (ORSA) 29

B.5 Internal Control System 31

B.6 Internal Audit Function 32

B.7 Actuarial Functions 33

B.8 Outsourcing 34

B.9 Adequacy of government system 36

B.10 Other information 36

C. Risk Profile 37

C.1 Underwriting Risk 38

C.2 Market risk 43

C.3 Counterparty’s Risk of Default 48

C.4 Liquidity Risk 51

C.5 Operational Risk 54

C.6 Other material risks 56

D. Assessment for solvency purposes 58

D.1 Assets 58

D.2 Technical Provisions 62

D.3 Other liabilities 67

E. Capital Management 69

E.1 Self Owned Fund 69

E.2 Compliance with MCR and SCR 74

F. Appendix 76

Appendix A: Cosmos Organizational Structure 76

Appendix B: Excerpt from Annual QRT 77

Appendix C: Abbreviations 89

Appendix D: Auditor’s Report 90

COSMOS PUBLIC INSURANCE COMPANY LTD

HEADQUARTERS

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Business plan summary

I.

Report purpose

The objective of the Report on Solvability and Financial Condition (“SFCR”) is to comply with the public disclosure requirements under Article 304(1) of Delegated Regulation (EU) 2015/35.

The report discloses the information referred to in Article 292 to Article 298 of this Regulation with the main titles: business and performance, governance system, risk profile, assessment for solvency and capital management purposes.

This SFCR has been prepared with reference to December 31, 2022 and has been approved by the Company’s Directors on March 30, 2023.

II.

Company Overview

Cosmos Public Limited Insurance Company (hereinafter referred to as “Cosmos”) was established in Cyprus on October 17, 1981 as a Private Limited Liability Company and on December 6, 1999 the Company became listed on the Cyprus Stock Exchange.

Cosmos operates island-wide through its large network of insurance brokers and through its offices in Nicosia, Larnaca, Limassol and Paphos. The company employs sixty five (65) trained individuals and maintains partnerships with more than one hundred twenty (120) insurance intermediaries islandwide.

The Company maintains a loyal network of insurance agents and clients. Service standards and claims settlement in particular remain intact and Cosmos enjoys an excellent reputation in the market.

Cosmos is ranked 12th in 2022 (compared to 11th in 2021) in terms of market share in the Non-Life Insurance Industry, with a total GWP of €18.78 million. Motor vehicle insurance is the Company’s largest line of business followed by General Liability business line.

On January 1, 2016, the Company switched to the Solvency II regulatory framework after completing a comprehensive program of regulatory requirements in corporate governance, risk assessment and management, solvency and reserves and oversight and public disclosure.

COSMOS PUBLIC INSURANCE COMPANY LTD

HEADQUARTERS

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I, I, I.

Business and Performance

The Company’s main business lines (“LoB”) are Motorcycle, Accident & Health, Fire and Liability. The Company’s net technical results for 2022 resulted in a profit of €1.3 million as follows:

Amount in EUR (€)	A&HMOTORMATFIRELIABILITY	TOTAL
Written Gross Premium	2,837,987 471,415 (162,933) 12,225,229 11,159,097 (6,255,533) 37,355 (168,099)	18,781,371 12,738,673 (6,625,219) (2,101,582) (2,726,188)
Net Premium earned
Net Claims Issued
Net Commissions and Acquisition Fees
Operating costs
Underwriting Results	15,439 541,846 22,960 463,076 242,363	1,285,684

Table 1: 2022 Underwriting Results per LoB

Overall, the Company’s gross premium (“GWP”) is approximately €18.8 million in 2022, recording a decrease of 8.1%% or €1.6 million compared to 2021.

During 2022, the Company experienced a significant decrease in GWP from LoB Liabilities and a slight decrease in GWP from LoB Motor, which was partly offset by an increase in written premium volume from all other lines of business.

The decrease in GWP LoB Motor was mainly due to the Company’s decision to reduce exposure from certain portfolio types. On the other hand, the Company’s efforts to increase its share in other profitable business lines such as Fire are considered successful, given the aggressive approach of insurance companies affiliated with the Bank.

In addition, the Company’s expenses decreased mainly due to the improvement in the ratio of losses in all business lines.

The Company’s Business Performance is further analyzed in Part A of this report. IV. Government system

The corporate governance framework is based on the “Three Lines of Defense” model which supports the implementation of a strong internal control system and is in line with the “four eye principles” that the Company must comply with.

In addition, the Company has established the following functions to ensure effective oversight of its operations, in accordance with Solvency II requirements for the Internal Control System:

The Company ensures that all persons who effectively run the Company or have other key functions are able to provide sound and prudent management through their professional qualifications, knowledge and experience and are worthy of good reputation and integrity.

COSMOS PUBLIC INSURANCE COMPANY LTD

HEADQUARTERS

Q: +357 22 796000 | F: +357 22 022000

The Company has also established its own risk management system and conducts Own Risk and Solvency Assessment (“ORSA”) at least once a year.

The corporate governance system is further analyzed in Part B of this report. V. Risk Profile

The company uses a standard formula for estimating the Solvability Capital Requirement (“SCR”) according to which the SCR calculation is divided into risk modules.

The SCR components (before diversification) for the reporting year ended December 31, 2022 and their SCR allocations are presented below:

operational risk; 6.4%

market risk; 26.2%

Non-Life Underwriting Risk; 52.5%

counterparty risk; 13.6%

Health Insurance Risk; 1.3%

Figure 1: Cosmos SCR components as of 31/12/2022

The main components of the Company’s SCR are Non-Life Underwriting Risk, Market Risk and Counterparty Default Risk.

Non-life insurance risk consists of Premium & Reserve risk, Lapse risk and Catastrophe risk, which are mitigated mainly through the purchase of reinsurance protection.

The SCR of Market risk is relatively high and substantially driven by the Company’s large property portfolio and significant exposure to Property risk.

The Company’s Risk Profile is further analyzed in Part C of this report.

COSMOS PUBLIC INSURANCE COMPANY LTD

HEADQUARTERS

Q: +357 22 796000 | F: +357 22 022000