22. Commitments
22.1. Czech Nuclear Pool
The Company is a member of the Czech Nuclear Pool and, pursuant to the Agreement of Insurers participating in nuclear plant risk insurance on joint and several liability, has undertaken to meet a liability arising from the Agreement on Cooperation for nuclear plant operation and damage liability insurance to take on an uncovered part of the liability of a member or several members who fail to fulfill their obligations on a joint basis in the ratio of its own net retention used for the given agreement. The total potential liability of the Company including joint and several liabilities is contractually limited to twice its own net retention for a given type of insured risk.
The subscribed net retention is as follows:
| (CZK’000) | 31 December 2015 | 31 December 2014 |
|---|---|---|
| Liability | 51,800 | 51,800 |
| Fire, lightning, explosion, aircraft (“FLEXA”) and breakdown of operations | 102,000 | 102,000 |
| Transportation risks | 19,200 | 19,200 |
| Technical insurance and breakdown of operations | 44,400 | 44,400 |
| Total subscribed net retention | 217,400 | 217,400 |
22.2. Czech Bureau of Insurers
As a member of the Bureau, the Company has committed itself to guarantee the liabilities of the Bureau, in proportion to its membership contributions, pursuant to Section 18(6) of Act No.168/1999 Coll. On Motor Third Party Liability (“MTPL”) Insurance. For this purpose the Company makes contributions to the guarantee fund and recognizes a specific provision (Note 12). The amount of contributions and the other technical provisions is determined based on the Bureau’s calculation.
In the event of a fellow member of the Bureau being unable to meet its liabilities arising from MTPL because of its insolvency, the Company may be required to make additional contributions to the guarantee fund.
22.3. Receivable from developers
On 21 December 2006, the Company entered into an agreement under which it undertook to acquire a special purpose entity (“SPE”) for EUR 22.2 million from an unrelated party. In 2007, the Company made an advance payment in the amount of EUR 5 million which has been recognized in Other receivables (see Note 8). The SPE was owned by the property developer which built the administrative building for the Company. The Company undertook to purchase the SPE not earlier than the building is completed and occupancy permit issued. The receivable has been secured by the pledge over the SPE’s land. The building was not completed by the planned deadline. Although the property developer paid a portion of interest (EUR 0.5 million) in October 2010 and consequently provided another security to the receivable, the Company monitored the developer’s deteriorated financial position and decided to establish a 100% allowance against the receivable. In May 2011, the Municipal Court in Prague declared bankruptcy and commenced insolvency proceeding with the property developer. In August 2013 a separate insolvency proceedings (reorganization) were commenced with the SPE. During 2014 the registered receivable was partly paid, either within the partial schedule at the level of the development company, or either by sale SPE assets in accordance with the fulfillment of the approved reorganization plan. Insolvency proceeding with the SPE has been finally terminated in 2015 since the reorganization plan has been fulfilled. The company further claims the rest of the unpaid receivable in the ongoing proceedings.
22.4. Contingent liabilities
The management of the Company is not aware of any contingent liabilities at as the balance sheet date with the exception of those disclosed in the statements of the financial positions of the Company.