LEKS KINDLUSTUS

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, Q1 2000



Structure of the group



At the end of accounting period, Leks Kindlustuse AS had two fully-owned 

subsidiaries: Leks Investeeringud OÜ and Kahjukäsitluse AS. No changes were 

made in the structure of the group in Q1.





Sources of financing. Changes in share capital.



Leks Kindlustuse AS share capital volume is EEK 39.7 mln. 

Changes occurred in the structure of the company's major shareholders. As 

of the balance sheet date, Balti Kindlustuse AS has 78.2% holding in Leks 

Kindlustuse AS share capital (core investor of Balti Kindlustus is European 

leading insurer Alte Leipziger Europa). Swiss Reinsurance Company owns 

20.7% of Leks Kindlustuse AS share capital. The two companies together own 

98.9% of Leks Kindlustuse AS share capital.





Developments in Q1 2000



At the end of Q1 2000 the balance sheet size of Leks Kindlustuse AS 

was EEK 178.5 mln. The share of profit earning assets on the assets account

(mainly investments) increased to 74.5% of total assets. The relative 

structure of invested assets has remained unchanged, which is in line with 

the nature of liabilities. The precondition for new investments is 

sufficient liquidity and optimal risk.



In Q1 2000 Leks Kindlustuse AS posted EEK 3.3 mln net profit. Regardless of 

EEK 2.6 mln increase in net unsatisfied claims, the company earned in Q1 

insurance technical profit of EEK 0.5 mln. Net insurance technical reserves 

grew by EEK 11.9 mln, amounting to EEK 111.7 mln at the end of the 

accounting period.



Compared with Q1 1999, the volume of gross premiums grew from EEK 49.9 mln 

to EEK 60.5 mln, whereas operating expenses grew from EEK 12.3 mln to EEK 

12.8 mln (+0.5 mln).



The company's insurance technical result improved mainly due to 

consolidation of damage insurance market, improvement of general economic 

environment and excellent risk management. In Q1 2000 gross claims ratio of 

Leks Kindlustuse was 56.4% (in Q1 1999 77%, in Q2 61%, in Q3 57%, in Q4 

61%) and net claims ratio 66.8%. In Q1 2000 the gross cost ratio stood at 

30.3% (in Q1 1999 36%, in Q2 33%, in Q3 31%, in Q4 32%) and net cost ratio 

32%.



The extraordinary general meeting of Leks Kindlustuse AS was held on 

13.01.2000. The EGM discussed the election and recall of Supervisory Board 

members, and approval of amendments to the Articles of Association. The EGM 

recalled Leks Kindlustuse AS Supervisory Board members Kalle Kaldjärv, Otu 

Sukles, Christoph Dorschel and Eero Sirendi. Two new members were elected 

to the Supervisory Board: Olga Reznik and Thomas Schirmer. 



Between 10.01 and 07.02 2000 Balti Kindlustuse AS made a take-over bid to 

small shareholders of Leks Kindlustuse AS, in the course of which Balti 

Kindlustuse AS bought altogether 271,519 Leks Kindlustuse AS shares. After 

take-over bid made to small shareholders of Leks Kindlustus, Balti 

Kindlustuse AS has 75.5% holding in Leks Kindlustuse AS share capital.



According to the decisions of Leks Kindlustuse AS and Balti Kindlustuse AS 

Supervisory Boards (27.03. and 28.03.00, respectively), the Management 

Boards of the two companies were authorized to prepare the merger 

agreement, merger report and agreement on transfer of insurance portfolio.



Annual general meeting of shareholders was held on 27.03.2000. 

The following items were on the agenda of AGM:

- Approval of 1999 annual report;

- Appointment of auditor for year 2000;

- Evaluation of the activities of Supervisory Board members;

- Remuneration of Supervisory Board members.



The AGM resolved:

- to adopt the 1999 annual report, as compiled by the Management Board and 

approved by the Supervisory Board.

- to appoint Urmas Kaarlep and Tiit Raimla of PriceWaterhouseCoopers to 

audit Leks Kindlustuse AS financial reports in year 2000

- to approve the activities of Supervisory Board members in year 1999, and 

to exempt the Supervisory Board members from responsibility for the 

company's results in 1999 financial year

- to remunerate the former Supervisory Board members Otu Sukles, Eero 

Sirendi, Christoph Dorschel and Kalle Kaldjärv in the amount of EEK 

15,000 each member, and the former Supervisory Board chairman Indrek 

Holst in the amount EEK 20,000.







Significant events during the period of compilation of interim report and 

interim report's balance sheet date



The shareholders' structure has changed. Balti Kindlustuse AS owns 98.9% 

holding in Leks Kindlustuse AS share capital.





Pille Eikner

Public Relations Manager

+372 62 67 200