Powszechny Zakład Ubezpieczeń Spółka Akcyjna Capital Group (“PZU Group”) is one of the oldest and largest insurance groups in Poland in terms of gross written premium (according to the data collected by Polish Financial
Otwarty Fundusz Emerytalny PZU „Złota Jesień” (“OFE PZU”);  investment funds offered by Towarzystwo Funduszy Inwestycyjnych PZU SA (“TFI PZU”.)
TFI PZU offers:  participation units in open investment funds, including specialized open investment funds;  investment certificates in closed investment funds;  investment plans, and
December 2012, prices of commodities and services were 2.4% higher year on year (4.6% at the end of 2011).
Source: PFSA (www.knf.gov.pl). Biuletyn Kwartalny. Rynek ubezpieczeń 3/2012, Rynek ubezpieczeń 3/2011, data of PZU Życie
The underwriting profit/loss of PZU Życie accounts for a major part of the result generated by all life insurance companies in the market. This proves high profitability of products offered. Interestingly, the technical margin on premium written is almost four times higher than the margin generated jointly by all other life insurers on the market (21.9% compared to 5.7%). At the end of Q3 2012, the margin of PZU Życie increased by 2.3 p.p. yo -y, while that of other life insurers dropped by 0.5 p.p.
Number of OPF members 2 222 853 15 942 282 13 719 429 2 214 995 15 493 373 13 278 378 Net AUM in PLN million 36 282 269 596 233 314 30 523 224 720 194 197
(due to economic improvement). The increase in the accident and health insurance market resulted mostly from growing popularity of health insurance on the Lithuanian market (the segment grew by 23.4% year on year).
Lithuania. PZU Lietuva is the second with the market share of 13.3%. BTA is the third largest with the market share of 13.2%.
The Act of 14 June 2012 amending the act on therapeutic activity and certain other acts (Law
The Ordinance of the Minister of Finance on statutory TPL insurance of an insurer not carrying out therapeutic business activity but providing health care services of 22 December 2011 (Law Journal No. 293, item 1728) came into force on 1 January 2012 and has determined the detailed scope of statutory TPL insurance for entities providing health care performances referred to in Article 5.41.b and 5.41.d of the Act on health care performances financed with public funds of 27 August 2004 against damages arising from health care performances provided based on health care performance agreement, the deadline for the statutory insurance and the minimum guarantee amount.
Effects of amendments to the therapeutic laws for PZU Group: an increased written premium in the first half of 2012 arising from the obligation for hospitals and therapeutic entities to conclude insurance contract. The statutory insurance may contribute to market growth and at the same time result in an increase in the number of claims lodged in relation to therapeutic activities, as well as in the total of claims paid.
Further, under implementation of Solvency II, PZU has carried out quantity survey following guidance of the Polish Financial Supervision Authority (FSA).
The amendment is to reduce the deficit of the Social Security Fund (ZUS) in disability pension funds and in future should contribute to its gaining a balance.
The need to comply with recommendations of Directive of the European Parliament and the Council 2009/138/EC
The year 2013 will remain tough for the insurance market. The projected GDP growth is still lower than in 2012.
PZU Życie core business is conducting insurance and directly related activities in respect of section I insurance –
Currently TFI PZU manages 25 investment funds and sub-funds with various investment strategies.
Tower Inwestycje Sp. z o.o. (formerly PZU Tower Sp. z o.o.) was established in 1998 as an SPV in the PZU
 The PZU Fundusz Inwestycyjny Zamknięty Dynamiczny fund has been consolidated using the full method
(a change from PLN (274.5) million to PLN (30.7) million). The key reasons of the above change included:  releasing provisions for employee benefits (retirement and jubilee bonuses) of PLN 177.0 million following termination of the Collective Labour Agreement and limiting the liabilities to the statutory level
Management report on the activities of Powszechny Zakład Ubezpieczeń Spółka Akcyjna Capital Group in 2012 5.6. Performance and performance ratios of PZU Group
Intangible assets 183 238 166 038 10.4% Goodwill 8 474 8 716 (2.8)% Property, plant and equipment 992 317 1 055 381 (6.0)% Investment property 564 404 534 222 5.6% Entities measured using the equity method 0 0 x Financial assets 50 423 076 46 775 359 7.8% Receivables, including under insurance contracts 1 835 793 1 734 636 5.8% Reinsurers‟ share in technical provisions 749 334 700 713 6.9% Estimated recoveries and recourses 121 632 83 117 46.3% Deferred tax asset 13 963 8 600 62.4% Current income tax receivables 80 646 8 582 839.7% Deferred acquisition costs 574 489 569 843 0.8% Prepayments 94 942 125 890 (24.6)% Other assets 83 704 120 461 (30.5)% Cash and cash equivalents 136 586 237 724 (42.5)% Assets used in continuing operations 55 862 598 52 129 282 7.2% Non-current assets held for sale and disposal groups 46 962 0 x Total assets 55 909 560 52 129 282 7.3%
Share capital 86 352 86 352 - Supplementary capital 8 780 212 7 711 818 13.9% Revaluation reserve 363 242 268 831 35.1%
Pursuant to the Act on insurance activity, insurance companies having their registered offices within the territory of the Republic of Poland are obliged to have own funds in the amount not lower than the required solvency margin and the guarantee fund. There are no regulations that would define the calculation of the solvency margin and the amount of own funds for the capital group and therefore tables 19 and 21 present the data separately for
Table 19: Calculation of own funds to cover the required solvency margin of PZU (under Polish GAAP)
Extraordinary Shareholders‟ Meeting of Sigma Investments Sp. z o.o. (a company excluded from consolidation)
An increase in administrative expenses in 2.8% resulted from project activity aimed at optimization of service processes, among others by implementing of a new product system and building of a positive image of the PZU
(very cold winter and spring frost). In both periods, the level of claims was similar.
Table 27: Gross written premium in the corporate insurance segment (property and personal insurance)
(in both cases netted off with a change in the mathematical provision). At the same time, a reduction in
The decrease in the value of net claims (by PLN 44,5 million, i.e. 6.9%) resulted from lower endowment payments arising from old individual portfolio policies concluded in the nineties and lower endowment level in the structured, single-premium product “Świat Zysków” (the value was offset with a change in the mathematical provision). An increase in the claim amount was seen in the individual pension account product, which was partly related to transfer of the insured to individual pension insurance account.
In 2012, investment income of the PZU Group increased by PLN 2,110.9 million, i.e. by 132.4% year on year.
Tourist insurance, Green Card, corporate property insurance and motor insurance contributed the most to the growth in the written premium.
introducing new standards and decisions of the Supreme Court in favour of consumers;  growing consumer awareness that may translate into a growing number of claims, among others as a result of actions undertaken by consumer institutions, such as Office of Competition and Consumer
Motor Insurers and certain other acts effective from 11 February 2012, PZU adjusted its operations to these amendments, among others through change of selected general terms and conditions, information provided to clients and operating procedures.
The decision of the EU Court of Justice set the compliance deadline at 21 December 2012. PZU Życie was among the first Polish sellers of products compliant with the decision since their launch took place on 1 October and 1
regarding life insurance added to mortgage loans. Focus was placed on maintenance of the insurance portfolio and work related to the planned consumer finance insurance and mortgage banking.
At the end of 2012, Opieka Medyczna, the individual hospital insurance product, was withdrawn.
PZU Życie offers insurance both through its own network and the agency network. Additionally it uses new distribution channels which are gaining popularity in Poland, such as banks and direct sales (mail). Key distribution channels include:  PZU employees – group insurance; o employees of PZU Życie with the key task to sale and maintain the existing group insurance portfolio; o the broker network cooperating on the sales of group insurance.
Communication Platform (Eurotax Audyt service);  Control of car repair cost estimates prepared by repair shops (service by Control Expert);  Simplified procedure of window break claims handling.
The year 2012 was marked by intense efforts including sales, public relations and marketing. The key activities in this period included:  Completion of work on the remote distribution channel in the form of an Internet platform with an IVR
In 2012, total expenses incurred by the PZU Group in relation to the media campaigns amounted to PLN 34.4 million.
In order to develop modern insurance products tailored to customer needs and to establish appropriate relations with the insured by developing distribution channels and ensuring top quality services, including claims handling,
2. Centralisation and optimisation of operating processes continued. In 2012, 2 Operation
9.10. Corporate social responsibility activities in 2012 9.10.1. Ethics in business
“Świetlica Moje Miejsce”; o Europejski Dom Spotkań Fundacji Nowy Staw in Lublin funding rental of a hall for the purpose of Economic Forum of Young Leaders; o Krajowy Fundusz na Rzecz Dzieci in Warsaw providing support for talented kids and youngsters; o Fundacja Centrum im prof. Bronisława Geremka in Warsaw sponsoring history workshops for students and teachers; o Fundacja Młodzieżowej Przedsiębiorczości in Warsaw subsidising the project
Warsaw, Instytut Spraw Publicznych in Warsaw, Polskie Towarzystwo Fizyczne in Warsaw,
Błaszczyk A Kogo? in Warsaw, Polskie Stowarzyszenie Pomocy Osobom z Zespołem Prader
Social Responsibility 1. Continuing activities that support the image of PZU as an institution helping to secure future.
HR: business partner / involved employees / performance oriented culture 1. Transforming PZU Group into a performance-oriented organisation.
The risk management objective is to ensure that the PZU and PZU Życie, when pursuing its business goals, keeps monitoring and managing its portfolios in a safe manner and adequately to the scale of incurred risk. Risk management strategies are an integral part of the management process in PZU and PZU Życie. Key elements of risk management in PZU and PZU Życie include:  the system of limits and restrictions to acceptable risk level determined by the Supervisory Board,
Strategic decisions regarding compliance risk and acceptance of the risk level is the responsibility of the Management Board.
Mortality – 90% of the currently assumed level (133) (116) (133) (116)
Mortality – 110% of the currently assumed level (954) (961) (954) (961)
3. Equity and the solvency margin are calculated in line with the prudential standards established for the Polish insurance market.
In February 2012, all insurance companies operating on the Polish market received a letter from the Chairman of
The supervisory body recommended further (similarly to the recommendation regarding dividend from profit generated in 2011) that dividend payment should take place only in companies that met specific criteria
By the date of signing these financial statements, the Management Board of the Company had not adopted a resolution on the proposed distribution of the net profit for the year ended 31 December 2012.
Obywatelski is an initiative for private investors started by the Ministry of Treasury during the IPO of listed entities: PZU, Tauron Polska Energia and Warsaw Stock Exchange.
PZU also qualified to the second stage of the sixth edition of the contest entitled the Golden Website. Twelve companies from those listed in WIG20 and mWIG40 were appreciated for top quality communication with investors, the content and usefulness of their websites.
Information about the fee of the authorized entity can be found in the financial statements of PZU for 2012 –
The report is an element of implementing of the corporate social responsibility (CSR) strategy in PZU
 As for the recommendation specified in Section I.12 with respect to ensuring two-way real-time communication which ensures that shareholders may express their opinions during a shareholders meeting even if they are not physically present at a session and with respect to exercising voting rights during the shareholders' meeting (whether in person or through a proxy) the Company decided to no longer provide two-way real-time communication ensuring that shareholders may express their opinions during a shareholders‟ meeting even if they are not physically present at a session and exercise their voting rights during the shareholders' meeting (whether in person or through a proxy), because according to the Company there are numerous technical and legal issues, which may disrupt appropriate course of a session of the Shareholders‟ Meeting and adequate application of the provisions of the recommendation in question. Moreover, according to the Company, principles concerning participation in shareholders‟ meetings applicable in PZU allow for exercising rights from shares and protect interests of all shareholders.
The Company‟s shareholders may attend the General Shareholders‟ Meeting and exercise the right to vote personally or through a proxy. The power of attorney to participate in the General Shareholders‟ Meeting and to exercise the voting right may be granted in writing or in an electronic form.
Sławomir Niemierka – Member of the Board of PZU Życie, Director of the PZU Group
Group in charge of security and risk management on 16 March 2012.
The Supervisory Board enacts the rules and regulations which regulate its organization and mode of operation. In accordance with the Statute, the Supervisory Board meetings are held at least once every quarter. The
The functioning and competencies of the Supervisory Board arising from the Rules and Regulations of the Supervisory Board
The Supervisory Board decided that the nominations and remuneration committee shall be composed of four persons. On 30 June 2011, the Supervisory Board appointed a nominations and remuneration committee composed of the following persons: Zbigniew Ćwiąkalski (Chairman of the committee), Marzena Piszczek
Dresler (member of the committee), Marzena Piszczek (member of the committee) and Zbigniew Derdziuk
A certified auditor appointed by the Supervisory Board of PZU based on the recommendation of the Audit
Otwarty Fundusz Emerytalny (“ING Fund”) managed by ING Powszechne Towarzystwo Emerytalne S.A. has increased its holding to 4,356,139 shares in PZU, accounting for 5.0446% of the share capital of the Company and the total number of votes in the General Shareholders‟ Meeting. As at 31 December 2012 ING Fund held