Alior Bank, and selected foreign companies. We are looking at the telematic solutions tested by LINK4; if the project turns out to be a success, we will introduce these solutions throughout the Group.
shares in Bank Pekao by UniCredit in July 2016 and the average price of Pekao shares on the Warsaw Stock Exchange, over the last six months before the agreement’s signing. The settled price was also positively verified by the market. Within just a few months of the conditions being announced, the market valuation of Bank Pekao’s shares grew by almost 20%, while S&P Global Ratings confirmed the financial strength rating and credit strength rating of PZU at A-, one grade higher than Poland’s rating for debt in foreign currencies.
Management Board intends to offer products and services that are most suitable to meet the needs, ambitions, and aspiration of the clients. CHAPTER 9. CORPORATE SOCIAL
[…] We believe that PZU will continue to pass our hypothetical sovereign foreign currency default stress test. We therefore rate PZU one notch higher than our foreign currency sovereign rating on Poland.” – explained S&P analysts in the report dated 31.10.2016.
DECEMBER execution of a contract for purchase of 20% Pekao Bank shares Execution, in cooperation with PFR, of a contract for the acquisition of 32.8% of Pekao Bank shares at the total price of PLN 10.6 billion (price per share – PLN 123.00). It was one of the largest transactions performed in the bank sector in Europe in the recent years.
DECEMBER acquisition of Artimed in Kielce Artimed offers a comprehensive scope of services, including standby surgeons and orthopedists. The center provides services to commercial patients, holders of health care insurance, and NFZ patients.
State Treasury or companies controlled by local governments also contributed to the decrease in investments (energy, public services). The investment growth rate of other companies also decreased, which was influenced by uncertainty regarding future economic conditions or regulations. The impact of inventories and net exports on the GDP growth in 2016 was positive, although only slightly so in the case of the latter.
Despite the improvement on the labor market, there was no visible increase of the nominal growth of remuneration in 2016, although surveys from the turn of the year indicate higher remuneration pressure. The average monthly remuneration in the national economy increased by 3.6%, and in the enterprise sector alone by 3.8%.
decrease in 2015. Deflation (year-on-year) began to decline in the last months of the year to finally fade completely in
The last several months of the year were heavily influenced by the US presidential election. Pre-election movements on the financial markets indicated that a potential victory of
This indicator for Poland is almost 2.5 times lower than the
PLN 3.5 2.4 Regulations on the insurance and financial markets in Poland 2016 was the first year in which insurance and reinsurance companies operated in the regime the requirements of the
(CPI) amounted to 0.1% year-on-year (-0.5% in the fourth quarter of 2015). The year-on-year change in the consumer price index was influenced mainly by alcoholic beverages and tobacco products. The unemployment rate remains stable, at
growth. Improvement of external conditions – foremost, a bigger growth of global trade turnover and a better situation in the global industry – should help Polish exports and industrial production. Our forecast assumes that the labor market situation will continue to improve. However, the increase in employment and a decline in the unemployment rate will be slower than in 2016 – due to the fact that Poland is getting close to the state of „unemployment equilibrium”
Financial Enterprises LLC the sale of shares and division agreement, which concerned the acquisition of the core activity of Bank BPH. The transaction was financed by the public issue of new Alior Bank shares in observance of the pre-emptive right. A legal merger of Alior Bank with a separated part of Bank BPH took place on 4 November
(drop by 37.3% compared with the same period of the previous year). Excluding the dividend from PZU Życie, the net profit of the non-life insurance market grew by
The value of investments of non-life insurance companies at the end of Q3 2016 (excluding subsidiary investments) was
PLN 212.4 million for the periodical premium after Q3 of 33.3% calculated using the gross written premium, confirms the high PZU’s insurance profitability level than in 2015 - this change was affected to the greatest extent by the drop in the technical result on Motor TPL insurance and fire and other tangible damage insurance
729 million, most of which concerned motor insurance, respectively: • value of the MTPL insurance was PLN 558 million, which constitutes 76.6% of the entire portfolio; • value of the motor own damage insurance premium was
PLN 88 million, which constitutes 64.0% of the entire portfolio; • insurance for other tangible damage – PLN 21 million, which constitutes 15.1% of the entire portfolio; • assistance – PLN 10 million, which constitutes 7.1% of the entire portfolio; and
August 2008; • potential raise of claims handling costs resulting from the implementation of further recommendations of PFSA
PZU Życie collected 33.7% of the gross written premium of all life insurance companies in the first three quarters of 2016, which means a substantial growth in comparison with last year’s market share (+4.5 p.p.). The main reason was the lower than market average share in the company’s portfolio of the single payment premium, of which the written premium dropped significantly.
(class I) for the periodical premium, and after Q3 2016 the share amounted to 67.1%. For the same group of risks, the share in the market, taking into account the way of concluding the agreement, was 66.7% for group agreements and 38.9% for individual agreements during the analyzed period.
Moreover, there was a number of service changes, which include: • monitoring and controlling the quality of service in medical establishments by regular testing the satisfaction of the patients, introducing the analysis of Customer Satisfaction
building the long-term value of Bank Pekao, (ii) pursuing the policy to provide development, financial stability and effective yet prudent bank management towards the bank, as well as (iii) providing adequate standards of corporate governance for the bank. The point of the agreement was to set the rules of cooperation between PZU and PFR after the realization of Bank Pekao share purchase from UniCredit and the obligations of bank’s shareholders, especially in terms of determining the method of exercising the joint voting rights attached to Bank Pekao shares, as well as to manage the common long-term policy for the bank’s activity in order to achieve the abovementioned goals. Especially PZU and
Between January and December of 2016, the banking sector generated a net profit of PLN 13.9 billion from the
in 2015 (excluding one-off events associated with the merger with the separated part of Bank BPH).
PJS-40-071/14.01.2016. Therefore, one of the conditions included in the agency agreement with Telekom Romania
At the end of 2016, TFI PZU managed net assets of over
TFI PZU one of the biggest Investment Funds in Poland – as at 31 December 2016, it was classified in the second place according to the report of the Fund and Asset Management
EUR 463 million in 2016 and was 13.2% higher than in the previous year.
The largest insurance company in Lithuania in terms of total gross written premiums from non-life insurance remains
Reserve Fund; • pension funds preparing for organizational and legal changes resulting from the transformation of open pension funds into investment funds composed of Polish shares and pension funds into investment funds; • possibilities arising due to the realization of the assumptions determined in the Plan of Capital and Strategy
(Armatura Kraków) since October 1999. At this time, 100% of the shares of Armatura Kraków are owned by the PZU FIZ AN
“Today, PZU is one of the most profitable companies in the insurance sector. However, we realize that, in order to ensure high profitability for our investors in the future and considering rapid technological changes, we also need to invest in our own development. We need to constantly develop and stay focused on the clients and their changing needs.” – Michał Krupiński,
Key changes made to PZU Strategy 3.0 adopted in January 2015 concerned the following: • increased focus on profitability of the Group’s core business
(insurance), e.g. by reducing fixed costs by PLN 400 million by 2018; • accelerating PZU Group growth rate, including development of the following areas: Zdrowie and Inwestycje; • including in PZU Group Strategy a plan for investment in the banking sector; • increased role of innovation in PZU Group as a tool for achieving goals regarding profitability and growth.
Comprehensive and multi-channel distribution and Customer service, including further development of CRM (Customer
LINK4). The Management Board of PZU intends to implement these goals by means of, for example: • permanent restoration of profitability of motor insurance and an increase of the activity on the market of profitable non-motor insurance by means of better recognition of the needs of the client and a flexible price policy; • focusing on maintaining the scale and the growth in internal sales channels (exclusive agents, branches) and improving profitability of external channels by means of better adoption of costs of service to the potential of the distributor and management of profitability in the channels; • use of the cross-selling potential of PZU Group by means of comprehensive management of PZU Group’s offer (non-life insurance, life insurance, investments, health, and pension)
Bank constituted a consolidation platform during the purchase of a part of Bank BPH which included its core operations, without its mortgage loans portfolio and the Investment Trust
3. The agreement concerning the purchase of 32.8% of shares of Bank Pekao S.A by PZU Group and the Polish Development Fund (PFR) was signed.Under the agreement, PZU Group will purchase approx. 20% of the shares, while PFR (Polski Fundusz Rozwoju S.A.) will acquire 12.8% shares of the bank.
Simultaneously, over the past few years, PZU’s operations have also included a chain of health care centers and recently banking operations – the PZU Group segment expanded under independent brands.
The main areas of activity also include: • investments – under the PZU Inwestycje brand (by TFI PZU
In motor and property claims as well as at workshops that repair equipment damaged during overload, the client – prior to deciding – can estimate the amount of compensation on his/her own in several steps. The information is sent online to 01. Event 02. Filling claims: phone, www 03. Link to the client. Self-Service 04. Determination of the scope of the damage 05. Sending of the results to PZU – automatically 06. Substantive claim handling 07. Decision 08. Payment
Życie clients show that the insured perceive the service in a very positive way. In 2016, over 30% of the clients whose issues qualified for this form of service decided to use it.
The expansion of the product offer made available to the agents continued under the framework of the Everest platform development
At the end of last year, the bank had 71 points in Tesco markets, which offered credit products under the Tesco
Group and continued insurance – Poland 6,775 6,689 6,539 6,415 6,364
The above factors were partially compensated with: • profit from the bargain acquisition of the separated part of Bank BPH for PLN 508 million, including the following: difference between the purchase price and the acquired net assets according to the accounting value of PLN 282 million; fair value measurement of asset and liability components in the amount of PLN 313 million; • PLN 119 million lower costs of depreciation of intangible assets identified as a result of the acquisition of insurance and health care companies.
As at 31 December 2016, the total assets of PZU Group amounted to PLN 125,345 million and were 18.9% higher than at the end of 2015. The growth resulted mainly from the consolidation of Alior Bank with the separated part of Bank
Total net cash flows as at the end of 2016 amounted to
towards PLN; • growth of acquisition expenses (not including reinsurance commissions) by PLN 73 million, i.e. by 25.3 % compared with 2015, resulting from higher direct acquisition costs is the result of considerably higher sales dynamics; • slight drop in administrative expenses to PLN 125 million, i.e. by 1.6% from the previous year mainly as a result of limiting the expenses due to the application of cost discipline e. g. in the scope of property and marketing costs.
◦ lower level of compensation and benefits, mainly resulting from death and permanent health impairment in individually continued insurance; • acquisition costs in the group and individually continued insurance segment in 2016 amounted to PLN 329 million, a PLN 27 million (7.6%) drop in comparison with the corresponding period of the previous year. Factors determining the level of direct and indirect acquisition costs included modification in the agency agreement in the bancassurance channel, due to which the presentation of remuneration for agency activities comprising of the participation in administrating the protection insurance agreements was adjusted (a transfer from the acquisition costs to the administrative expenses of the amount
128 million in comparison with the corresponding period of the previous year and resulted mainly from the growth in the allowances for receivables from the clients of the non-financial sector.
investment contracts, i.e. PZU Życie’s products which do not transfer significant insurance risk and which do not meet the definition of an insurance contract (such as some products with a guaranteed rate of return and some unit-linked products).
Management Boards and Supervisory Boards of companies, as well as dedicated Committees, play the key role.
The management boards of the PZU Group entities are responsible for performing their duties in line with generally applicable regulations of domestic and international law, especially for implementing adequate and effective risk management system.
• banking activity at Alior Bank – as a result of which PZU
Group significantly increased exposure to interest rate risk and credit risk.
The market risk is measured using the following measures of risk: • VaR, i.e. Value at Risk – a risk measure quantifying the potential economic loss which will not be exceeded over a period of one year with a 99.5% probability under normal market circumstances; • standard formula; • exposure and sensitivity measures; • accumulated monthly loss.
PLN 183 million (PLN 124 million as at 31 December 2015) for impairment losses and PLN 78 million (PLN 97 million as at 31 December 2015) for IBNR respectively.
Monitoring and controlling operational risk is carried out mainly by established operational risk indicators which make it possible to assess the change of operational risk level and the factors that influence the risk level in business activities.
portfolios. PZU’s risk is also mitigated through reinsurance of the financial insurance portfolio.
In 2016, PZU shares remained among the top most liquid companies on WSE. With capitalization amounting to
(at a single session) did exceed 7.7 million share units. The announcement of the dividend policy (4 October 2016) was accompanied by strong emotions as well. On 4–5 October 2016, the total turnover reached 16.5 million shares and the price rose by 11.3% in total.
Downgrading Poland's long-term foreign currency sovereign credit rating to "BBB+" from "A-"
In 2016, PZU actively supported individual investors, specifically by providing credible and relevant information on the activity of PZU, the insurance industry, and financial markets. In this range, PZU both realized the projects oriented to improve communication (including the online report, newsletter, factsheet) and was pro-active in providing direct access to the Company’s representatives, including: • participation in Poland’s biggest conference for individual investors organized by Individual Investors’ Association, named 20th Wall Street Conference in Karpacz (over 1,000
PZU received the following awards and prizes in this area: • First place for the annual online report (for the second year running) in the „Banks and financial institutions” category in the Best Annual Report competition organized by Polish Institute of
Kryształ wśród raportów W PZU wiemy, czym jest przejrzystość – nasze wysokie standardy w zakresie raportowania fi nansowego online już po raz drugi zostały docenione pierwszą nagrodą w konkursie IRIP za najlepszy raport roczny w Internecie.
Zapraszamy do zapoznania się z treścią raportu w nagrodzonej, innowacyjnej formie na raportroczny2015.pzu.pl.
WSE in December 2016, following the announced intention to purchase the package of shares of Bank Pekao. The spread between the highest and the lowest target prices also experienced a considerable decline, which can be interpreted as a sign of declining uncertainty. The end of the year also saw lower polarization of the given recommendations. The clearly higher uncertainty at the beginning of the year was demonstrated in the wider range of recommendations, i.e.
overweight and underweight. The only recommendations left in December 2016 were to buy (69.2%) and neutral (30.8%).
The capital management policy is based on the following rules: • PZU Group’s capital management (including surplus capital)
As per the supervisory institution’s recommendation, the dividends should be paid only by the insurance companies that meet specific financial criteria. At the same time, the dividend payment should be limited to the maximum of 75% of the 2016 profit, maintaining the capital requirement coverage for the quarter concerning the dividend payout at minimum 110%. Simultaneously, PFSA permits dividend payment
March 2014 onwards, the rating of PZU is one notch above foreign currency sovereign rating on Poland. .
* profit attributed to the owners of the dominating company ** dividend from surplus capitals paid in 2013 (PLN 2.00 per share), not included in dividend payout ratio *** the rate calculated as dividend as at the ex-dividend date vs. share price as at the end of the given year **** by the date of preparing this Management Report of PZU Group, the Management Board had not adopted a resolution concerning distribution of profit for 2016.
Company name Rating and outlook Date of update Rating and outlook Date of update
EUR 500 mln to 07/03/2019 BBB+ 21 January 2016 A- /Stable/ 20 June 2014
Ethics, regarding the firm as a whole and its individual employees, is the foundation of all activities performed by PZU
Language in some of its branches. The service is provided in collaboration with Migam.org and facilitates a video connection with a translator via a tablet. The service is already operating in eight selected branches SEE. The solution implemented by
PZU does everything in its power to create a working environment which assists the employees in finding and strengthening their motivation, and thus raising the value of their work, and in reaching top effectiveness in the interest of the clients, shareholders, and the entire environment of the
(themed days with attractions and dressing up), contests; • development of competences – initiatives building and developing the competences and talents of the employees, e.g. open courses (creative thinking, ways to fight stress, cooperation), development program for leaders, development program for selected consultants; • communication – initiatives improving internal communication and allowing for getting to know one another, e.g. “Communicate to start the day” breakfast with the management or executives, dedicated mailing and contact box, internal intranet website, periodical ZOOM
Enforcement of these rules allows for clear association of effectiveness with raises, a developmental offer, and promotions, and has also provided the managers with tools to manage employee motivation. What is equally important, all employees take active part in assessment, have the opportunity to share their opinions with their superiors, and take responsibility for their individual development.
Nordic walking. In total, they include almost 800 people – the employees of PZU Group (PZU / PZU Życie / PZU CO / PTE
• promotion to Let’s Go League 1 (soccer) and the second place in Let’s Go League 1,
Corporate social responsibility activity. Most CSR GLOSSARY operations are conducted in the following areas: • creation of a friendly workplace,
8. General Shareholders’ Meeting, Supervisory Board and Management Board 9. Remuneration of the members of PZU Group’s bodies
The split of shares was performed through the exchange of all shares in 1:10 ratio. The split of shares had no influence on the share capital of PZU.
From 2013 to 2016, no employee stock ownership plans existed in PZU.
Directors of the PZU Group hold any PZU shares or rights to
Shareholders’ Meeting in the form of a resolution passed by a majority of three fourths of votes. In cases specified in the Act on Insurance Activity GLOSSARY such change must be approved by the PFSA and then recorded in the National
Member) concerning e.g. professional and personal relations, especially with members managing or supervising PZU and entities in PZU Group. The Independent Member has to present a written statement that all independence criteria provided for in the By-laws have been met and inform the
Computer Science, specialization in Management and Marketing, major in Business Management.
In accordance with the Regulations of the Supervisory Board, once the Company’s shares are quoted on the regulated market, as understood by the Act on Trading in Financial
Board of the new term before the end of the current term.
Board; • Dariusz Krzewina – Member of the Management Board; • Robert Pietryszyn – Member of the Management Board; • Maciej Rapkiewicz – Member of the Management Board.
The regulations of the Management Board determine: • scope of Management Board’s competencies and activities that require approval or confirmation by the Supervisory
University of Liverpool as an engineer. He is a Chartered Accountant, certified in the United
Supervisory Board of Morizon S.A (2015-2016), President of the Supervisory Board of Dom Invest sp. z o.o. (from 2016), Vice President of the Supervisory Board of Przedsiębiorstwo Energetyki
Graduate from the Faculty of Economic Sciences and Management at the University of Szczecin.
PZU shares. As at 31 December 2016 Alior Bank held 18,700
Information on off-balance sheet items as at the end of 2016 has been presented in CHAPTER 6.5 STRUCTURE OF ASSETS
The financial position of the Issuer is very good. It meets all the security requirements imposed by the Act on Insurance
Appropriations on net profit during the financial year - - - (1 727) -
Agricultural insurance claims higher than the average of the last 3 years (237) - - - -
NPS (Net Promoter Score) – a method of assessing loyalty of a given company’s customers; calculated as the difference between promoters and critics brand inward reinsurance – reinsurance activity entailing a reinsurer or reinsurers accepting a portion of the insurance or groups of insurance yielded by the cedent.OCCP – Office of Competition and Consumer Protection; Polish anti-trust authority that operates to ensure increased competition, secure business entities exposed to monopoly practices, and protect interest of consumers, ww.uokik.gov.pl