Corporate governance 137 10.1 Corporate governance principles applied by PZU 138 10.2 Application of Best Practices of WSE Listed Companies 138 10.3 Application of Corporate Governance Principles to Supervised institutions 138 10.4 Control system applied during preparation of the financial statements 140 10.5 Entity authorized to audit financial statements 141 10.6 Share capital and shareholders of PZU; stock held by members of its authorities 142 10.7 PZU’s Articles of Association 143 10.8 General Shareholder Meeting, Supervisory Board and Management Board 143 10.9 Remuneration of the members of governing bodies 164
However, numbers and results are equally as important as the realised projects, and the ones we achieved in 2014 and in the previous years place PZU Group among the most profitable institutions in the country and in Europe.
The event, which became an additional catalyst for change and PZU’s offensive turn towards modernity, was its IPO in 2010. The value of the public offer was almost 8.1 billion PLN
Net profit (PLN million) and ROE (%)Gross written premium (million PLN)
Environmental impact – our activities take two forms: of responsible internal resource management and of building environmental sensitivity and awareness among stakeholders
Both PZU and PZU Życie have had a Standard&Poor’s financial strength rating at the “A” level since 2009. This is one of the top ratings available for a Polish company.
June 17 June – The PZU Management Board offers the highest dividend in the history of PZU – PLN 54 per share.
April 4 April – PZU introduces a revolutionary service – Direct Claims Handling. PZU Clients with TPL policy can file and handle the vehicle damage claims when the perpetrator is insured in a different company.
Occupational Pensions Authority) published the first set of recommendations, i.e. the level 3 documents.
In 2014, PFSA released recommendations concerning flood risk management in the insurance sector, insurance distribution, motor insurance claims handling, outwards reinsurance/ retrocession, IT management and ICT security.
PTE in successive years because of the lower management fee and lower contributions. At the same time, as the result 28MANAGEMENT’S REPORT OF THE PZU CAPITAL GROUP FOR 2014
TFI are implementing procedural and IT solutions aimed to satisfy the requirements of the Intergovernmental Agreement
Furthermore, there is ongoing work on the new version of the
Geopolitical factors will also have considerable impact on the financial markets in 2015, as they had in 2014. The Russian-
Increase in gross expenditure on tangible assets in % (y/y) 7.0 9.5 0.9 (1.5) 9.3
* as at 31 December 2014, Grupa Armatura included the following entities: Armatura Kraków SA, Armatoora SA, Armaton SA, Armatura Tower Sp. z o.o., Arm Property sp. z o.o., Armagor SA and Armadimp SA. ** Grupa Centrum Medyczne Medica includes the following entities: Centrum Medyczne Medica Sp. z o.o. and Sanatorium Uzdrowiskowe “Krystynka” Sp. z o.o. The structure does not cover investment funds.
PZU Ukraine Life Kiev PZU – 53.4723% PZU Życie – 0.0053% PZU Ukraine – 46.5224%
Excluding the dividend from PZU Życie (which constitutes the profit generated by the company in 2013), the net profit of the non-life insurance market dropped by PLN 0.33 billion
The total value of investments and deposits of the non-life insurance companies (excluding investments in subsidiaries)
In scope of PZU Group’s development strategy assuming the strengthening of PZU’s position in Poland and international expansion, PZU signed the agreement for the acquisition of Link4 shares on 17th April 2014. The transaction of the acquisition of Link4 shares was closed on 15th September 2014 and final settlement of the transaction on 11 march 2015, as the purchaser, PZU paid the total price of
The reasons of the lower single premiums in recent years include the current situation of the capital market. The record low interest rates reduce the profitability of short-term endowment policies (polisolokaty) thereby generating greater interest in other investment products, i.e. the investment funds offered by TFI or the unit-linked insurance products.
Inwestycyjnych PZU SA (TFI PZU). It offers products and services to both mass market and institutional customers, including additional investment/ savings programmes within pillar III of the social insurance system, including Individual
(compared to PLN 2.2 billion at the end of 2013 and PLN 1.8 billion in December of 2012).
The condition and results of the investment fund market will primarily depend on: • operations of central banks; • the economic climate on capital markets (including the prices of raw materials); • attractiveness of traditional bank deposits and profitability of instruments.
EUR 21.4 million. The transaction has not been ultimately settled. As a result of transaction intangible assets in the amount of EUR 7.4 million and the goodwill in the amount of EUR 26.4 million have been recognized.
(-33.6%), voluntary property insurance (-26.6%), voluntary other TPL insurance (-34.8%), and credit insurance (-40.3%)
TOP 20 life insurance companies generated 98.8% of the written premium.
In 2014, the Ukrainian insurance market experienced difficult conditions associated with the state’s weakened economy, the annexation of Crimea, the armed conflict in the east, low client activeness, devaluation processes, and the decline of bank system liquidity. The market continued to present a high level of acquisition costs, problems with preservation of current liquidity of some insurance companies, and the reduced confidence among individual clients, which entailed the problems associated with the liquidity of a part of the banking system. In 2014, due to the aforementioned events, the Ukrainian clients often decided to purchase insurance and investment products from companies holding the western capital share. The previous determinant of the insurance company was the price but in 2014 it was moved aside by credibility and solvency.
At the end of 2014, the Company was cooperating with more than 1,380 health care establishments throughout the country and had a leading position on the market of intermediation in the sale of damaged vehicles through an on-line auction platform.
4.1 Effects of the PZU 2.0 strategy 2014 was the last year of PZU 2.0 – the PZU Strategy for the years 2012-2014 – which was approved in December 2011.
One of the main contributors of the growth of the Polish economy will still be individual consumption, which will grow at the annual pace of 2.6-3.3%.
– This market will benefit from the low interest rates and the rising wealth of the society. It is projected that the household assets invested in TFI will grow at the average annual pace of approximately 12,3%; • great potential of health insurance and prepaid health packages – Due to the difficult access to the NFZ benefits, the private expenses for health insurance and prepaid health packages will grow at the average annual pace of *Q4 2014 Forecast 60MANAGEMENT’S REPORT OF THE PZU CAPITAL GROUP FOR 2014
(“Cztery Pory Roku”) additional insurance (also for continued insurance). 4. Expansion of the own health care centre network. Purchase of shares in Elvita Jaworzno
(quick pricing changes and product implementation); • complete image of the client – a 360° view of the client with all relation, change and contact history; • multichannel sales and customer service with full availability of the electronic channels to the client; • complete digitalisation of client processes (elimination of
PZU consequently trained successive end users of the system throughout 2014. The total of 17.5 thousand users started work under the Everest system until the end of 2014, including all branch employees, tied agents, and office agents.
employees. It should be noted that the proportion of women in the employment structure has been stable in recent years.
7.1 million had been given under the facility provided for the period from 21 October 2014 to 20 October 2015.
PLN 126.4 million (a 15.5% increase compared with 2013). This was caused foremost because of the increased cost of the agency network’s commission, which was the result of a change in the remuneration policy, and which contributed also to a higher volume of new sales of protection products, and also to changes in the contract’s terms and conditions in the case of life insurance where the investment risk is borne by the policyholders in the bancassurance channel. The above-mentioned effects were offset by a lower sales commission which was caused by a withdrawal of the Plan na Życie savings product with a protection component and regular premium and limited cooperation with Bank Handlowy; • administrative expenses in the segment were at the same level as in the previous year; • changes in the other revenues and expenses category
Income from operating activities in the investments segment amounted to PLN 578.9 million (external operations only) and was 35.4% lower than in 2013. It was mostly a one-off effect of the beginning of the consolidation.
PLN 374.5 million, i.e. was 65.9% lower than in the previous year. In particular, sales of short-term endowment products dropped (by PLN 711.9 million, the effect of the strategy consisting of withdrawing from this type of products); • deterioration of the investment income. The result was
Fund charge in the current year (eliminated for the purpose of the consolidated result).
rating above Poland’s foreign currency sovereign rating for debt in a foreign currency.
The reporting aims to ensure efficient insurance risk communication and supports insurance risk management at various position from the employee level to the Supervisory
Insurance risk management process are carried out, in particular by: • specifying the level of tolerance to insurance risk and monitoring thereof; • business decisions and sales plans; • calculating and monitoring the adequacy of technical provisions; • tariff strategy, as well as monitoring existing estimates and assessing the adequacy of the premium; • the process of assessment, measurement and acceptance of insurance risk; • the use of insurance risk mitigation tools, including, in particular, reinsurance and prevention.
Compliance risk is identified and assessed for the individual internal processes by the managers of organizational units, in line with the division of reporting responsibilities. Additionally, the compliance unit identifies risks on the basis of entries in the register of conflicts of interest, gifts, benefits and irregularities, as well as the enquiries received.
The analysis presented above is a sensitivity analysis of the net result and equity to changes in the assumptions used to calculate the capitalized annuities. The analysis does not take into account the impact of changes in valuation of the deposits taken into consideration in calculation of the reserve on the net financial result and equity.
PZU Group’s guarantee capital coverage with own funds 873.6% 1,055.5% 1,217.3% 1,058.6% 1,103.7%
The main trends of the global financial markets in 2014 were strongly associated with the development of the economic situation in the USA and the euro zone and with their central bank’s policy SITUATION ON FINANCIAL MARKETS SECTION.
PLN 486, which was a growth by +8.3% compared to the closing price of 31st December 2013 of PLN 448.95. Taking into account PLN 34 per share of the dividend paid in 2014, the PZU shares allowed the investors to earn 15.83%. Thus,
implemented its PZU 2.0 strategy. Restructuring of PZU Group brings the expected results in terms of cost optimisation and improved operational efficiency. PZU cares about the image of a modern insurer, undertakes innovative health-related projects and introduces innovative solutions. Refreshment of the brand, revitalisation of the branch network and actions aimed at providing a high level of customer service - these are just a few of the initiatives taken by PZU in recent years.
EPS (PLN) Earnings (losses) per share / number of shares 34,.37 38.16 37.68 27.14
Year” of the contest organised by Puls Biznesu. PZU was also ranked second in the categories “Competencies of the
group of investors who know the company and are wellinformed; • adequate coverage for PZU shares by analysts of investment banks and brokerages (sell-side) and ensuring the fair valuation of PZU shares by providing analysts with high-quality information on the activities of PZU, industry trends, factors affecting the financial results and feedback on the analysis of the issued recommendations; • providing a broad market for PZU bonds by carrying out pro-investors activities addressed to debt investors; • creating standards of investor relations for other listed companies to emulate; • monitoring changes in the shareholding structure in order to take on appropriate targeting of actions and assess the effectiveness of IR plans.
On 13th May 2014, the Management Boards for PZU decided to update the Capital Structure and Dividend Policy of PZU
Issue value: EUR 500 mln Margin: 85 b.p. above Mid-Swap 5-year senior bonds
Dividend per share as at ex-dividend date (PLN) 34.00 49.70 22.43 26.00 10.91
December 2014 the supervisory body recommended that the insurance companies continue their prudent dividend policy using the generated profit to enhance their capital standing.
PZU takes utmost care for safety of entrusted and processed data. Therefore, Personal Data Protection Act is rigorously observed, allowing processing of data only if approved by its owner. As a data administrator PZU strictly controls which personal data are introduced, when and by whom, and to whom they are transferred. We also take care to protect the interests of individuals, in particular in relation to processing of data in accordance with the law, collecting them for
Poland (Stowarzyszenie Compliance Polska). This prestigious award in the “Best compliance on the Polish financial market”
Supported by PZU Foundation and using the Prevention Fund, we get strongly involved with social issues.
Moje Miejsce (Community Centre is My Place); • Centrum im prof. Bronisława Geremka Foundation in
Foundation) to fund a finance and safety education project called Bezpieczne wędrówki. Od grosika do złotówki (Safe
(Young Disabled People Able with PZU) competition with grants for social inclusion projects for the disabled and their families. One-off support was also granted to the following organizations.
European Commission of 14th December 2004 fostering an appropriate regime for the remuneration of directors of exchange listed companies (2004/913/EC), supplemented by recommendation of EC of 30th April 2009 (2009/385/
IV.12, regarding enabling shareholders’ participation in general meetings using IT tools to allow mutual real-time communication and participating in discussions during the meeting for shareholders who are physically absent at the meeting venue, please note that in our opinion, there are a number of technical and legal factors that may affect the course of a general meeting, and therefore the appropriate application of the above rule. Moreover, in our view, principles concerning participation in shareholders’
General Shareholder’s Meeting and raise doubts about the effectiveness of the resolutions adopted during the meeting; the occurrence of the above-mentioned risks may affect the correct application of the principle in full; • in relation to the principle contained in § 12.2 of the
Court Register. The Supervisory Board can approve the unified amended text of the Articles of Association.
Daniluk and Włodzimierz Kiciński. At the same time, on 18th June 2014, the General Shareholders’ Meeting of PZU
Wyborcza daily newspapers. In 1999 - 2004 he was the Chief Economist of Bank Pekao S.A.
He completed his studies at the Faculty of Internal Commerce and Services at the Warsaw
Bank Kredytowy SA prior to the merger with BPH SA, as well as in PKO Bank Polski S.A. He was the coordinator of the Municipal Development Program organized by the World Bank and the
Management Board; • approval of the regulations of the Management Board; • examination and evaluation of issues submitted by the
Additionally, the Statue stipulate that a vote may be cast in writing through another member of the Supervisory Board.
In accordance with the Regulations of the Supervisory Board, apart from appointing the audit committee and promotion and compensation Committee, provided for in the Statue to properly perform its supervision, the Supervisory Board may appoint other permanent advisory and consultative committees whose competencies, composition and way of work is specified by regulations adopted by the Supervisory
Dariusz Filar was indicated by the Supervisory Board as an independent member, having accounting and audit qualifications as defined in Article 86.4 of the Act on statutory auditors GLOSSARY.
Dariusz Krzewina – CEO of PZU Życie, PZU Management Board Member
Director in PZU and since January 2006 he was the Coordinating Director in charge of Corporate
Financial Division Deputy Head in the Head office of PZU and PZU Życie. From November 2008 to
Managing Director in charge of Insurance Products – Head of the Mass Client Function. He has been in the Management Board of PZU Życie since 2008. He became a Director of PZU Group in
reorganization in the Credit Agricole Group in Poland. The next stage in his career was the launch of Polbank EFG, where he acted as a CIO responsible for the IT structure implementation in the Polish branch and he co-designed universal IT infrastructure for the CEE as a part of the
Przemysław Henschke joined the Management Board of PZU Życie on 3 February 2012. On 7
The guarantee issued by PZU is irrevocable and unconditional and will expire on the expiry of the bondholders’ claims against PZU Finance AB. PZU is not entitled to receive any remuneration for the issuance of the guarantee.
President of OCCP are presented in the financial consolidated financial statements of PZU Group for the financial year ended 2014.
Data transformed for the year 2013. For 2010-2012 according to approved financial statements.
8. Property or its part excluding property or its part for own use 76,421 0.4% 25%
A. Life insurance provision where the (investment) risk is borne by the policyholder 4,966,674 100.0% x
Civil Code – Act of 23rd April 1964 – Civil Code (Journal of
The combined ratio should not exceed 100% as that would signify that the revenues from the sales of insurance are insufficient to cover claims and claims handling expenses.