The PZU Group’s consolidated assets amount to PLN 329 and it enjoys the trust of 22 million clients in five countries by offering products and rendering services to retail clients, small and medium enterprises and business entities. The Polish market is the PZU Group’s core market measured by the scale of its business and client numbers. Nevertheless, its subsidiaries play an important role on the markets in Lithuania, Latvia, Estonia and Ukraine.
In the banking segment, the PZU Group’s operations are conducted in the following four areas: bancassurance, assurbanking, cooperation and operational synergies.
The promise of distributing profits to shareholders in the form of dividends also evidences PZU’s attractiveness as an investment, where these profits are not needed to underwrite its rapid growth. The dividend per share paid from 2017 earnings (on 3 October 2018) was equal to PLN 2.50, representing 78.6% y/y growth.
Selected awards and distinctions The PZU Group received numerous awards and distinctions for the activity in 2018. We present some selected ones below.
Gross Domestic Product According to preliminary estimates of the Central Statistical Office, in 2018 GDP increased 5.1% in real terms, which was the strongest growth since 2007. Household consumption, up 4.6% from 2017, remained the main driver of the country’s GDP growth. This persistently robust consumption growth was supported by higher employment, a decline in the rate of unemployment and higher real income. Investments in fixed assets were a major contributor to the strong economic growth. The growth rate of investments in 2018 accelerated to 7.3% from 3.9% the year before, also owing to public investment projects co-funded by the European Union. The GDP growth rate was also driven by rising inventories. On the other hand, the deteriorated condition of German industries and the slowdown in economic growth in the euro area suppressed the growth rate of Polish exports, whereas imports remained high due to strong domestic demand. The contribution of net exports to the GDP growth rate was negative (-0.2 p.p.).
Increase in GDP of Baltic states at the end of Q3 2018 on an annual basis: Latvia by 5.3% Estonia by 4.2% Lithuania by 2.9% on an annual basis
The European insurance market generates approximately 30% of the world’s gross written premium3. According to data published on October 30, 2018, insurers operating in Europe, in countries affiliated to Insurance Europe, obtained in 2010 EUR 1 213 billion in premiums4. In 2015-2017, the European insurance market grew at an average rate of 0.6%.
In 2017, the statistical European spent EUR 2,030 on insurance, whereas the average Pole spent EUR 380, or more than 5 times less. Insurance spending in the Baltic states was even lower. In 2017, the average Lithuanian spent EUR 278 on insurance, the average Estonian spent EUR 251 and the average Latvian spent EUR 123. In 2017, the average Ukrainian spent only EUR 33 on insurance.
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The Polish banking sector operates in accordance with the classic model of financial intermediation in which banks mainly provide loans to the non-financial sector using their customers’ deposits in the process. This is reflected in the high share of loans in the banking sector’s assets, which at the end of 2017 accounted for 68% of such assets and was higher than the average for the banking sectors of the European Union (65%) and Central and Eastern Europe (66%). The share of other types of assets in the banks’ balance sheets, in 8 European Central Bank, particular those making up the “held for trading” portfolio, was much lower in Poland, just like in other Central and Eastern European countries, than in more developed economies.
9 BZGD research is conducted in the international research network called Household Finance and Consumption Network (HFCN). Central banks and statistical offices representing euro area countries, Poland and Hungary participate in this undertaking initiated in 2006 and coordinated by the European Central Bank. ZGDwP_20180109.html
To strengthen consumer protection the President of the Office of Competition and Consumer Protection obtained additional powers in the Act of 16 February 2007 on Competition and Consumer Protection. He may impose 2.6 Regulations pertaining to the insurance market and the financial markets in Poland
Employee Capital Schemes (ECS) GLOSSARY are a solution to increase future pensions. Their organizational rules have been laid down in the act of 4 October 2018 on Employee Capital Schemes. These schemes involve the obligation of employers to administer capital schemes for their employees’ retirement. Their launch will take place on 1 July 2019 and sequentially they will apply to businesses with more than 250 employees, small and medium-sized companies and public finance sector entities. Every employer has an obligation to set up an ECS and offer it to its employees, while the participation of employees is not mandatory. They can opt out of participating in a scheme at any time. The main contribution in an ECS is paid by the employer (1.5%) and the employee (2.0%) alike. Additionally, the state is to make a welcome contribution to an employee’s ECS in the amount of PLN 250 and an additional annual contribution of PLN 240. Moreover, employees and employers will have the option to make an additional
Drafted legal regulations that may have a significant impact on the PZU Group’s business Legislative work is underway on the act on rendering services to pursue compensatory claims. The bill aims to regulate the rules for commercial undertakings active in the business of pursuing compensatory claims to conduct their business. The bill calls for curtailing the fees for activities related to pursuing these claims, introducing a requirement for clients to approve the legal actions executed by their advisors to waive a claim, disbursing damages directly to injured parties and introducing compulsory TPL insurance for losses caused in the course of pursuing compensatory claims.
The Supreme Court also explained the doubt concerning the term for the prescription of claims resulting from unit-linked insurance policies recognizing that this period is 10 years (case file III CZP 13/18, III CZP 20/18 and III CZP 22/18).
Factors specific to the sectors in which the PZU Group operates In addition to the above factors influencing the conditions of operation and the Group’s results, the situation in individual areas of business is influenced by sector-specific factors and evolution therein.
1 PZU Zdrowie has 6 branches: CM Nasze Zdrowie, CM Medicus, CM Cordis, CM Warszawa, CM Kraków i CM Poznań 2 The Centrum Medyczne Medica Group is composed of the following companies: Centrum Medyczne Medica Sp. z o.o. and Sanatorium Uzdrowiskowe “Krystynka” Sp. z o.o. 3 The Alior Bank Group is composed of the following companies: Alior Bank SA, Alior Services sp. z o.o., Alior Leasing sp. z o.o., Meritum Services ICB SA, Alior TFI SA, New Commerce Services sp. z o.o., Absource Sp. z o.o. 4 The Bank Pekao Group is composed of the following companies: Bank Pekao SA, Pekao Bank Hipoteczny SA, Centralny Dom Maklerski Pekao SA, Pekao Leasing sp. z o.o., Pekao Investment Banking SA, Pekao Faktoring sp. z o.o., Centrum Kart SA, Centrum Bankowości Bezpośredniej sp. z o.o., Pekao Property SA, Dom Inwestycyjny Xelion Sp. z o.o., Pekao Investment Management SA, CPF Management 5 The Armatura Group is composed of the following companies: Armatura Kraków SA, Aquaform SA, Aquaform Ukraine TOW, Aquaform Romania SRL The structure does not include mutual funds or companies in liquidation.
The increase in the technical result in motor insurance chiefly ensues from the higher earned premium (up PLN 1,936 million, +14.5%) following the price hikes made in recent years that outpaced the growth in claims paid (up PLN 1,068 million, +10.9%) despite incorporating the additional provision estimate to cover the claims for pain and suffering caused by the vegetative state.
* PZU Group – PZU, Link4, TUW PZUW ** PZU Group’s market share in non-life insurance on direct business at the end of Q3 2018.
medical care in the event of a traffic accident or an accident at work. The scope of available services includes specialist consultations, selected diagnostic tests and a list of physical therapy procedures.
At the end of the third quarter of 2018, Alior Bank was the seventh largest bank in Poland (in terms of the value of its assets).
New products and services In 2018 the key new products and services in the Alior Bank Group’s offering included: • “Pożyczka na piątkę” cash loan/consolidation loan with a very attractive 5% interest rate independent of the loan amount – addressed to clients who have no cash loan/ consolidation loan with Alior Bank; • Online loan offer, in which the Bank refunds interest on every twelfth installment repaid; • “Pożyczka dwuosobowa” cash loan/consolidation loan, which allows one to obtain an attractive price of a product (reduction of all costs by 33%) if the loan offer is used by two or more borrowers; • deployment of Apple Pay in June enabling iPhone owners to make contactless payments for products and services using their handset. On top of the payment solutions already available, i.e. Android Pay, HCE and BLIK, this heralds another innovative payment solution forming a component of the Digital Disruptor Strategy; • preparing a new investment certificate offer for selected Private Banking clients entailing a limited capital guarantee and a conditional early call option known by the name of “autocall”. In 2018 thirteen issues of this type were carried out for a total nominal value of PLN 218 million; • continuing the agency training program to offer individual insurance policies; • implementing property insurance in cooperation with PZU to be available to mortgage loan borrowers in Alior Bank; • implementing life insurance for cash loan borrowers in cooperation with PZU Życie; • rolling out Konto Mocno Oszczędnościowe (Mega Savings Account) that offers attractive interest for new deposits and moreover, free-of-charge wire transfers by Internet to one’s own checking and saving account in Alior Bank; • cooperating with BANCOVO to launch the first, fully digital financial intermediation platform; Operational launch of BANCOVO, a fully-digital financial intermediation platform was held on 6 March 2018. As a result, for the first time in Poland, clients obtained a true online access to actual offers of numerous banks and loan providers
• launch of inPZU SFIO Parasolowy, a new product line of passive funds; • difficult situation on the equity market causing outflows from this class of funds; • unfavorable sentiment towards closed-end funds on the domestic market.
The structure of non-life insurance in 2018 was dominated by motor insurance, which accounted for 58.1%, including MOD insurance accounting for 34.6%. Property insurance collected 28.5% of the gross written premium on the market.
Ukraine Life (a life insurance company), referred to as “PZU Ukraine Life”. In addition, LLC SOS Services Ukraine performs assistance functions.
Meet our intern in the #IT area. Agnieszka studies IT and econometrics at the University of Warsaw. She is honing her analytical and programming skills in the Information Management Department, maintenance and implementation team. Agnieszka leads a healthy lifestyle; she regularly goes to the gym and prepares health meals which she describes in her Kitchen Madness blog.
Launch an integrated CRM platform – to provide rapid access to information pertaining to products and services
Metric: percentage of marketing consents and client contact data in PZU and PZU Życie.
Offering bank products in the course of insurance-related contacts (sales and service), including “lead generation” through PZU’s sales network Sales efforts directed to PZU’s clients in connection with the occurrence of specific life events such as childbirth, the purchase of a car, a motor claim or a property claim Special offers for PZU clients (discounts / cash back) and strategic partnerships
#6: Converting the sales network into a general sales network Initiative: modify PZU’s proprietary networks in the direction of becoming more universal in nature. This project applies to channels fully controlled by the PZU Group: branches, tied agents in life and non-life insurance and the corporate sales network.
Metric: third party assets under management (PLN billion), net result on asset management (PLN million), percentage of assets on the employee capital schemes (ECS) makret.
Metric: number of products available in the direct channel (Internet and telephone); market share held by PZU and Link4 of the non-life insurance sold in the direct channel (at least 50% by 2020)1.
• the agency network model was reorganized under efforts focused on sales growth in 2018 with respect to dedicated sales structures, compensation and cost control as well as the employee structures to handle the SME portfolio.
3. PZU Zdrowie’s acquisition of equity stakes in Centrum Św. Łukasza and Elvita’s acquisition of equity stakes in Multimed in 2018. Additionally, PZU Zdrowie acquired equity stakes in Alergo-Med in January 2019.
2. The banking segment’s contribution to the PZU Group’s operating result was PLN 4,036 million at the end of 2018.
3. Work was continued to achieve income and cost synergies in the cooperation between PZU and the banks in its group (Pekao, Alior Bank).
Property and TPL insurance for companies We support large corporates, small and medium enterprises and farms. We insure their property and care for their employees. We also lend a helping hand in tough circumstances related to practicing a profession.
To track on a continual basis trends, changes and new developments in innovation Link4 constantly cooperates with trend watchers and the startup community. In 2018 Link4 partnered with the insurtech path in the accelerator program organized by MIT Enterprise Forum Poland. After the program ended the company began to cooperate with two startups through pilot projects.
Artificial intelligence solutions implemented by PZU LAB used for failure prediction are another example of risk management innovations. They make it possible to detect irregularities in the operation of machines, going back as much as tens of hours earlier than the existing systems. This has paramount importance especially for complicated industrial installations (such as, for example, turbines) because it makes it possible to avoid damages and losses in the range of tens of millions of zlotys.
Distribution channels Pekao’s customers can use a developed network of branches and ATMs, which provides convenient access throughout Poland, as well as a professional call center and a competitive Internet banking and mobile banking platform for individual and corporate clients, and for small and micro businesses.
Since 2017, the bank has been implementing a project of behavioral segmentation of retail clients, which allows it to target products and services to the appropriate recipients. Behavioral segmentation is applied to the development of the product offering and also to the support given to the sales network. In 2018, the bank continued to implement the strategic segmentation of its clients. It implemented an innovative solution, i.e. customer surveys carried out using Dronna, a speech synthesizer combined with Data Mining models, which enabled telephone contact with 3.5 million clients. The knowledge of customer needs and the focus on segments of strategic importance allowed the bank to implement the new Savings Account quickly and efficiently. In one of the regions, the bank tested the implementation of the Strategic Segmentation in the sales network; after 6 months it contributed to an increase in the sales of checking and saving accounts by 71%.
3 Study conducted by the Gfk Polonia institute, 2018 4 Customers of Banks in Poland, Kantar Millward Brown, 2018
In 2018, the PZU Group generated a result before tax of PLN 7,086 million compared with PLN 5,474 million in the previous year (up 29.4%). Net profit surged to PLN 5,368 million, i.e. PLN 1,183 million more than the result in 2017. Net profit attributable to the parent company’s shareholders was PLN 3,213 million compared to PLN 2,895 million in 2017 (up 11.0%).
Net revenues from commissions and fees 2,620 1,762 544 243 351
Financial Results * Interest rate, foreign exchange and equity price derivatives duly presented in the categories of debt market instruments – treasuries, money market instruments and listed and unlisted equity instruments.
The PZU Group’s receivables, including receivables under insurance contracts and current income tax receivables were PLN 6,343 million and represented 1.9% of its assets. For the sake of comparison, at the end of 2017 they stood at PLN 9,096 million (2.9% of the Group’s assets) and their decrease was caused mainly by the drop in outstanding transactions on financial instruments and margin calls.
The largest item of equity and liabilities at the end of 2018 were financial liabilities representing 71.9%. The value of this item reached PLN 236,316 million and included in particular: • l client deposits liabilities in the amount of PLN 206,909 million (an increase in current and term deposits in Pekao and Alior Bank by PLN 9,500 million compared to December 2017); • liabilities on the issue of own debt securities totaling PLN 12,009 million, including: ◦ PLN 5,922 million on bonds, of which EUR 850 million are Eurobonds issued by PZU Finance AB, a whollyowned subsidiary; the balance was up by PLN 2,101 million over 2017, chiefly due to Pekao’s issue of bonds ; ◦ PLN 4,542 million on certificates of deposit issued by Bank Pekao and Alior Bank; ◦ PLN 1,545 million on covered bonds issued by Bank Pekao.
6.7 Contribution made by the market segments to the consolidated result
Group and individually continued insurance Insurance result in the group and individually continued insurance amounted to PLN 1,543 million in 2018 and was PLN 93 million, or 6.4%, higher than in the previous year. Individual constituent elements of the insurance result were as follows: • gross written premium was higher than in the corresponding period of the previous year by PLN 36 million (0.5%), which was mainly the result of the following: ◦ acquiring more contracts in group or individually continued health insurance products (new clients in outpatient insurance and sales of different options of the medicine product). At the end of 2018, PZU Życie had more than 1.8 million contracts of this type in force. In Q1 2018 PZU Życie introduced a new rider to continued insurance under the name “PZU Uraz ortopedyczny [PZU orthopedic injury]”,
◦ active up-selling of other riders in individually continued insurance products, including in particular together with the offering of the basic agreement in PZU branches and increase of amounts insured during the terms of the agreements. In addition to the aforementioned rider, in Q4 PZU Życie introduced another product – heart attack or Stroke Rider – providing for financial support in the event of heart attack or a stroke.
Pension insurance In 2018, the operating profit in the pension insurance segment amounted to PLN 107 million, i.e. it increased by 23% compared with 2017. The major drivers of the operating result included the following: • revenue from commissions and fees, which amounted to more than PLN 149 million, i.e. increased by 17% compared with the previous year. This change was the result of: ◦ revenues up by PLN 13 million on reimbursements from the Indemnity Fund; ◦ management fee up by nearly PLN 5 million as a result of the higher average annual net asset value in OFE PZU, including take-over of management of OFE Pekao.
• decrease in investment income. In 2018, the result was PLN 2 million and was 90.0% lower than in the previous year, primarily as a result of declines in the equity markets during the last quarter; • increase in net claims and benefits. They amounted to PLN 905 million and were higher by PLN 132 million compared to the year before. The loss ratio in non-life insurance stood at 61.2% and was similar to last year’s level. In life insurance the value of benefits stood at PLN 38 million and was 15.6% lower than in the previous year; • higher acquisition expenses. Segment’s expenditures for this purpose were at PLN 317 million. The acquisition expense ratio calculated on the basis of net earned premium dropped by 0.6 p.p. and stood at 21.4%; • increase in administrative expenses. They were PLN 125 million, increasing by 12.6% from the previous year. Despite a increase in incurred expenses, the administrative expense ratio dropped to 8.4%, down 0.4 p.p. relative to 2017. Cutting the administrative expense ratio was possible due to maintaining cost discipline coupled with the growth in the scale of business.
Contingent receivables amounted to PLN 4,490 million, down by PLN 126 million compared to the year before. They comprised among others: guarantees received, bills of exchange issued on account of granted insurance guarantees and other contingent receivables comprising mainly securities received in the form of mortgage on the debtor’s assets and other contingent receivables.
3. Insurance activity expense ratio (insurance activity expenses/net earned premium) x 100% 24.8% 25.2% 27.9% 29.4% 28.5%
PZU Group. The operational objective of the PZU Group Risk Committee is to coordinate and supervise activities related to the PZU Group’s risk management system and processes..
When measuring market risk, the following stages, in particular, are distinguished: • collection of information on assets and liabilities that generate market risk; • calculation of risk based on the VaR metric and the standard formula.
Credit and concentration risk Credit risk is the risk of a loss or an unfavorable change in the financial standing resulting from fluctuations in the trustworthiness and creditworthiness of the issuers of securities, counterparties and all debtors, materializing by the counterparty’s default on a liability or an increase in credit spread. The following risk categories are distinguished in terms of credit risk: • spread; • counterparty default risk; • credit risk in financial insurance.
Compliance risk is monitored, in particular, through: • analysis of reports obtained from the heads of organizational units and cells; • monitoring of regulatory requirements and adaptation of the business to the changing legal environment of PZU Group entities; • participation in legislative work aimed at amending the existing laws of general application; • performing diverse activities in industry organizations; • coordination of external control processes; • coordination of the fulfillment of reporting duties imposed by the stock exchange (in respect of PZU) and by statute; • increasing the level of knowledge among PZU Group staff in the field of competition law and consumer protection, tailored to the specific business areas; • monitoring of anti-monopoly jurisprudence and proceedings conducted by the President of UOKiK; • reviews of the implementation of recommendations issued by the PZU Group’s compliance unit; • ensuring a consistent implementation of the compliance function within the PZU Group.
Reinsurance treaties in PZU Życie Under the outward reinsurance treaty entered into by PZU Życie, the PZU Życie portfolio is protected against the accumulation of risk and it has protection for individual policies with higher sums insured.
One of the main factors that affected the increased volatility in the valuation of PZU’s stock for most of 2018 was uncertainty arising from speculations about the possible merger of Alior Bank and Pekao and its impact on PZU. On 23 and 24 October 2017, both banks announced in their current reports that work was initiated on analyzing strategic options available to the PZU Group, including a potential merger transaction. After the 7 August 2018 session, the banks announced their withdrawal from negotiations and completion of the analysis process. The justification for the decision was that it will be more beneficial from the shareholders’ point of view for the banks to keep operating as separate entities and cooperate with each other as members of the PZU Group. The market reacted favorably to this information. PZU’s share price at the close of the 8 August 2018 session went up 2.5% to PLN 42.6.
Volatility Compared to the broad WIG market, PZU’s systematic risk expressed by the beta coefficient (PZU stock price vis-à-vis the WIG index for daily shifts) in 2018 was 1.23 (1.06 in 2017). The increase in the beta coefficient was related to the poor performance of the main Polish indices, all of which wrapped up 2018 in the red. In sectoral terms, the situation was not much better either: WIG-Fuels was the only industry-specific index that improved. Against this background, PZU’s stock prices definitely stood out, generating a 4.1% increase (net of the distributed dividend). In 2018, the annualized standard deviation for daily changes in the PZU stock price increased 3.5 percentage points y/y and stood at 27.1%. The value of this statistic for WIG and WIG20 went up 3.4 p.p. and 3.7 p.p. to 15.2% and 18.7%, respectively, which was in line with the global trend of increasing volatility in 2018.
PZU’s shareholder structure As at 31 December 2018, the Company was aware of two shareholders controlling more than 5% of its share capital and votes at the PZU Shareholder Meeting: the State Treasury of the Republic of Poland (34.2%) and NN OFE/NN DFE5 (5,1%)6 SECTION 9.6. PZU’S SHARE CAPITAL AND SHAREHOLDERS
The median target price in the valid recommendations as at 31 December 2018 was PLN 49.5 (down 3.1% y/y, or 2.1% if consideration is given to cutting off the dividend in September 2018). The average target price was 11.4% higher than the share price at the end of 2018 (at the end of 2017 the deviation was 16.0%).
Institutions issuing recommendations for PZU’s stock (as at 31 December 2018)
Book value per share and gross accumulated dividend per share in PZU (PLN) (2010-2018)
In October 2018 Pekao issued subordinated bonds in subsequent B and C series worth PLN 550 and 200 million, respectively. These bonds have a 10-year tenor and bear interest at a floating rate equal to the sum of the underlying WIBOR rate for six-month deposits and a 1.55 p.p. margin (for series B bonds) and a 1.80 p.p. margin (for series C bonds), respectively.
In 2018, PZU complied with the recommendations and principles set forth in Best Practices of WSE Listed Companies 2016, except for recommendation IV.R.2. which provides for a possibility for shareholders to participate in a Shareholder Meeting using means of electronic communication, in particular via the following: • real-time transmission of the Shareholder Meeting, • real-time bilateral communication where shareholders may take the floor during a Shareholder Meeting from a location other than the shareholder meeting,
The elements which facilitate completing the process are the accounting principles (policy), the chart of accounts with a commentary and other detailed internal regulations approved by the PZU Management Board specifying key rules for recording business events in PZU, the valuation of assets and liabilities and dedicated reporting systems.
In 2018 the audit firm auditing the financial statements rendered permitted services to PZU that were not part of the audit. The Company conducted an assessment of the audit firm’s independence and the PZU Supervisory Board consented to the rendering of the foregoing services.
On 24 November 2015, at PZU’s request, the Management Board of the National Depository for Securities (Krajowy Depozyt Papierów Wartościowych S.A., “KDPW”) adopted Resolution No. 789/15 on setting 30 November 2015 as the date of a split of 86,348,289 PZU shares with a par value of PLN 1 each into 863,482,890 PZU shares with a par value of PLN 0.10 each.
PZU did not issue, redeem or repay any debt or equity securities that would provide its shareholders with special control rights.
Amendments to the Articles of Association PZU’s Articles of Association may be amended by the Shareholder Meeting provided that a resolution is adopted by a majority of three fourths of the votes, KNF’s approval is issued in the cases referred to in the Insurance Activity Act GLOSSARY and the amendments are entered in the National Court Register. The Supervisory Board has the powers to approve the consolidated amended text of the Articles of Association.
Shareholder Meeting The Shareholder Meeting is PZU’s highest corporate body. The general operational principles and the rights of the Shareholder Meeting are regulated by the Commercial Company Code GLOSSARY and the Articles of Association.
• disposal of shares in another company, with the value exceeding: ◦ PLN 100 million or ◦ 10% of total assets within the meaning of the
On 9 January 2018, due to his death, the mandate of Bogusław Marian Banaszak as a Supervisory Board Member expired.
Graduated from the Law and Administration Department at the University of Warsaw. Completed post-graduate studies in intellectual property law and postgraduate studies in evidence law. Graduate of the Center for American Law Studies, Leadership Academy for Poland. Advocate and professional mediator of the Mediation Center at the Polish Bar Council. Lecturer of advocate training at the Bar Association in Warsaw. Currently, he runs his own legal practice and is a Managing Partner at the law firm Kopeć Zaborowski Adwokaci i Radcowie Prawni sp.p. He has acquired experience in corporate governance as a member of the supervisory boards in various companies.
The Audit Committee was appointed by a Supervisory Board resolution of 3 June 2008. Composition of the audit committee as at 1 January 2018: • Bogusław Banaszak – Committee Chairman; • Marcin Chludziński – Committee Member; • Maciej Zaborowski – Committee Member.
On 9 January 2018, due to his death, the mandate of Bogusław Banaszak as the Committee Chairman expired.
• in addition to the above requirements, meets other requirements arising from separate regulations, in particular is not in breach of any restrictions or prohibitions for holding an executive position in commercial companies.
The Management Board exercises any and all rights related to managing PZU which are not otherwise reserved by law or the provisions of the Articles of Association to the Shareholder Meeting or the Supervisory Board. Two Management Board members acting jointly or one Management Board member acting jointly with an attorney-in-fact are authorized to represent the Company. The Management Board adopts its rules and regulations, which are approved by the Supervisory Board. The Rules and Regulations of the Management Board were adopted by the Management Board on 2 October 2012, subsequently amended by Resolution of the Management Board of 8 April 2013 and Resolution of 10 May 2018, approved by the Supervisory Board resolution of 15 May 2018.
Aleksandra Agatowska PZU Życie Management Board Member / PZU Group Director since 25 March 2016 no scope of duties assigned because of the temporary absence *
* client relations management - area overseen since 28 January 2019
Roger holds an Honours Degree in Mechanical Engineering from Liverpool University and also qualified as a Chartered Accountant in the United Kingdom. From 1998 to 2007, he worked for GE Capital where he held various managerial positions in finance and operations. From 2007 to 2008 he was the CEO of AAS Balta – the largest insurer in Latvia. From 2008 to 2009 he was the Commercial Director in Intouch Insurance Group, the Joint Venture established by the RSA Group and DIFI to establish Direct Insurance businesses in Emerging Markets. From 2009 he was CEO of Link4 Towarzystwo Ubezpieczeń S.A. He received the prestigious “Man of the Year” award from Gazeta Ubezpieczeniowa in 2014.
PZU Management Board Member since 22 March 2016 / PZU Życie Management Board Member since 25 May 2016
Graduate of the Department of Economic Sciences and Management at Szczecin University. Certified internal auditor. In 2006-2008, he worked for the Ciech Group. He served as a member of the Ciech S.A. Supervisory Board and was also Deputy Director of the Corporate Governance Department. A member of the supervisory boards of Zakłady Chemiczne Alwernia S.A. and Ciech Polfa Sp. z o.o. In 20072009, the deputy director of the Foreign Investment Department at PZU. In 2010-2012, he worked for Telewizja Polska S.A., initially as Deputy Director of the Management and Corporate Department, then as Director of the Internal Audit and Control Department. He also served as a member of the supervisory boards of Enea S.A. and Zakłady Azotowe w Tarnowie-Mościcach S.A.
The foregoing rules stipulate that the total compensation due to a Management Board member for rendering management services and discharging other obligations ensuing from the Management Services Provision Agreement consists of the following: • fixed compensation - flat monthly base compensation (for a calendar month) that cannot exceed the reference range established pursuant to art. 4 section 2 of the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies without prejudice to the situations outlined in art. 4 section 3 of the aforementioned act; • variable compensation - supplementary compensation for a given financial year depending on the extent to which management objectives are attained, within the catalogue of management objectives defined pursuant to the aforementioned act, and which include, among others, growing the Company’s value and improving its economic and financial ratios. The variable compensation for a given financial year may not exceed 100% of the annual fixed compensation in the previous financial year for which the amount of variable compensation due is to be calculated. In addition, a significant portion of the variable compensation is awarded in the form of deferred variable compensation. Deferred variable compensation is payable over 3 years. After the elapse of 12, 24 and 36 months, respectively from the date of allocation, a Management Board member may acquire the right to 1/3 of the deferred variable compensation for a given year subsequent to satisfying the conditions defined in the Management Services Provision Agreement.
Respecting individuality, promulgating equal treatment and combating discrimination at work are accomplished in practice by supporting procedures and initiatives: • countering mobbing – support is given by the Antimobbing Procedure contemplating the appointment of an Anti-mobbing Commission to investigate every report of improper conduct that may involve elements of mobbing; • ensuring equal treatment in employment opportunities and counteracting discrimination – support is given by the “Report an Incident” procedure enabling employees to convey information pertaining to the breach of a rule through the intranet platform.
Armatura Kraków SA chiefly funds its business using loans totaling PLN 69 million. In 2018 the financing banks extended the maturity of the loans.
As at 31 December 2018, the total value of all the 217,810 cases pending before courts, competent bodies for arbitral proceedings or public administration authorities to which PZU Group entities are a party was PLN 7,804 million (of which PZU was a party to 146,551 cases with a total value of PLN 3,482 million). PLN 4,108 million of that amount pertains to liabilities and PLN 3,696 million to the accounts receivable of PZU Group companies (including 3,060 of liabilities and PLN 423 million of the Issuer’s accounts receivable).
One-off events in PZU Group -impact on gross result (PLN million) 2018 2017 2016 2015 2014
11. Attachment: Glossary of terms insurance agent – commercial undertaking conducting agency activity pursuant to an agreement executed with an insurance undertaking. The activity of agents focuses on acquiring customers, entering into insurance contracts, participating in the administration and performance of insurance agreements and organizing and supervising agency activity assurbanking – distribution of banking products by insurance companies bancassurance – distribution of insurance company products by the bank insurance broker – entity holding a permit to conduct brokerage activity. Performs activities on behalf or in favor of an entity seeking insurance cover cedent – person who cedes an account receivable to a buyer
COR – Combined Ratio – calculated for the non-life insurance sector (section II). This is the ratio of insurance expenses related to insurance administration and the payment of claims (e.g. claims, acquisition and administrative expenses) to the net earned premium for a given period cross-selling – a sales strategy for selling a given insurance product in combination with a complementary insurance product or an insurer’s partner’s product, e.g. a bank’s product. Bancassurance products such as credit insurance may serve as an example