Clear and direct. According to a survey carried out by Norstat Polska, PZU’s clients more frequently declare that it is easy to find the information they need in the correspondence they receive and that it is written in a way that is easy to understand. PZU’s Plain Language Department looks after that. It also worked on refining the Polish wording of this report.
18 19MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
Contribution of banking activity to net profit attributable to the parent company (PLN m)*
30 31MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
Lithuania In Q4 2020, seasonality-adjusted GDP decreased by 1.3% y/y. While public consumption showed a favorable growth rate, the other GDP components recorded a decline. It is expected that the COVID-19 pandemic will continue to exert an adverse impact on the economy, yet the economic activity should improve at the beginning of Q2 2021.
The annual consumer price index (CPI) stood at -0.4%. Prices reacted strongly to the outbreak of the pandemic in the spring and to the consequent rapid decrease in oil prices. By November, energy prices fell (mostly fuels), dramatically increasing only towards the end of the year. From the beginning of the pandemic, food prices grew, which also resulted from a relatively quick increase in prices in external markets. In Q4, the consumer price index stabilized at -0.8%.
Bank loans stated as a percentage of GDP in the Polish banking system at 61% in 2019 versus the European average of 125%
Europe’s largest insurance market is the United Kingdom (with EUR 327.2 billion in gross written premium in 2019). Markets above the EUR 100 billion gross written premium threshold include France (EUR 234.3 billion), Germany (EUR 217.9 billion) and Italy (EUR 150.0 billion). In terms of size, the Polish insurance market also trails behind certain Western European countries with a significantly smaller population than Poland, including Austria (EUR 17.6 billion), Belgium (EUR 32.5 billion), Denmark (EUR 33.2 billion), Finland (EUR 24.4 billion), the 5 6 Insurance Europe, 7 KNF, Annual bulletin. Insurance market 2019, updated on 6 November 2020
W ri tt en p re m iu m p er c ap ita 8, in e ur o)
Banking assets in Poland have recorded a significant increase since the transformation. Currently, the Polish banking sector, as measured by the value of assets, ranks around the European median. According to data of the
Loans per capita (2019, EUR) in relation to the insurance market growth rate (2012-2019)
Alior Bank 4 Warsaw - Poland PZU – 31.9071% Investments Funds menaged by TFI PZU– 0.0216%
Przemysłowa “PROF-MED” sp. z o.o. merged with Centrum Medyczne Medica Sp. z o.o.; • On 19 February 2020, Alior Bank acquired a 100% stake in Harberton sp. z o.o.; • On 17 April 2020, RBL_VC sp. z o.o. ASI S.K.A, a company established by Alior Bank and RBL_VC sp. z o.o. on 21 November 2019, was registered in the National Court Register; • On 3 June 2020, Harberton Sp. z o.o., a wholly-owned subsidiary of Alior Bank SA, and Lurena Investments B.V., entered into a final share purchase agreement. On its basis, Alior Bank indirectly acquired 108,824,007 shares in RUCH SA, representing in total 100% of the company’s share capital, for the price of PLN 1. Haberton Sp. z o.o. became an indirect parent of the following wholly-owned subsidiaries of RUCH SA: Fincores Business Solutions sp.
The largest contributor was an increase of the technical result on motor own damage products by PLN 235 million (effect of an increase in earned premium with a simultaneous decline in claims and benefits paid) and by PLN 62 million in assistance products, while the result on insurance against fire and other damage to property fell by PLN 78 million and on loan and guarantee insurance products was PLN 31 million lower y/y.
* includes LINK4 and TUW PZUW Source: KNF (www.knf.gov.pl), Quarterly Bulletin. Rynek ubezpieczeń [Insurance market] 3/2020, Rynek ubezpieczeń 3/2019, PZU’s data
56 57MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
• development of the PZU D&Oskonała Ochrona [PZU D&O Perfect Protection] sub-product for small and medium-sized enterprises, which covers third party liability insurance for members of governing bodies of such companies.
In 2020, PZU cooperated with 8 banks and 10 strategic partners. PZU’s business partners are leaders in their respective industries and they have client bases offering the possibility of extending the PZU’s offering with additional innovative products geared towards those clients. By actively cooperating with PZU Group’s banks, i.e. Bank Pekao and Alior Bank, PZU continues the implementation of a comprehensive offering using the banks’ distribution networks. This cooperation has allowed PZU to steadily expand the offering and scale of sales of insurance products linked to bank products, including insurance coverage for cash loans and mortgage loans.
Product offer PZU Życie, as a popular and the largest insurer on the Polish market, continuously expands its offering by adding new products or modifying existing ones to protect its clients at each stage of their lives. The unique synergy of competences within the PZU Group (insurer, medical operator, investment manager) allows the company to comprehensively take care of life, health and savings of its clients, providing them with the broadest possible support in accordance with their expectations and needs.
62 63MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
In 2020, according to data by Analizy Online, the balance of payments to and withdrawals from retail funds offered by TFIs in the domestic market stood at PLN 0.1 billion. This low sales result was caused mainly by the massive fund outflows in March and April (PLN 23.1 billion in total) in response to the panic behavior of capital markets in connection with the start of the COVID-19 pandemic in Poland. From May to December positive fund flows gradually increased, thanks to which the year ended with net inflows.
• Employee Capital Schemes are voluntary long-term savings programs for employee. Money on the employee’s ECS account comes from three sources: • the employee’s own payments (the so-called basic contribution, which is mandatory and voluntary additional contribution); • contributions financed by the employer (basic and additional contributions); • subsidies financed by the State Treasury (the so-called welcome contribution of PLN 250 and annual contributions of PLN 240).
In 2020 the offer of specialized open-end mutual funds inPZU SFIO was strongly developed. These funds are available on the online platform inPZU.pl. Clients were offered new passive strategies based on cooperation with such partners as the Warsaw Stock Exchange and Goldman Sachs Asset Management, as well as actively managed ‘lifecycle” funds with investment policy changing over time, adapted to savings for pension. TFI PZU also offers intensively developed managed account services.
The travel restrictions introduced in connection with the COVID-19 pandemic affected the non-life insurance market. Sales of travel insurance dropped by EUR 7 million (36.9%) relative to 2019, and motor TPL insurance by EUR 12 million (12.1%), which was additionally attributable to the price pressure and the resulting reduction of insurance rates in this market segment.
Family Card” program (extension of the 2018 contract) – in 60 own locations, PZU Zdrowie offers discounts on doctor consultations and laboratory diagnostics tests, imaging and exercise diagnostics); • a series of free health education webinars organized in cooperation with the Her Impact internet platform; • PZU Zdrowie also partnered in creating the first “Top Disruptors in Healthcare” report in Poland on innovations in medicine prepared by the Polish Federation of Hospitals and Young Managers of Medicine; • PZU Zdrowie assumed the patronage of a charity concert for the Children’s Transplant Center at the Children’s Memorial Health Institute; • PZU Zdrowie also assumed the patronage of the “I, the Patient” debate held by the Medical National Interest Group think tank at the Polish Academy of Sciences on the occasion of the World Day of the Sick.
The #newPZU strategic perspective for 2016-2020, announced on 23 August 2016, focused on the significance of profitability of the Group’s core business, acceleration of growth (chiefly driven by the Health and Investment pillars) and a greater role of innovation. In the updated strategic assumptions adopted by the PZU Management Board and Supervisory Board on 9 January 2018, the Company’s client approach was redefined.
• adaptation of PZU Zdrowie facilities to the conditions of the pandemic and commencement of the provision of remote consultations on a large scale; • establishment of an own telemedicine center named Centrum Telemedyczne PZU Zdrowie [PZU Zdrowie Telemedicine Center]; • establishment of collaboration with other medical centers. At yearend 2020, the PZU Zdrowie partner network comprised approximately 2,200 entities; • launch of a state-of-the-art medical center in downtown Warsaw, one of the best in Poland. The center has been fitted with a host of innovative solutions to improve care for patients and set new standards in this area.
Metrics: third party assets under management (PLN billion), net result on asset management (PLN million).
Execution: • sales of group insurance to SMEs in 2016-2020 increased by 30% and property insurance by 34%. The continuation of the transformation processes in 2020 served the purpose of developing the sales network and acquiring new clients in the SME segment.
The procurement platform rolled out in 2020 and constantly improved since its inception enables the completion, storage and continuous updating of documents related to collaboration with external firms. Companies seeking to do business with the PZU Group are required to complete a registration form, which includes a declaration of acceptance of the “Code of CSR Best Practices for PZU’s Suppliers”. Only on this basis are such companies added to the PZU Group Supplier Database.
“Infectious” word of the year. The word coronavirus is the word of the year according to the plebiscite run by the Institute of the Polish Language at the University of Warsaw and the Polish Language Foundation with which PZU collaborates. Unfortunately, in 2020 this word exerted a major impact on our lives and the economy and it also triumphed in the linguistic realm.
Alior Bank clients partner centers cooperating with the PZU Group at the end of 2020
106 107MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
In 2020, due to the COVID-19 pandemic, agents received from PZU additional support which ensured safety both to agents and to their clients. PZU equipped their offices with Plexiglas screens, 7 thousand liters of disinfectant, 55 thousand facemasks and 168 thousand disposable gloves. Thanks to intensive promotion of the mojePZU portal, agents were well prepared for effective sales using this tool, which was particularly important in the initial phase of the pandemic.
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..
The Repair Network workshops apply an innovative technology using artificial intelligence algorithms and allows for analyzing the photographs documenting the loss. It can also determine the scope of the damage and classify the given part for repair or replacement. The algorithms can detect more anomalies more quickly and accurately, and confirm that all repairs are carried out in compliance with the procedures and standards adopted by PZU. In 2020, artificial intelligence analyzed over 160 thousand claims worth over PLN 1.5 billion.
In Q4 2020, PZU Życie introduced robotic handling of medical benefits. The optical character recognition (OCR) tool reads the data from the medical documentation and transmits it to a resource operated by a robot. Then, on the basis of a learnt script, the robot automatically transfers the read data to the product system (hospitalization period and diagnosed conditions), and verifies whether the data on the information sheet from the hospital pertain to the insured. The automation of the process supports Relationship Managers in their daily work, limiting the manual operations in the system. It also facilitates retrieval of data from unstructured documents, which shortens the benefit processing time and eliminates mistakes which could occur during manual data input.
In November 2020, IRSA and IRA pension products were introduced in the inPZU platform.
We provide remote medical care – our patients can use a phone, chat or video chat to consult specialist physicians of over a dozen medical fields. During remote consultation they can discuss their ailments, test results and receive prescriptions for medicines taken permanently and referrals to examinations; We make available the patient’s path – on the platform we conduct an interview with the patient, which is very similar to when an interview with a physician and then present the most probable solutions and define the next steps. This may be phone consultation, video consultation or a chat with a doctor or a visit in a clinic to with a specific specialist. However, in many cases such a discussion with a patient may end with an advice or an e-prescription sent without any need to leave home.
In addition: • Insurance programs for the banks’ employees and special offers on bank products for the employees of PZU Group companies; • Cost synergies in the area of IT, administration, real estate and security, the annualized cost synergies as at the end of 2020 reached PLN 181.3million; • Initiatives promoting Poland and Polish economy in Europe and globally. During the 2020 and 2019 World Economic Forum in Davos PZU together with Bank Pekao organized, the Polish House (Dom Polski) – a place devoted to promotion of Poland, its economy and the entire Tri-Sea Region.
The bank’s business model is based on a segmentation of clients into the following areas: • Retail and Private Banking – providing services to individual clients, including affluent private banking clients and micro businesses. Private banking clients are offered investment advice in private banking centers and remote channels, and all retail clients and micro businesses are served using the extensive network of own branches and partner centers supported by market-leading remote channels, including digital channels; • Banking for Small and Medium-sized Enterprises (SME) – providing financial services to clients from the SME sector who are serviced by advisors, supported by product specialists. The service is provided in specialized Business Customer Centers and universal retail branches. Clients are offered products and services tailored to their individual needs, based on proven corporate banking solutions and adapted to the needs of the SME segment; • Corporate and Investment Banking – providing financial services to medium-sized and large corporations (segmentation based on revenues), public sector entities, financial institutions and the commercial property finance industry. Corporate and Investment Banking clients are serviced by advisors, supported by product specialists.
Bank Pekao launched authentication of clients who have the digital banking identity PekaoID using the mojeID service (PekaoID) and the Trusted Profile using the so-called eIDAS National Junction, i.e. an administrative HUB, to which already over 100 authorities, including state administration bodies, are connected. Thanks to it, the utilization of the commercial mojeID (PekaoID) service in public administration was expanded. Using a single tool the bank’s clients may authenticate their ID in the platforms of both commercial and public entities. In 2020, the number of clients using Pekao exceeded 230 thousand.
In addition, the bank launched the Autopay service thanks to which selected motorway sections can be paid for automatically, without the need to wait in the lines at the toll gates. The service can be activated from the PeoPay app and the Pekao24 online banking platform.
Alior Bank combines the principles of traditional banking with innovative solutions and consequently it sets new trends in financial services and consistently strengthens its market position. SECTION 3. OPERATION OF THE PZU GROUP
• hedge accounting, i.e. hedging of interest rate risk resulting from banking activity through concluding interest flow swap transactions (interest rate swap - IRS, overnight indexed swap - OIS) in PLN and foreign currencies.
Distribution network At the end of 2020, Alior Bank had 674 outlets (180 traditional branches, 7 private banking branches, 13 corporate centers and 474 partner centers). The bank’s products were also offered in the chain of 10 mortgage centers and a network of roughly 3 thousand intermediaries.
Alior Bank’s traditional branches are located throughout Poland, in particular in cities with more than 50 thousand residents, offering the full range of the bank’s products and services. Partner centers on the other hand are located in smaller towns and in selected locations in Poland’s major cities, offering a broad range of services and deposit and credit products for retail and business customers. Cooperation between the bank and its partner centers is based on an outsourcing agency agreement. Agents provide exclusive agency services to the bank in respect to the distribution of products. These services are provided in locations owned or leased by agents approved by the bank. The bank’s products are offered in financial intermediary chains, such as Expander, Open Finance, Dom Kredytowy Notus, Fines and others, whose offering focuses mainly on mortgage loans and cash loans.
RBL_ Innovation by Alior Bank In 2019, Alior Bank built an internal structure – RBL_ Innovation by Alior Bank, whose task is to develop the bank’s innovation potential. It is composed of: • An Innovation Laboratory, responsible for prototyping, UX
136 137MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
was PLN 1,142 million higher than one year before. This was affected by: • increase in the provision for outstanding claims and benefits in non-life insurance related to the higher level of claims provisions in motor insurance (both segments) and the occurrence of several high value events in non-motor insurance; • higher provisions in life insurance as an effect of enhancing cooperation with banks as regards protection and investment products and as a result of the development of pension products: Employee Capital Schemes (ECS) and Individual Retirement Accounts (IRA), for which the contribution balance exceeded the disbursement level; • decrease in provisions in the case of the structured product in life insurance which was withdrawn from the offering; • decrease in the provision for unearned premiums arising from sales slowdown as a consequence of the restrictions imposed in connection with the COVID-19 pandemic, which resulted in limitations in clients’ access to the sales network and from the lower share of long-term agreements with a high unit value in the non-life insurance portfolio in the corporate segment; • increase in the provision for the capitalized value of annuities due to higher provisions for motor TPL insurance
y/y), to PLN 1,712 million as a result of: increase in the portfolio of protection products in the bancassurance channel, in particular sold in cooperation with Alior Bank, where the second product was introduced to the offering in June 2020 – individual insurance for mortgage loans,
combined with a decrease in gross written premium. The gross written premium was PLN 1,694 million compared to PLN 1,713 million in the previous year (-1.1% y/y). The premium accumulated in non-life insurance decreased by PLN 28 million (-1.7% y/y, and in the functional currency: -5.5% y/y). The highest drops were recorded in TPL and MOD motor insurance (-9.1% y/y in the functional currency), which resulted, among others, from the ban on movement introduced due to the COVID-19 pandemic. This effect was exacerbated by the decrease in insurance rates caused by a strong price pressure in the region, and by the slowdown of sales of new vehicles. An increase was recorded in financial insurance (+24.1% y/y in the functional currency) and health insurance (+6.5% y/y in the functional currency). Premiums in life insurance increased by PLN 9 million (+12.5% y/y); • investment income lower by PLN 20 million (-52.6% y/y), to PLN 18 million. The cause was above all drops on stock markets; • net claims and benefits lower by PLN 24 million (-2.4% y/y, and in the functional currency: -6.1% y/y), to PLN 965 million. The restrictions caused by the COVID-19 pandemic contributed to a lower frequency of losses in motor insurance and to a lower frequency of benefits paid in respect of health insurance. The loss ratio in non-life insurance fell 2.5 p.p. to 57.8% relative to the previous year In life insurance, the value of benefits stood at PLN 61 million and was 10.3% lower than in 2019 (-12.5% y/y in the functional currency); In addition, other contributors to the operating result included other operating income and expenses, above all the Bank Guarantee Fund fees (PLN 541 million) and the levy on other financial institutions (PLN 881 million). Alior Bank’s result was decreased additionally by: goodwill impairment as a result of the acquisition of Meritum Bank ICB SA in the amount of PLN 104 million and redemption of non-financial assets related to the T-Mobile Banking Services project being closed in the amount of PLN 48 million.
The presented profitability and operational efficiency indicators, being standard measures applied generally in financial analysis, provide, in the opinion of the Management Board, significant additional information about the financial performance of PZU Group’s activity. Their usefulness was analyzed in terms of the information, delivered to the investors, as to the financial standing and the financial performance of the Group.
The results of this segment are presented according to the Polish Accounting Standards, which means that they include, among other things, gross written premium, claims paid and movements in technical provisions. These categories are eliminated at the consolidated level.
156 157MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
In 2020, COR was 88.2% and was 0.3 p.p. lower than in 2019, due primarily to a lower loss ratio in motor insurance. It was an outcome of a lower frequency of claims due to the traffic restrictions introduced at the time of the COVID-19 pandemic, and an increase of the average disbursement.
We put a lot of effort to continue developing sophisticated risk management procedures. They are of fundamental significance to us. It is important for us that our clients have peace of mind and feel safe with us and the Group’s results remain predictable.
In addition, PZU, as a leading entity, manages risk concentration on the level of the whole PZU Financial Conglomerate. It also defines the risk concentration management standards, in particular through introduction of rules for identification, measurement and assessment, monitoring and reporting of significant risk concentration and making managerial decisions.
The credit rating of reinsurers is assessed on the basis of market data, data obtained from external sources, e.g. from S&P Global Ratings, as well as on the basis of the model * the data unaudited
and the security management system in the PZU Group. It also involves their ongoing monitoring. The PZU Group’s designated personnel cooperates with the Management Boards of entities and managers of such areas as finance, risk, actuarial services, reinsurance, investments and compliance on the basis of mutual cooperation agreements.
The overall risk of the banking sector entities accounts for approximately 35% of the PZU Group’s total risk (Q3 2020), while the largest contribution is in credit risk.
The application of limits is the primary management tool to maintain a risk position within the acceptable level of risk tolerance. The structure of limits for the various categories of market risk and also for the various organizational units is established by appointed committees in such a manner that the limits are consistent with risk tolerance as agreed by the management boards of the subsidiaries. Banking sector entities are in this respect subject to additional requirements in the form of sector regulations.
The banks in the PZU Group employ the liquidity risk management metrics stemming from sector regulations, including Recommendation P issued by the Polish Financial Supervision Authority.
In connection with the COVID-19 pandemic, banks in Poland, including the banks from the PZU Group, experienced overliquidity in 2020. The pandemic caused a major disruption of the existing simple model involving transfer of funds from bank deposits to finance the economy. In the banks’ balance sheets, the inflow of deposits remains undisrupted but the outflow is not routed mainly to finance the economy but to purchase of securities issued and guaranteed by the State Treasury. This results in an increase of debt securities and, consequently, increase of liquidity, in the banks’ balance sheets. Reduction of the lending activity results from the banks’ restrictive lending policy and, at the same time, clients’ aversion to incurring debt in unpredictable conditions. The banks’ liquidity was additionally strengthened by the reduction of the NBP reserve requirement from 3.5% to 0.5% as of the end of April 2020.
PZU makes efforts aimed at ensuring adequate and uniform standards of compliance solutions in all subsidiaries and monitors compliance risk throughout the entire Group.
This proposal inspired by Perfect’s hit comes from Krystian Bohatczuk of the Opole Operations Center
In this section: 1. Equity and bond market 2. PZU’s share price 3. Banking sector on the Warsaw Stock Exchange 4. PZU’s investor relations 5. Analysts’ recommendations regarding PZU stock 6. PZU Group’s Capital and Dividend Policy 7. Debt financing of PZU, Pekao and Alior Bank 8. Rating 9. Calendar of PZU’s major corporate events in 2021
PZU’s share price In 2020, PZU’s shares remained among the most liquid companies traded on the WSE. With a market capitalization of 7 WIG20 is a price index, meaning that it is calculated by using only the prices of the transactions related to it, without incorporating dividend income.
Average number of trades per session 4,169 3,942 3,751 3,744 6,045
According to NBP data10, after the first 11 months of 2020, the interest income of the banking sector decreased by PLN 8.3 billion y/y, or 15.9%, compared to the corresponding period of 2019. In the same period, provisions increased by PLN 4 billion. Moreover, in 2020, the banks were more severely affected by the levy on the assets of financial institutions, which is a non-tax-deductible expense. The banking sector’s net profit plummeted by 45.5% y/y to PLN 7.9 billion after the first 11 months of the year. Moreover, by a recommendation issued at the end of March 2020, KNF imposed an effective ban on the distribution of dividends by banks due to the spread of the COVID-19 pandemic. As a result, the low profits and undistributed capital from 2019 contributed to a decrease in the return on equity (ROE) reported by banks after the first 11 months of 2020 to a level of approx. 3%.
Without interruption since 2012, PZU has also been participating in a program conducted by the Polish Association of Individual Investors called “10 of 10: Communicate Effectively”. Its purpose is to promulgate high communication standards between public companies and retail investors.
In 2020, PZU stock recommendations were issued by 11 domestic and international financial institutions. In total, sell side analysts published 25 recommendations
Dividend paid for the year (in PLN m) 1,209 2,159 2418 ** ***
(b) Dividend yield during the year (%) * 6.1% 4.2% 5.9% 6.4% **
In accordance with the prospectus, Alior Bank may conduct public offerings of interest-bearing or non-interest-bearing bank securities.
Country Rating and outlook Last change Rating and outlook Updated on
• the rule laid down in § 52 section 2 reading as follows: “In a regulated institution in which there is no audit or compliance cell or no cell responsible for this area has been designated, the information referred to in section 1 shall be conveyed by the persons responsible for performing these functions." – audit and compliance cells operate in PZU; • the rules laid down in Chapter 9 entitled “Exercising rights from assets acquired at a client’s risk" – PZU does not offer products entailing asset management at a client’s risk.
The key controls during preparation of the financial statements include: • controls and permanent monitoring of the quality of input data, supported by financial systems with defined rules of data correctness, in accordance with PZU’s internal regulations governing the control of accuracy of accounting data; • data mapping from the source systems to financial statements supporting the proper presentation of data; • analytical review of financial statements by specialists to compare them with the business knowledge and business transactions; • formal review of the financial statements to confirm compliance with the applicable legal regulations and market practice in terms of required disclosures.
The Act of 31 March 2020 Amending the Act on Special Solutions Associated with Preventing, Counteracting and Combating COVID-19, Other Infectious Diseases and Crises Caused by Them and Certain Other Acts (known as the Special Act) repealed the provision of the Act on Statutory Auditors according to which “the maximum permissible uninterrupted duration of the statutory audit engagements referred to in Article 17(1) second paragraph of Regulation No 537/2014, performed by the same audit firm or an audit firm associated with this audit firm or any member of a network operating in the European Union states of which these firms are members may not exceed 5 years.” The Special Act introduced similar amendments to the Accounting Act.
As at 31 December 2020 and as at the date of publication of this report, PZU shareholders holding significant equity stakes were: • State Treasury of the Republic of Poland, which holds 295,217,300 shares representing 34.19% of PZU’s share capital giving the right to 295,217,300 votes at the Shareholder Meeting; • Funds managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne SA: Nationale-Nederlanden Otwarty Fundusz Emerytalny, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2025, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2030, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2035, NationaleNederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2040, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2045, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2050, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2055, Nationale-Nederlanden Dobrowolny Fundusz Emerytalny Nasze Jutro 2060, which hold a total of 44,260,638 shares representing 5.13% of PZU’s share capital giving the right to 44,260,638 votes at the Shareholder Meeting, of which Nationale-Nederlanden Otwarty Fundusz Emerytalny holds 43,670,336 shares representing 5.06% of PZU’s share capital giving the right to 43,670,336 votes at the Shareholder Meeting.
The data on the equity stakes held by funds managed by Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A. were provided in its notification received by PZU on 28 December 2020.
Limitations on transferring the title to the issuer’s securities The PZU Articles of Association contain no provisions restricting the transfer of the title to the issuer’s securities. Nor are there any other known limitations arising from documents other than the Articles of Association that would be applicable in this context, except for limitations resulting from generally applicable laws in precisely defined situations, in particular • limitations resulting from the provisions of the Act of 29 July 2005 on Public Offerings and the Conditions for Offering Financial Instruments in an Organized Trading System and on Public Companies (Journal of Laws of 2020, item 2080), namely: from Article 75(4) – shares encumbered with a pledge, until the date of its expiration, may not be traded, except in a situation where the acquisition of such shares takes place in the performance of an agreement on the establishment of financial security within the meaning of the Act of 2 April 2004 on Certain Forms of Financial Security, from Article 77(4) – temporary limitations on the acquisition or disposal of shares in the period between the notification of the intention to announce a public tender offer and the end of the public tender offer, applicable to the entities and to the extent specified therein, from Article 88a – temporary limitations on the direct or indirect acquisition of or subscription for shares in a public company by an entity required to perform the obligations specified in Article 73(2) and (3) of the Act or Article 74(2) and (5) of the Act, which in the company in question exceeded the threshold of the total number of votes specified in these regulations – until the date of fulfillment of such obligations; • limitations arising from Article 362 of the Commercial Companies Code, regarding the prohibition of the acquisition of treasury shares by the issuer, except for the cases specified therein and limitations on the acquisition of the parent company’s treasury shares by a subsidiary company or a subsidiary cooperative and persons acting on their behalf; • limitations pertaining to the closed period referred to in Article 19 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing Directive 2003/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (MAR) and insider dealing within the meaning of the provisions of MAR; • possible objection by the regulatory authority, in the form of a decision, to the acquisition of or subscription for shares or rights attaching to shares in a domestic insurance undertaking in a quantity ensuring the achievement or exceeding of, as the case may be, one-tenth, one-fifth, one-third, one-second of the total number of votes at the Shareholder Meeting or of a stake in share capital – in accordance with Article 90(1) of the Act of 11 September 2015 on Insurance and Reinsurance Activity (Journal of Laws of 2020, item 895, as amended), if: the entity submitting the notification referred to in Article 82(1) failed to remove the deficiencies in its notification or in the documents or information attached to the notification within the prescribed time limit,
A majority of 90% of votes at the Shareholder Meeting is required to pass resolutions relating to the following: • preference shares; • Issuer’s business combination by transferring all its assets to another company; • merger by forming a new company; • dissolving the Company, also as a result of moving its registered office or head office abroad; • liquidation, transformation or reduction in the share capital through the redemption of a portion of shares without a concurrent capital increase.
Shareholders representing at least one-half of the share capital or at least one-half of the total number of votes in the Company may convene an Extraordinary Shareholder Meeting. These shareholders designate the Chair of this meeting.
Shareholder rights and the method of exercising them at the Shareholder Meeting are specified in the Commercial Company Code and the Articles of Association. Only persons who were shareholders of the Issuer 16 days prior to the date of the Shareholder Meeting have the right to participate in the Meeting (date of registration of attendance at the Meeting).
Robert Śnitko Supervisory Board Secretary since 28 April 2020 (in the Supervisory Board since 12 April 2017)
Foreign Affairs and non-governmental organizations from the United Kingdom and the United States. Ph.D. in economics obtained from the Warsaw School of Economics. Academic teacher, deputy department director at the Ministry of
240 241MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
To properly perform its supervisory function, the Supervisory Board may establish permanent advisory and consultative committees whose competencies, composition and manner of operation will be laid down in the rules and regulations of the committee in question adopted by the Supervisory Board. The Supervisory Board and its committees may use the services of experts and consulting firms.
In connection with the resignation of Alojzy Nowak from the Supervisory Board, on 21 April 2020 his membership in the Audit Committee ceased.
Accordingly, from 10 September 2020, the Management Board composition was as follows: • Beata Kozłowska-Chyła – acting President of the
The President of the Management Board makes decisions in the form of orders and official instructions. Other Members of the Management Board administer the operations of the Company within the scope specified by the President.
Member of the PZU Management Board from 24 October 2019 to 19 February 2020 / PZU Group Director at PZU from 25 March 2016 to 23 October 2019, reappointed to the position of a PZU Group Director at PZU from 20 February 2020 / Member of the PZU Życie Management Board from 25 March 2016, acting President of the PZU Życie Management Board since 19 February 2020, President of the PZU Życie Management Board since 15 February 2021
PZU and PZU Życie - supervision over PZU Group’s foreign companies, assurbanking, bancassurance, strategic partnership programs, corporate business development and cooperation with brokers in the area of corporate sales
Purpose coordination and supervision of the Company’s and PZU Group’s risk management system and processes
Deputy Head of the Crisis Management Team Committee Chairperson: Innovations Committee
Functions discharged by Management Board Member and PZU Group Directors in standing committees: Name (Management Board composition at the end of 2020)
Member of the Crisis Management Team for Finance Committee Chairperson: Data Governance Committee, Investment Committee, Cost Committee Committee Deputy Chairperson: PZU Pricing Committee, Procurement Committee, Asset and Liability Management Committee
Bartłomiej Litwińczuk Member of the PZU Życie Management Board / PZU Group Director at PZU
PZU confirmed its will to pursue a diversity policy by joining the signers of the international Charter of Diversity in 2013.
Annex no. 1 to the Mandate Agreement to Provide Unfunded Credit Protection from Time to Time contemplates contractual penalties that may be due to PZU from Alior Bank if Alior Bank breaches certain obligations stemming from Annex no. 1 to the Agreement. The total maximum amount of contractual penalties cannot exceed PLN 3 million. Annex no. 1 to the Agreement does not rule out the possibility of pursuing damages exceeding the sum total of the contractual penalties.
4. Insurance segment acquisition expense ratio (acquisition expenses/premium earned on own share) x 100%
288 289MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
ECSs – Employee Capital Schemes defined by the provisions of the Act of 4 October 2018 on Employee Capital Schemes