8 PZU ON THE CAPITAL MARKET 87 9 CORPORATE SOCIAL RESPONSIBILITY 94 9.2 Ethics in action 95 9.5 Volunteers among the PZU Group employees 99 10.1 Corporate governance principles applied by PZU 101 10.2 Application of Good Practices of Companies Listed on WSE 101 10.3 Control system applied during preparation of the financial statements 102 10.4 Entity authorized to audit financial statements 104 10.5 Share capital and shareholders of PZU; stock held by members of its authorities 104 10.6 By-laws of PZU 107 10.7 General Shareholders’ Meeting, Supervisory Board and Management Board 107 10.8 Remuneration of the members of Group’s bodies 126 11 MANAGEMENT BOARD’S REPRESENTATION 128
At the end of 2013, we initiated the pilot programme of the Everest platform – one of the world’s most modern
IT policy support systems. This is key evidence of the evolution of the PZU Group’s operating model from an organization operating in accordance with product lines to a customer-oriented organization. This is almost certainly the most important change we managed to implement this year and it will have an impact on the
Customer orientation and high operational effectiveness will help maintain the leadership position – the PZU
Group will remain the largest and most profitable insurance company in Central and Eastern Europe.
PZU is also developing its foreign offices. We started to sell insurance products in Latvia and Estonia in 2013.
The profitability of PZU’s foreign business is increasingly improving and, from year to year, is becoming an increasingly important position in our balance sheet.
In the area of investments, the PZU Group is continuing to strengthen its position on the market through TFI
From a business point of view, we set ourselves a particularly high target in 2012, achieving the best net financial result since our IPO. This is why I am especially pleased to announce that the PZU Group’s net
We entered 2014 with visible symptoms of economic recovery, which will certainly affect the whole of the financial sector. However, our ambitions are very wide and we do not intend to rest on our laurels. I trust that the consistent pursuit of the business strategy coupled with the effects of changes which have taken place at
PZU in recent years will help us achieve our business objectives.
Despite the difficult external situation and significant economic downturn, the Company has reinforced its market position and is successfully continuing to implement its strategy.
The beginning of 2013 in the economy was a continuation of the negative trend from 2011. The slow-down in the growth of individual consumption and decline in investments, both in Poland and abroad, was accompanied by a further exacerbation of the credit crunch in the euro zone. This adverse impact from external factors was noticeable in many segments of the insurance business; it particularly severely affected the mass market insurance segment, including motor insurance, as well as the corporate insurance segment.
Even so, in such difficult conditions, the PZU Group managed to improve its financial results for another successive year. The improvement in the results was primarily due to the increase in gross written premiums, less calims in agriculture and the improvement in the profitability of certain products. Paradoxically, we managed to improve profitability in the financial insurance segment because of last year’s collapse of the construction market and the resulting changes in the risk acceptance and valuation process. Upholding cost discipline was also important. It is also worth emphasizing PZU’s consistently improving profitability on eastern markets over the past few years.
I would like to thank the Management Boards and employees of the PZU Group for their vision, commitment and their thorough work, without which the achievement of such a good result would not have been possible.
I am certain the Company will be able to take advantage of this opportunity and that the ambitious plans for 2014 will be achieved with benefits for the shareholders, customers and employees of the PZU
The PZU Group satisfies the fundamental needs of 16m customers in the area of security and stability, including 6m customers in the area of group life insurance.
Innovativeness, ethics in operation and adaptation to the increasingly demanding market conditions caused by, among other things, the entry of international players onto the Polish market, constitute the basis for
PZU’s rapid expansion. The PZU Group is still number one on the Polish insurance market. It is simultaneously strengthening its position in other segments of the financial market in Poland.
The PZU Group is also developing its insurance business in selected countries of Central and Eastern Europe and has a presence in Ukraine, Lithuania, Latvia and
not only in the history of the Polish capital market, but also in Central and Eastern Europe since the beginning of the economic transformations, as well as throughout the whole of Europe since 2007. PZU’s shares have ended up in the hands of 250 thousand individual investors.
PZU’s strategic investor is the State Treasury, which, at the end of 2013, held a 35.19% share of the Issuer’s share capital.
in May 2012 increased his savings by 78.6%. by the end
Number one in the ranking of investment funds with an 11.8% share of fund assets
The PZU Group’s products accompany individual customers at every stage of life and every stage of development of Polish firms. The PZU Group not only provides comprehensive insurance cover in all major areas of private, public and business life, but also offers various forms of increasing savings, including the accumulation of funds for an additional pension.
The PZU Group is an innovator on the Polish financial market. It was the first institution in Poland to create a
Security Accounts. It is a precursor in the development of health insurance and was the first to launch drug insurance on the Polish market. It is also actively working towards developing voluntary health insurance.
Pillar III of the pension system (employment pension products- EPP, individual pension accounts – IKE and individual pension security accounts – IKZE)
The financial results achieved by the PZU Group in recent years place it among the most profitable financial institutions in the country. They simultaneously contribute to high performance ratios. In 2013, the rate of return on capital was 24.1%. In addition, the claims ratio in the insurance portfolio has been systematically declining in recent years. In 2013, the combined ratio
The PZU Group complies with all safety standards of business. Equity amounted to PLN 13,127.3m as at 31 December 2013. The solvency coverage ratio at both PZU and PZU Życie significantly exceeded the average for the insurance sector.
The premium increased at an average rate of 3.5% per year in the years 2009–2013.
PZU’s insurance portfolio is not exposed to concentration risk – this arises from the high level of diversification of the portfolio. It largely consists of a substantial share of premiums obtained from the mass market (non-life insurance) and group insurance customer (with moderate sum of insurance).
At the end of 2013, the PZU Group employed approximately 11.24 thousand employees calculated as
PZU’s share price listings from IPO on the Warsaw Stock Exchange 48.7% of the total shareholders return comes from dividends, cumulatively PLN 109.04 per share 51.3% of the total shareholders return comes from the increase in the price PLN 141.50 per share
PZU TSR - total shareholders’ returs, including dividend paid by PZU
Income from investments (in PLN million) 2,488.1 3,704.7 1,593.8 2,777.8 3,469.0
Gross written premium according to IFRS at PLN 7,745m, increase of 3.9%.
Market share of 29.3%, including 43.7% in regular premiums (after three quarters of 2013).
Net ssset value of PLN 22.2bn at the end of 2013 – growth of PLN 6.9bn.
Maintenance of the position of leader with a market share of 11.8%.
Maintenance of the position of leader on the market of Employee Pension Programmes and registration of further EPPs.
Third place on the market with a share of 13.4% by net asset value.
Maintenance of the position of leader on the Individual Pension Security Accounts market among the voluntary pension funds.
Rapid expansion of business and increase in market share: Ukraine: 3.3% of the non-life insurance market and 5.7% of the life insurance market (after 3 quarters of 2013); Lithuania: 13.6% of the non-life insurance market (3rd place on the market) and 4.2% of the life insurance market.
Pilot launch of a new Everest IT system for non-life insurance policies.
Completion of the process of writing up and valuing work posts.
Net profit of PLN 3,295.1m, namely 1.3% higher than in 2012.
2 The external environment in 2013 2.1 The main trends in the Polish economy
Real GDP in Poland increased by 1.6 % in 2013 compared with 1.9% in the previous year. In the first half year, the growth rate was just 0.7% y/y, but then it started to increase and, in the last quarter, it was 2.7%
2013 was the second successive year of a decline in domestic demand, which was concentrated in the first half year. A real decline in income from 2012, with a higher rate of unemployment and a low rate of savings, resulted in two successive years of the lowest individual consumption growth since the mid-nineties. Individual consumption in 2013 increased by just 0.8%, which is even weaker than in the previous year. Once again, investments in fixed assets also declined (annual decline of 0.4%), while the change in inventories still had a negative impact on GDP growth.
In the light of the declining domestic demand, economic growth was once again possible in 2013 as a result of the achievement of a positive balance of foreign trade.
A gentle recovery in domestic demand in the second half of the year has not resulted in a sufficiently major increase in imports, to significantly reduce the scale of the positive impact of net exports on GDP growth.
December was the same as in the previous year, i.e. it
In the first half of the year, the rate of growth of individual consumption was still close to zero. However, the real growth in household income, with a slightly better outlook on the labour market and the increase in consumer credit, has helped overcome this stagnation and, in the last quarter 2013, the rate of growth of individual consumption approached 2%2 y/y. However, throughout 2013, it was only 0.8%.
In 2013, the consumer price index (CPI) increased by an average of just 0.9% compared with 3.7% in 2012.
At the end of the year, the CPI index declined to 0.7%
Inflation would have been even lower, if not for the jump in the CPI index in July from 0.2% y/y to 1.1%
y/y. This was mainly caused by the entry into force of the amendments to the regulations on the maintenance of cleanliness in municipalities and, as a result, a significant increase in household charges for waste disposal.
However, in May, given the further decline in inflation 2 PZU’s estimate and the lack of clear signals of an upturn in the economy, it resumed the 25-point cuts in rates. Three such decisions were made at successive meetings of the
Council indicated that interest rates should remain unchanged at least until the end of 2013, while, at the
Policy Council announced the prolongation of declaration of maintenance of unchanged interest rates at least till 3Q2014.
On the money market, changes in WIBOR 6M rates were closely related to the changes in the NBP
reference rate. The level of WIBOR declined together with the cuts in interest rates. It stabilized in June 2013, even before the last reduction in rates by the
The main trends on the global financial markets developed in conditions of the euro zone coming out of the recession in the second quarter and the continuation of the economic recovery in the US, which
This turnaround in the Fed’s monetary policy was a shock to the global financial markets, especially for the debt market, initiating a trend of a growth in yields from the middle of 2013. The flow of capital from the bond market and a better outlook for economic growth promoted the increase in share prices.
After the banking crisis in Cyprus, which resulted in a temporary increase in unrest on the global financial markets in the initial months of 2013, increases in major world stock exchange indices dominated.
The yields of treasury bonds with longer maturities also started to increase in June 2013, which coincided with both the final phase of the cuts in interest rates by the
MPC and the Fed’s turnaround in monetary policy. It seems that this latter factor, in particular, is responsible for the change in the market trend of Polish treasury bonds. Finally, 5-year and 10-year bond yields increased in 2013 by approximately 60 basis points.
The zloty exchange was supported very strongly by the reduction in the current account deficit in the balance of payments, placing Poland among the stable economies.
The average Pole spends over 4 times less on insurance than the average European. The value of insurance premium per average Pole (density ratio) in
Treasury bond yields in 2013 2Y yields % 5Y yields % 10Y yields %
Poland was EUR 384.4 (i.e. PLN 1,627) in 2012, while it was EUR 1,842.8 in Europe at the end 2012. Almost 60% of the premiums of both the average Pole and the average European are paid towards life insurance.
GDP (penetration ratio), Poland is below the European average, as a result of which it can be assumed that there is still growth potential. This indicator for Poland is half the European average and less than one third of that of the UK.
Estonia and Latvia, in which PZU is present, have a ratio of 1.7% and 0.9% accordingly, which, from the point of view of market development, open up huge opportunities for sales growth.
The main legal regulations concerning insurance and other business activities, which entered into force, or were adopted or published in 2013, that may have influence on a change in the PZU Group’s business or organization, are presented below: The Act of 14 December 2012 on the amendment to the
Act on Insurance Activity of 22 May 2003, which entered into force on 29 January 2013 and implemented changes in the domestic legal order, which arise from the ruling of the Court of Justice of the European Union of 1 March 2011 regarding the lack of possibility of differentiating insurance premiums or benefits due to the gender of the person insured.
November 2003 on the level of the percentage contribution paid by insurance companies to the
Draft of the Act on Insurance Activity due to the implementation of Solvency II
The timing for the implementation of these changes it is not currently known.
The new act will introduce significant changes in the business and financial management of insurance and reinsurance companies, which will result in the need to make many organizational changes and incur substantial costs. It is difficult to estimate them at the present stage. These costs will probably be spread over time.
Information Best Practices relating unit linked life insurance policies. The main point of the recommendation is the Product Data Sheet, which will be received by every customer considering purchase of investment product from a life insurance company, which accedes the Recommendation. .
The customer will be warned that such a policy is related to the risk of a loss in value or a loss of all invested funds. He will also receive information about the level of all charges related to the insurance product and three variants of the course of the insurance (the base variant, a variant with a reduced profitability and increased profitability). Therefore, the Product Data
Sheet will give the ability in a simple cost comparison, as well as indicate the risk of every unit linked life insurance policy.
Although the Chamber does not have the right to issue obligatory recommendations and its application is voluntary, up to 98 percent of life insurance companies
(measured by the written premium within the framework of unit linked life insurance products) have declared that they intend to implement it. In accordance with the schedule proposed by the PFSA
(Polish Financial Supervision Authority) insurers shall fully adapt to the provisions of the Product Data Sheet until May 2014.
On 28 August 2013, PZU Życie declared that it would join the recommendation and implement it no later than
ZUS, where they are to be indexed and inherited, just as the remaining funds on these sub-accounts. Additionally, from 3 February 2014, pension funds cannot invest in treasury securities nor in debt instruments guaranteed by the State Treasury, nor in securities issued by the governments of other OECD states;  the specification of the principles of paying pensions from the funds accumulated in the
ZUS. Funds on the sub-accounts at ZUS, which will pay the pension, may be inherited after 3 years pass from the moment the insured retires;  the ability of the insured to make a choice in the form of a declaration regarding the further transfer of the contribution at the new level to the open-ended pension funds, with respect to future contributions – in the period from 1 April 2014 to 31 July 2014, the insured may decide on whether the pension contribution of 2.92%
is to continue to be transferred to the OFE or to
ZUS. In the absence of a declaration on the transfer of the contributions to the OFE, the pension contributions will be automatically recorded on a special sub-account at ZUS. The decision on whether to choose the OFE or remain in ZUS will not be final. The insured will receive successive opportunities to change his decision in four-year intervals;  the establishment of new rules of investment by the OFE – the gradual reduction in the minimum limit of the OFE’s commitment to shares. A substantial proportion of the concentration limits will be eliminated. Every
the fees charged by the funds on the contributions will be reduced from 3.5% to 1.75% (including the reduction in the charge to
ZUS from 0.8% to 0.4%);  the establishment of the level of contributions to the Guarantee Fund – 0.3% of the net asset value of the OFE is to be transferred to the
Papierów Wartościowych SA), while the funds accumulated to date on the additional part of the Fund are to be transferred to the pension fund societies (PTE) as at 1 July 2014;  the introduction of the ban on advertising OFEs
introduction of incentives for saving for retirement in the so-called third pillar. A flatrate has been introduced for disbursements from Individual Pension Security Accounts
GDP growth. The stagnation also forced cuts in several budgetary expenditures (mainly investments and transfers to local budgets).
Despite these adverse conditions, in 2013, the insurance sector in Ukraine was developing rapidly. The gross written premiums on the non-life insurance market in three quarters of 2013 was UAH 19.7bn, or, in other words, it was 34.8% higher than in the corresponding period of the previous year. Additionally, life insurance companies collected UAH 1.7bn gross written premiums in three quarters of 2013, which was 39.8% more than in the corresponding period of 2012.
Numerous legal regulations entered into force in 2013, which had the objective of stabilizing the Ukrainian insurance market. The most important of these include:  Changes in the fiscal code. In the fiscal code in force since 1 January 2013, the Ukrainian
Parliament gave insurance companies primarily the right to pay 3% tax on the gross written premium, without the need to transfer to the overall tax system.
International Green Card Insurance System, on 1 January 2013, the Ukrainian insurers, which are members of Ukraine’s Motor Insurance
The new mechanism anticipates that the full members of the MTSBU transfer from 45% to 55% of the insurance premiums under the
Green Card agreements to the insurance guarantee fund, while the MTSBU ensures the punctual and qualitative settlement of insurance claims on the basis of these agreements.
 Amendments to the Act “On obligatory third party liability insurance of owners of land transport.”
A new mechanism was introduced for calculating claims with regard to damage to the health and lives of victims. The injured party can receive no less than 1/30 of the amount of the minimum monthly salary per day of treatment (but no more than for 120 days)
according to the value on the date of the accident (as at 30 June 2013, the minimum monthly salary was 1,147 hryvni).
 Changes in the principles of registering insurance agents. In accordance with
Amendments to the Act “On insurance” entered into force on 16 May 2013. The changes applied to:  enabling Ukrainian insurance brokers to conclude basic all-risks insurance contracts for
Ukrainian customers with foreign insurance companies. Before this change it was only possible to take out insurance directly with foreign insurance companies for specified risks;  the level of the share capital required when setting up life insurance companies in Ukraine –
Union. According to Eurostat data, gross domestic product in the third quarter of 2013 was 4.5% higher than in the third quarter of 2012 in Latvia, 2.2% in
by 8.7% with respect to the previous year, while the gross written premium of life insurance companies amounted to LTL 626m (an increase of 8.9%).
(insurance premiums), which are held on the account of the brokerage company in the event of its bankruptcy.
Republic of Lithuania, amended the level of the charge on written premiums to the Lithuanian office of motor vehicles from 4.6% to 4.1% by means of a Regulation.
growth in Poland should exceed 3% in 2014. After two years of decline, domestic demand will increase. This improvement should also be noticeable in the insurance sector.
The real increase in household income, with the improvement of the situation on the labour market, should contribute to the acceleration of the rate of consumption in 2014 to over 2%.4
The outlook of moderate, gradually increasing inflation and the relatively calm increase in the growth rate probably means that the MPC will start to raise interest rates no earlier than at the end of this year. The maintenance of low interest rates and the acceleration of the growth ratecan promote a recovery in loans and support demand for capital goods.
3 Activities of the PZU Group 3.1 Structure of the PZU Group
The PZU Group conducts various activities in the area of insurance and finance. The Group’s companies provide services in life insurance, other non-life insurance and asset management for customers within the openended pension fund and investment funds.
PZU Group in 2013:  A new company, PZU Finanse Sp. z o.o., was established on 30 October 2013. The
Company’s capital is PLN 50k and is divided into 100 shares, at PLN 500 per share. All shares were acquired by PZU. The Company was registered in the National Court Register on
 In 2013, the PZU Group increased its share of the capital of Instytut Medyczny SA (EMC)
(from 25.31% of the votes at the general meeting of shareholders at the beginning of 2013 to 29.87% at the end of 2013) through
Company has been valued using the equity method in the PZU Group’s consolidated financial statements since 30 June 2013.
PZU Group. A profit of PLN 8,263k was realized in the transaction of the sale of the shares in
Sigma Investments in liquidation passed a resolution to terminate the liquidation of the
Center in liquidation passed a resolution to wind up the Company. The Company was deleted from the register on 20 May 2013.
The non-life insurance market in Poland measured by the gross written premium grew by an annual average of 5.8% over the past 5 years. Over 3 quarters of 2013, the market grew by a total of PLN 325.5m compared with the same period of the previous year, mainly as a result of the increased sales of insurance covering damage caused by the forces of nature and other property damage (by PLN 520.0m, +12.9%
compared with the same period of the previous year) in particular as a result of the renewal of long-term agreements with corporate customers.
Furthermore, the positive impact on the growth of the entire non-life insurance market had significantly higher sales of insurance covering various financial risks (PLN
(by PLN -299.5m, -7.0% y/y). These changes resulted mainly from the decline in prices on the Polish insurance market in 2013 and the depreciation of insured vehicles.
(which constitutes the profit generated by the life insurance sector in 2012), the net profit of the non-life insurance market increased by PLN 0.25bn (+14.6%).
PLN 455.0m compared with the same period of the previous year), the increase in contract guarantees (PLN
The higher result than in the previous year was caused by the increase of provisions set in 2012 for contract
Gross written premium of non-life insurance companies in Poland (in PLN million)
Source: PFSA (www.knf.gov.pl). Quarterly bulletin. Rynek ubezpieczeń [Insurance Market] 3/2013, Rynek ubezpieczeń 3/2012, Rynek ubezpieczeń 3/2011,
Non-life insurance companies - share of the gross written premium for 3 quarters of 2013 (in %)
symptomatic change is the return after 6 years to the path of clear profitability of MTPL insurance, the technical result of which amounted to PLN 97.2m at the end of the third quarter of 2013.
In addition to the improved sales described above, an additional factor causing the good results for three quarters of 2013 was the PLN 577.5m lower value of claims paid in respect of damage caused the forces of nature, i.e. a 50.2% decline compared to the corresponding period of the previous year.
The total value of investments and deposits of the nonlife insurance companies (excluding investments in subsidiaries) was PLN 46.6bn at the end of the third quarter of 2013, which was a 9.9% increase since the end of 2012. 51.0% of these investments at the end of the third quarter of 2013 were securities issued or guaranteed by the State Treasury and local government units. Increasing yields on treasury bonds in 2013 had a negative impact on the valuation of these instruments in insurers’ portfolios. Simultaneously, the share of other fixed-income instruments (including corporate bonds) declined from 7.2% to 4.8% (from PLN 2.9bn to
Within the PZU Group, activities on the non-life insurance market in Poland are conducted by the parent company in the Group, i.e. PZU.
After three quarters of 2013, it had a 31.1% share of the non-life insurance market (compared with 32.3% in 2012). The Company had a relatively strong market position in a auto casco insurance (with a share of 38.1%). Meanwhile, in the case of motor insurance for corporate customers, this share was even higher, amounting to 49.8% for MTPL insurance and 43.5% for auto casco insurance.
During 2013, PZU made changes to its product offering, with customers in mind, which included basic categories of insurance products addressed to all customer segments.
It was accepted that a small fleet comprises up to 40 vehicles, while a large fleet consists of at least 40 vehicles.
 Upheld the importance of underwriting in the area of non-life insurance through selective insurance sales, including to entities from sectors with high claims levels, ongoing improvement in the risk management process and the general application of additional clauses and other technical limitations changing the scope of the insurance.
In terms of financial insurance for corporate customers the Company assumed most of all:  Upheld the moratorium on sales of guarantees to companies performing construction contracts in the initial months of 2013. In April 2013 sale of guarantees to companies from the construction sector with revenues of over PLN
In the area of bancassurance, PZU continued to work with the leading banks operating on the Polish market
Millennium and BGŻ). The Company offers the customers of these banks, among other things, card payment protection programmes, as well as buildings and premises insurance attached to mortgage loans. In 2013, sales of PZU’s products offered in cooperation with the banks were expanded to include new channels, i.e. electronic banking and telemarketing.
PZU’s research indicates that, apart from price, crucial to customer loyalty is the process of claims handling and payment of benefits. The implemtation of improved claims handling procedures for TPL and nonlife insurance has resulted in reducing the average time of claims handling in PZU. In 2013, it was 16.8 days and was 3.4 days shorter than in 2011 and 1.2 days longer than in 2012.
PLN 8,273.9m, which was 2.1% more than in the previous year. At the same time, its structure changed in comparison with the previous year and, therefore:  The value of MTPL insurance was PLN
 PZU collected PLN 2,028.2m from auto casco insurance, which was 5.3% less than in the previous year. The slight increase in the number of insurance policies did not compensate for the effect of the drop in the average premium which contributed to growing competition, the ageing portfolio and the increase in no claims bonuses discounts. As a result, the share of the total auto casco
 The rapid growth in sales of insurance, such as: PZU DOM Plus [PZU HOUSE plus], PZU Doradca
[PZI Advisor] and agricultural insurance, contributed to the 2% growth in written premiums from the other products. As a result, the share of gross premiums from non-motor insurance to the total premium increased to a
 The reduction in the development of mortgage loan campaigns as a result of the stricter requirements of Recommendation S on good practices regarding the management of credit exposures collateralized with mortgages and the small scope of the Mieszkanie dla Młodych [Flat for the Young] Programme.
The life insurance market in Poland measured by the gross written premium increased by an annual average of 1.0 % over the past 5 years. The premium collected during the three quarters of 2013 was 14.5% lower than in the same period of the previous year, which means a major decline after a series of increases. The rates of growth for the same periods of 2012, 2011 and
It should be pointed out that the decline in the premium year-on-year applied exclusively to the single premium, for which exceptionally high growth of +14.1% year-onyear was achieved in the same period of 2012. This decline mainly applied to the written premium obtained through the bancassurance channel (a decline of
As a result, the share of the bancassurance channel in the life insurance premium obtained by the market declined with respect to the same period of the previous year by 4.2 p.p. to a level of 50.6%,6 which, despite everything, suggests that the bancassurance channel is 6 PIU data (www.piu.org.pl), The bancassurance market after the third quarter of 2013
However, the annual average growth rate in premiums measured from 2009 to 2012 was 8.1%.
Life insurance companies, on aggregate, estimated the value of technical provisions at PLN 81.1bn, which represented 84.8% of the value of the investments.
PZU Życie SA (PZU Życie) operates on the life insurance market within the PZU Group. The Company offers a wide range of life insurance products, including group and individual protection insurance, investment insurance and pension products.
During three quarters of 2013, PZU Życie collected 29.3% of the gross written premiums of the life insurance companies. In comparison, in 2012, the
During three quarters of 2013, it obtained 43.7% of such premiums of all insurance companies.
product range – Antybiotyk [Antibiotic] – was launched into the group drug insurance.
 group health insurance offered on the basis of the fee-for-service settlement model (the medical service provider is PZU Pomoc). The range was extended to include a number of additional medical consultations and diagnostic
Gross written premium of life insurance companies in Poland (in PLN million)
Groups: Allianz – Allianz, Euler Hermes; Ergo Hestia – Ergo Hestia, MTU; Talanx – Warta, Europa, HDI; VIG – Compensa, Benefia, Inter-Risk Source: KNF Biuletyn Kwartalny [PFSA Quarterly bulletin]. Rynek
examinations. Furthermore, additional options were introduced which are appropriate for sponsored products, such as family packages and the reimbursement of services provided outside the insurer’s own network. At the end of 2013, PZU Pomoc was working with 1,050 establishments (compared with 800 at the end
Because of the continuing uncertainty on financial markets, customers were still interested in traditional life insurance of a protective or protective and savings nature. Customers were primarily interested in the sale of classic insurance, such as PZU Ochrona Życia [PZU
Protection]. Simultaneously, the Company worked intensively on the adjustment of the current offering to the low yields on treasury bonds.
However, because of the unfavourable press, the statements of the regulator and the discussion on the structure of these products, customers showed limited interest in this product.
An important element of PZU Życie’s investment portfolio was the structured Świat Zysków [World of
Profits]. In order to adjust these products to customer expectations, the Company has products with varying investment strategies, enabling the diversification of portfolio risk. Because of the considerable decline in interest rates on deposits and bond yields, in 2013, the
Świat Zysków structured insurance in 2013. Because of the observed unfaltering customer interest in structured products, further issues of this product are planned.
In an effort to standardize the investment offering which was marketed in cooperation with Bank
Millennium, PZU Życie modified the group ubezpieczenie na życie i na dożycie SPE (Single Premium Endowment)
offered by the Bank to an individual form under the name of indywidualne ubezpieczenie na życie i dożycie
In 2013, customer interest only increased slightly in pension insurance, i.e. Individual Pension Accounts
The amendments introduced in the operating sphere resulted in the claims handling process being shortened in 2013. In 2013, it was 4.2 days and was 0.4 days shorter than in the previous year.
Factors, which will affect the activities of the life insurance sector in 2014
 The possible introduction of taxation on income from deposit policies and structured products, which will reduce customer interest in these products.
 An increase in basic interest rates and interest on deposits, reducing the attractiveness of structured products.
 Changes on the financial intermediation market affecting the popularity of independent financial advisory services and reducing the number of distribution channels of insurance products.
In December 2013, the net assets of open-ended pension funds were at a level of PLN 299.3bn and increased by 11.0% with respect to the end of the previous year. The following factors affected the rate of growth of the net asset value of the open-ended pension funds:  The increase in the level of premiums transferred by the Social Insurance Institution to the Open-Ended Pension Funds from 2.3% to 2.8% of the level of the pension insurance premium at the beginning of 2013.
 Good financial results. The funds generated an average rate of return at a level of 7.2%.
pensioners because of the excessively low incentives in the form of tax relief and the general lack of interest on the part of most Poles in pension savings. New, substantially simpler principles of calculating the limit of payments to the IKZE were introduced in a package of
Acts of law on the pension system at the beginning of 2014, making them dependent on the personal income of the Savers, together with a lower flat-rate tax on payments from the IKZE at a level of 10%. With the simultaneous reduction in the activities of pillar II, these solutions can contribute to the increase in interest of
 Net assets stood at PLN 40,114.7m, or, in other words, they represented 13.4% of the total value of assets of the open-ended pension funds operating in Poland.
Voluntary Pension Fund, which was the first to be entered into the Register of Funds on 12 January 2012.
PZU so that they could make their choice of method of receiving annual information and to survey customer satisfaction with the services provided by the Fund.
Source: PFSA, Monthly data on the open-ended pension fund market, Data as at
Factors, which will affect the activities of pension funds in 2014
 The reform of the pension system in Poland and the outflow of funds from open-ended pension funds.
 The economic climate on the capital market and, in particular on the WSE, affecting the value of the assets of the funds and the level of fees collected by the PTE for management.
Situation on the market 2013 was a good year for the investment fund market, although the average increase in assets largely arose from the creation of special funds often dedicated to single investors and operating on the private market.
At the end of 2013, the investment funds managed assets of a value of PLN 189.0bn, or 29.6% more than a year earlier. This was the highest level in history.
This increase was due, among other things, to:  The positive balance of funds flow to the investment fund. It amounted to PLN 21.5bn, whereby it was mainly the inflow of funds to the private funds market related to the transfer of substantial funding to the dedicated funds within the groups.
 Performance of the funds – in 2013, the average rate of return of investment funds on the Polish market fluctuated from 1.5% in the case of funds investing resources in Polish
Treasury bond to 31.1% for small- and medium-sized enterprise shares. However, it should be noted that, in this context, sometimes, clearly negative rates of return of funds dedicated to emerging markets and very poor investment performance of some bond funds stood out negatively.
At the end of 2013, TFI PZU had 25 funds and subfunds in its portfolio, of which 16 were also offered to customers from outside the PZU Group.
At the end of 2013, TFI PZU had accumulated net assets of a value of PLN 22,216.6m, which means growth of 44.6% compared with the situation at the end of 2012. Similarly, it maintained the leading position on the investment funds market with a share of 11.8% (compared with 10.5% in December 2012).
Simultaneously, the Company remained the leader in the segment of employee pension programmes among all institutions operating on this market (not only investment funds), accumulating assets worth more than PLN 2.2bn (PLN 1.8bn at the end 2012).
TFI PZU’s asset growth in 2013 was primarily due to:  The continuation of the investment strategy within the PZU Group and the transfer of some of the funds by some of its companies (mainly
 Further expansion of the distribution network in 2013, TFI PZU obtained new distributors to work with it, namely, DM BOŚ, DM BPS, Dom
However, with regard to accepting subscriptions for investment certificates, the Fund started to work with ING Bank Śląski, Alior Bank, Dom
 The establishment of cooperation with regard to investing the funds in investment funds managed by TFI PZU with TU na Życie Europa,
Rate of return from TFI PZU's investment funds in 2013 (in %)
Furthermore, work was conducted, among other things, on the launch of a public closed-ended investment fund - PZU FIZ Akord and work was initiated on the development of mobile web applications dedicated to customers of PZU Inwestycje.
TFI PZU’s activities were welcomed by the market. In 2013, the Company:  received a very good appraisal from an independent analytical company, Analysis
PZU Zrównoważony [PZU Balanced] and maintained this assessment for PZU Energia
Ecology] (4* in this rating);  The PZU Zrównoważony Fund Managers –
The condition of the investment fund market will primarily depend on:  the economic climate on capital markets;  the volatility of yields on treasuries;  the attractiveness of traditional bank deposits;  changes on the financial intermediation market, especially the slow-down in the growth of popularity of independent financial advisory services and, therefore, a reduction in the number of sales channels;  the currently unpredictable possible further regulatory changes regarding, inter alia, the pillar III pension system – especially with respect to individual products – the lack of clearer incentives for savers may continue to block the development of this segment of the market.
Life insurance companies collected UAH 1.7 billion gross written premiums in three quarters of 2013, which was 39.8% more than in the corresponding period of 2012.
The Ukrainian insurance market is fragmented. 441 insurance companies were operating on it in September 2013 (of which 62 were providing life insurance), of which 94 are companies with foreign capital.
Ukraine Life”. In addition, LLC SOS Services Ukraine performs assistance functions.
Because of the relatively low market penetration, as well as the number of inhabitants, Ukraine’s insurance market has a huge growth potential and is of interest to foreign investors. The amendments to the legal regulations introduced in 2013 should also favourably affect its functioning.
The increase in the value of motor insurance was mainly due to the higher prices of policies and the increase in company car fleets (due to the recovery in the economy). However, the expansion of the accident and health insurance market was related to the increase in interest in insurance of this type.
state). The largest insurance company in Lithuania in terms of total gross written premiums for non-life insurance is Lietuvos Draudimas. It had a 31.1%
LTL 626.0m which constituted 8.9% compared with 2012. Market growth primarily arose from the increase in insurance with a single premium (23.8%) while insurance with a regular premium increased by 6.8%.
The largest life insurance company in Lithuania in terms of total gross written premiums for life insurance was
237.2m, which constitutes a decline of 1.5% compared with the same period of the previous year. MTPL
Latvia at the end of September 2013 (including 8 branches of insurance companies registered in another member state). The largest life insurance company in
According to the data for the first half of 2013, the total value of the gross written premiums on the non-life insurance market was EUR 119m, which constitutes 3%
growth compared with the same period of the previous year. Within the product structure, auto casco insurance (36%) and MTPL insurance (27%), as well as non-life insurance (26%) had the highest market shares.
If, which had a 27% market share. The next places were occupied by Ergo and Swedbank (each with 14%),
In 2013, PZU Lithuania obtained a gross written premium of a value of LTL 189m, i.e. 16.7% more than in 2012, which was significantly higher than the rate of growth of the whole market. This result was achieved as a result of the increased sales of non-life insurance
The structure of the portfolio was dominated by motor insurance with a 54.1% share of the written premium.
In 2013, the contribution obtained by PZU Lithuania Life amounted to LTL 26.1m, which meant that it increased by 24%. The highest sales growth was recorded in traditional life insurance, which increased by 61.2%
 The PZU Lietuva Branch in Estonia was registered on 14 November 2012 and had recruited the key staff by the end of 2012.
In accordance with the Articles of Association, the activities of PZU Asset Management SA (PZU AM) are:  conducting brokerage activities in the meaning of the Act on the trading of financial instruments of 29 July 2005 (including the management of investment portfolios of investment funds);  the provision of portfolio management services.
During 2013, PZU AM’s activities involved managing closed-ended investment funds from the real property sector as well as managing the assets of the Słoneczna
The management of closed-ended investment funds from the real property sector was transferred to TFI
Employee Pension Fund, under which the Fund manages the assets on its own, PZU AM ceased providing asset management services to this fund.
At the end of 2013, the Company was working with more than 1,000 healthcare 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 (this tool will be developed in the direction of using the platform for further claims
Assistance Insured Club]. Discount, incentive and loyalty programmes addressed to the mining industry are being developed within this entity.
The statutory activities of PZU CO include conducting business regarding the provision of:  ancillary services related to insurance and pension funds;  permanent intermediation in the conclusion of insurance contracts, financial and investment contracts and assistance agreements;  contact centre services;  data centre services;  printing services;  IT services.
Armatura Group and is listed on the Warsaw stock exchange, Giełda Papierów Wartościowych SA. The
Tower Sp. z o.o. The Armatura Group conducts its business outside the area of financial and insurance services. It is a leading manufacturer in the plumbing and heating sector in Poland. The companies making up the Armatura Group specialize in the manufacture of bathroom and kitchen taps, aluminium central heating radiators, a wide range of valves and sanitaryware.
Since 27 August 2013, the owner of Armatura Kraków has been an investment fund managed by TFI PZU –
 7,078,381 shares as a result of a call announced on 6 November 2013; after this transaction was cleared, on 18 December 2013, the PZU Group held 75,125,538 shares, representing 92.75% of the share capital.
4 Business strategy The Management Board adopted an updated business strategy - the PZU 2.0 Strategy - in December 2011. At the same time, the main objective of the PZU Group’s development for successive years has been maintained.
Because of its strong customer orientation and high operational efficiency, the PZU Group will be the largest and the most profitable insurance company in Central and Eastern Europe.
PZU Group’s updated business strategy is driven by the slogan We are changing for good. This primarily means:  focusing on customer needs.
A modern and integrated model of customer service, together with automated back office processes leading to the elimination of paper operations, will create favourable conditions for better customer service and efficient resource management;  employee professionalism and commitment.
Group intends to finance large projects, as well as the purchase and restructuring of real property. These activities will be undertaken, inter alia, in order to reduce volatility of results on investing activities.
An important event which affected the implementation of the PZU Group’s business strategy in 2013 was the pilot implementation of the IT system for non-life products. The completion of this project (which was given the characteristic name of Everest) will enable the business and technological transformation of PZU and create conditions for the appropriate management of its customer relations.
 Group customers: PZU will maintain its leadership position on the group life insurance market. The sales of health and drug insurance, including riders, will play an important role in achieving this objective. At the same time, the development of this market will depend, to a large extent, on changes in legislation (i.e. the introduction of an act on voluntary health insurance and the admittance of competitors to manage public health insurance contributions).
 Human resource: In building a results-oriented organizational culture, special attention will be devoted to the development of employee competencies. The implementation of the knowledge and skills development programme for all PZU employees, known as Program Plus, was initiated after the annual appraisal had been conducted for the first time in 2013. The
Polish market, will be continued. The process of the Group’s best managers sharing their experience will also play an important role in the process of enhancing employee competencies and commitment.
1. Operating profit in the mass-market insurance segment in 2013 was 86.1% higher than in 2. According to the PFSA data, the market leader in the mass-market category after three quarters of 2013 - 33.3% in auto casco insurance, 27.2% in MTPL insurance, and 48.3% in other insurance.
4. The implementation of the new product system was continued (the Everest project). The system will contribute to the flexibility and sophistication of the products and will give the individual distribution channels new functionality. As a part of the pilot programme, the first motor insurance policy was issued in November 2013 within phase 1.0 of the Target
2. Work on the activation of a sales support tool (analytical CRM) for PZU Życie was continued.
2. Consistent growth in the gross written premium (+3.8% compared with 2011) and high profitability of the segment.
3. Sales of new individual continuation agreements for group life insurance continued in 2013.
1. The increase in the number of club members to 2.6m (from just over 2.0m at the end of 2011), created an opportunity for closer cooperation with customers and the extension of the range of services.
2. The implementation of Klub PZU Pomoc w Życiu at the workplaces of the insured at PZU
Życie continued. The range of services and discounts offered by the Klub PZU Pomoc w
1. 47.6% increase in the written premium in group health insurance compared with 2011.
4. Further improvement and development of the outpatient healthcare offering addressed to institutional customers, including further expansion of the network of service providers and improvement in the functioning of the TPA (third party agreement).
Regaining market position and maintaining profitability 1. Operating profit for 2013 in the corporate insurance segment was 101.4% higher than in 2. According to the PFSA data, the market leader after three quarters of 2013 in the category of enterprises and other entities in terms of value of gross premium written - 43.5% in auto casco insurance, 49.8% in MTPL insurance, 18.1% in other insurance.
Europe 1. Development of operations in the Baltic states - the PZU Group is present in Lithuania; the first policies were sold in Latvia in December 2012 and in Estonia started operations in 2. Having a high capital base, the PZU Group is looking for investment opportunities both in
2. Activities were conducted in the area of national heritage, education and development of young talents.
3. The PZU Group placed a great deal of emphasis on prevention programmes aimed at preventing road accidents and mitigating their effects and supported activities promoting health prophylaxis.
Leaders” competition in the category of companies that donated the largest sums of money to social causes. PZU won with a record-breaking value of donations of more than
Objective Implementation of Strategy 2.0 for the years 2012 - 2014 / summary of actions and achievements in 2013
Middle-office: a modern and integrated customer service model 1. 91% of customers were satisfied with the claims handling process (a customer satisfaction survey conducted on a sample of approx. 20,000 people in 2013).
2. The process of implementing a network of modern, highly visible, sales-oriented PZU
3. Work continued on the further optimization of the claims handling and benefits area, including modernization of the principles of cooperation with loss adjusters
1. Work was performed on the implementation of a product system for non-life insurance
2. The implementation of a common ERP class system for PZU and PZU Życie was completed - further processes were being implemented in the area of insurance bookkeeping for PZU
4. All PZU Group systems were transferred to a new integration environment. The current platform is modern and highly efficient, as a result of which it can handle large transaction volumes (1.5m a day).
1. PZU has the largest network of branch offices in Poland (412 PZU Branches).
December 2013. In the conditions of upholding the main strategic objectives selected in Strategy 2.0, the instruments for implementing the strategy were adjusted in order to provide a new growth stimulus.
Additionally, business pillars were adjusted in order to present the direction of PZU Group’s operations more clearly. This included the creation of the Health pillar.
PZU’s plans for 2014 take into account the expected moderate acceleration of growth in the Polish economy, the possible continuation of turbulence on the global financial markets, as well as the need to comply with the new solvency requirements in the mid-term perspective. Operating in the uncertain and variable environment, the PZU Group is going to pursue its strategy taking advantage of its strengths, such as the enormous customer base (millions of customers), high capital, qualifications of its employees and a strong, refreshed brand.
Profitable maintenance of the position in non-life insurance 1. Profitable maintenance of the market share in the motor insurance and non-life insurance segment.
1. One of the objectives of the PZU Group is the rapid growth of business measured by the nominal value of the customers’ assets managed.
Development of health insurance 1. Further creation of the health insurance market to increase the scale of business in this area.
committed employees / resultsoriented culture 1. Further strengthening of PZU’s position as a preferred employer by holding a further edition of the internships and traineeships programme.
Effective capital and investment policy 1. Focusing on the rate of shareholders return using such measures as optimization of capital, combined with maintaining the solvency ratios and maintaining resources for strategic development through acquisition.
5 Organization, infrastructure and human resources 5.1 Organizational and functional structure
PZU’s and PZU Życie’s organizational structure is based on the functional and territorial coordination of tasks.
(headquarters, specialized units, regional branches and branch offices) are fully integrated and perform their functions for PZU and PZU Życie.
As at 31 December 2013, PZU’s and PZU Życie’s organizational structure consisted of the following organizational units:  the headquarters – which supports the
Management Board of PZU in the management of the operations of the companies and the coordination of activities within the PZU Group, develops assumptions and directions of development of activities and the organization of the companies from the PZU Group; it is the centre of planning and management by setting business objectives, defining the strategy and coordinating its implementation;  specialized units – specialized operations centres performing their tasks for the companies or a distinct area of the country with regard to the contact centre, insurance operations, claims handling, accounting operations (insurance and non-insurance), personnel and salaries operations, debt recovery, financial insurance and administrative support operations;  regional branches with the network of branches
– direct, comprehensive customer service points with regard to life and non-life insurance.
At the same time, some operations are performed by subsidiaries (including PZU Pomoc – with regard to handling claims, PZU Centrum Operacji – with regard to insurance operations and Towarzystwo Funduszy
The PZU Group has the largest network of sales and service branches of all Polish insurers. The organization of the PZU sales network has the objective of guaranteeing sales effectiveness, while simultaneously assuring a high quality of services provided.
At the end of 2013, the PZU Group distribution network included:  Exclusive agents. PZU’s own agency network consisted of 8,354 exclusive agents at the end of 2013. The agency channel conducts sales of mainly all types of insurance, especially motor and non-life insurance and individual insurance
 Multiagencies. 2,178 multiagencies working with several insurance companies make sales mainly to the mass market (insurance of all types is sold through this channel, especially motor insurance and non-life insurance, as well as individual life insurance).
 Direct. PZU sells products to individual customers by telephone and over the Internet.
Claims Centres located throughout the country and at the central unit – the Operational Centre for Claims and
Furthermore, PZU is continuously expanding its cooperation with repair networks – at the end of 2013, the number had increased to 1,398 from 1,363 in 2011.
Promoter Score) recommendation index, which is the difference between the proportion of promoters and critics participating in the survey, was as high as 29%
In accordance with the accepted schedule, a pilot implementation of the new system was launched on 18 November 2013. The Everest system pilot programme was conducted in two stages. Within the so-called small pilot programme, PZU made Everest available to approximately 70 exclusive agents and 30 PZU employees from Lublin. During the “large pilot programme” conducted from 13 January until the end of February 2014, Everest was made available to all of
Lubelskie and Podkarpackie network. The pilot programme had the purpose of checking the functioning of the new process and the correctness of the plan to deploy the new system throughout the country, as well as prepare users. The “large pilot programme” also gave the opportunity to monitor and analyse the business indicators.
The implementation of the Everest platform has been divided into three phases. Such organization of the project will enable the business benefits to be achieved quickly with the simultaneous minimization of implementation risk. PZU will introduce motor, home and some property products into the system (for 11.5 thousand end users) by the end of 2014. The other products offered to the mass market and SMEs, will be activated from the beginning of 2015 (a further 10k end users). PZU plans to make products for corporate customers available in Everest in 2016.
A number of activities supporting important business initiatives and optimizing the technical infrastructure and processes were conducted in 2013, in particular:  the implementation of the system supporting the new model of human capital management at the PZU Group was completed;  work continued on improving the IT tools in the areas of fund and asset management;  a project of consolidating the IT infrastructure with regard to disk resources was completed, gaining the ability to effectively use them within the PZU Group;  work started on the strategy in the area of the technical infrastructure, the implementation of which will help optimize the costs of the IT
infrastructure;  significant cost savings were achieved through the optimization of the wide area networks
(WANs);  measurement of performance, effectiveness of processes and IT spending on the basis of the cost allocation model was improved;  implementation of an ERP system which is common to PZU and PZU Życie was completed
A major step was also taken with regard to the unification of IT in the PZU Group, standardizing supervision, the structure and management of IT in all
The proportion of women in the employment structure has slowly declined in recent years. 99.2% of employees had degrees or secondary education, whereby 75.5% had degrees. The share of employees with degrees increased significantly compared to 2011.
However, the age structure of employees was stable and, in December, 69.2% of the employees of both companies were aged up to 44 years.
Group in 2013 was a result of the implementation of the assumptions to the restructuring plan announced in
and PZU Życie announced their intention to make group redundancies, in accordance with the Act on the detailed principles of terminating employment for reasons not attributable to employees of 13 March 2003. The trade unions operating at these companies were consulted on the intention to make group redundancies, while information about the initiation of group redundancy procedures was provided to the appropriate County Labour Office.
PZU Życie, which represented 5.5% of all employees of these two companies.
Table of Employment at PZU and PZU Życie (in thousands of FTEs)
(just as during all stages of employment restructuring, namely in 2010–2012) were offered more favourable conditions of leaving than those provided for by law in similar situations. The amount of additional severance depended on the length of service at the PZU Group and the level of the given employee’s salary.
Employee appraisals, for which the assumptions were prepared in 2012, were conducted for the first time at
PZU in 2013. Their objective was primarily to promote appropriate attitudes among the employees based on cooperation, knowledge sharing and feedback. The
Within the process of valuing all positions, which started in 2012, the process of writing up and valuing positions was completed in 2013 and an analysis was conducted of salary practices applied at the individual companies with respect to the market. The last stage of the project, i.e. the implementation of its results is planned for the first half of 2014. They will be used in the salary system, which will take into account the competencies, skills required for a given position and market standards.
We Reward Results. WOW is a bonus system based on the assessment of the extent to which objectives are achieved, consisting of the employee’s annual appraisal and the annual development plan.
The following have been introduced to support employees in improving their skills, which are required at the given work post:  PLUS Training programme. Training is selected for the employee on the basis of his DNA
appraisal, which has the objective of developing the areas which constitute his weaknesses.
 Classroom training packages, such as management challenges, the Manager’s CV and coaching.
Every employee benefited from an average of 30 hours of classroom training and 16 hours of e-learning in
Develop together with PZU, The Customer comes first and Ambassadors of PZU.
In terms of employer branding, a number of activities dedicated to students were conducted. The Wiedzą
Potentials. In 2012, the programme enabled more than 100 people to work for the PZU Group. More than 60%
In 2013 , the PZU Group conducted six advertising campaigns with broad coverage, which primarily had the objective of strengthening the image of PZU as a modern and trustworthy company. These were:  A campaign on auto casco insurance, the objective of which is to inform customers that insurance in the formula of all risks give them peace of mind and certainty, even in unexpected situations.
 A campaign addressed to students and graduates Praca przez duże P [Work with a capital P]. Its objective was to strengthen
reindeer giving out presents reminded viewers that, whatever happens, customers can always rely on PZU. At the same time, some advertisements informed viewers that PZU and its employees support the
In addition, in September, PZU was the titled sponsor of the 35th PZU Warsaw Marathon. This information appeared in the Internet, the press, the OOH channel
6 Consolidated financial results 6.1 Key factors affecting the financial results achieved
The PZU Group achieved profit before tax in 2013 at a level of PLN 4,120.7m compared with PLN 4,038.7m in the prior year (increase of 2.0%). Net profit attributable to the shareholders of the parent company amounted to PLN 3,293.7m, compared with
Group’s financial results in 2013:  An increase in gross written premium. It amounted to PLN 16,480.0, i.e. an increase of 1.5% compared with the prior year. After accounting for the share of reinsurers and the change in provision for unearned premium, the net premium earned amounted to
 A decline in the net result on investing activities. The net result on investing activities amounted to PLN 2,488.1m, i.e. it was 32.8%
 The one-off profit before tax on the settlement agreement with the reinsurer on the Green Card insurance of PLN 53.2m (PLN 73.3m was recognized in other operating income and expenses).
 The decline in claims and benefits. Claims and benefits amounted to PLN 11,161.2m, which is a decline of 8.7% compared with the prior year.
Additionally, in 2012, technical provisions increased significantly as a result of a one-off change in technical rates. The total negative impact of this operation on the PZU Group’s profit before tax in 2012 amounted to
N e t p re m iu m e a rn e d
F e e a n d c o m m is si o n in co m e
, a n d t e ch n ic a l p ro v is io n s
O th e r o p e ra ti n g i n co m e a n d e x p e n se s
A cq u is it io n e xp e n se s
PLN 16,480.0m, i.e. 1.5% more than in 2012. They comprised mainly:  Regularly paid life insurance premiums. They had a 41.9% share of the total gross written premium (i.e. 0.2 p.p. more than in 2012).
Group’s insurance portfolio (18.2% in the prior year). In 2013, its value was 4.5% lower than in the prior year. This was the effect of a decline in policy prices as a result of increased competition on the market and lower car sales.
 Auto casco insurance. This type of insurance had a 12.3% share of the Group’s total gross written premium (i.e. 0.9 p.p. less than in the prior year).
 Fire and non-life insurance – this type of insurance represented 11.5% of total premiums. Its value increased by 5.1%
 Premiums from life insurance with a single premium. The written premium from this represented 5.1% of the Group’s total premiums (compared with 4.2% in 2012). The main increase was noted in premiums on unitlinked and structured products.
this insurance category, primarily the value of patient cover in respect of medical events dropped. In the first half of 2012, medical establishments were obliged to conclude insurance contracts for patients in covering medical events. Because of the changes in legislation, this obligation was deferred to 2016.
PLN 320.0 M to the PZU Group’s result, which is 34.9%
open-ended pension fund assets. They amounted to PLN 168.5m (a 3.9% increase compared with the prior year). The contributions transferred by the Social
PLN 82.9m, i.e. PLN 66.9m more than in the previous year, mainly as a result of the start of consolidation of real property funds from 2013.
PLN 3,704.7m in 2012 (a decline of 32.8%). The following factors had the greatest impact on the decline in this income:  A decline in bond prices. For example, the 5year Treasury bond yield increased by 42 basis points year-on-year, while the 10-year bond yield increased by 61 basis points year-on-year, while the yields dropped by 211 and 215 basis points respectively in 2012. As a result the
Group earned income of PLN 1,970.6m on interest-bearing financial assets, which was
 Worse conditions on the capital markets than in 2012 – in 2013 the WIG index increased by 8.1%, whereas, in the previous year, it increased by 26.2%. In effect, in 2013, the
Group’s income on investing activities on the capital markets amounted to PLN 592.8m and
 The decline in the result on derivatives, purchased mainly to manage market risk, of
Fashion. PZU plans to increase its debt portfolio to approximately 30 investments. According to the strategy, PZU plans to increase its non-Treasury debt securities portfolio to approximately 16% of the investment portfolio at its own risk.
In 2013, the net value of claims and benefits, as well as the increase in the PZU Group’s provisions amounted to
acquisition expenses of the consolidated companies amounted to PLN 30.7m in 2013.
In 2013, the Group’s administration expenses were at a level of PLN 1,406.5m, which was 2.3% lower than in the prior year. The following factors had an impact on their level:  PLN 19.1m lower personnel costs, as a result of employment restructuring and reorganization;  a decline in advertising expenses compared with 2012, when a large-scale corporate campaign was conducted;  an increase in project costs related to the implementation of a new product system, the
As at 31 December 2013, total assets of the PZU Group amounted to PLN 62,362.4m and were 11.5% higher than as at the end of 2012.
125.5m due to the implementation of the new policy system in the non-life company.
The PZU Group’s cash and cash equivalents amounted to PLN 548.3m (0.9% of total assets). A year earlier, they amounted to PLN 136.6m.
This drop was a result of slightly lower sales of investment products, combined with the lower disbursements in endowment covers in the bancassurance channel. In effect, their share in the structure of liabilities and equity dropped from 4.1% as at the end of 2012 to 3.4% as at the end of December
The balance of other liabilities and provisions as at the end of 2013 amounted to PLN 9,789.2m. The PLN
5 848.8m increase arose mainly from sell-and-buy-back transactions concluded at the turn of the years.
Under a guarantee facility agreement dated 7 October 2013 concluded by and between PZU and Bank
Under the guarantee facility agreement dated 7 October 2013 concluded by and between PZU Życie and Bank
Millennium SA, the bank grants bank guarantees (as tender deposits, as well as performance bonds) to PZU
As at the end of 2013, the balance of loans incurred by the PZU Group amounted to PLN 222.4m, of which the
 Life insurance – group and individually continued. PZU Życie offers this insurance to groups of employees and other formal groups
 Individual life insurance. PZU Życie provides this to individual customers. The insurance contract relates to a specific insured, subject to the assessment of the individual risk. This group comprises protection, investment (other than investment contracts) and health insurance products.
 Other. This encompasses consolidated entities not classified in any of the segments above.
(of PLN 86.1m). In the last quarter of 2013, thanks to of renouncement of the application of an uniform policy to all companies, meant that
PZU recorded a positive trend due to the closer cooperation with lease companies in motor insurance. The value of accident and health insurance also dropped (by PLN 65.6m). In the first half of 2012, hospitals and medical entities were obliged to take out insurance on behalf of patients to cover medical events; as a result of legislative changes, this obligation was deferred to 2016. As a result of renewing the three-year premium for the fuel and energy sector, premiums increased in the fire and other nonlife insurance cover (by PLN 49.0m).
 The drop in claims and benefits. The total amount of claims and benefits was PLN 854.1m and was PLN 319.9m lower than in the prior year. In particular, claims in non-life insurance dropped (by 37.9% year-on-year). This was the result of a smaller number of large one-off claims, a change in the approach to individual risk assessment and new pricing policies, taking into consideration customer risk and a more stringent financial insurance risk policy. A
 A drop in acquisition expenses. The drop mainly arose from lower sales and indirect costs which amounted to PLN 300.3m; they decreased by 10.7% compared with the prior year.
In 2013, the operating profit in the mass-market nonlife insurance segment amounted to PLN 1,067.3m (a 33.5% increase compared with the prior year). They comprised:  A gross written premium of PLN 6,533.7m, i.e.
1.2% less than in 2012. The motor insurance premium was 3.9% lower than in the prior year, but non-life (mainly agricultural) insurance premiums increased by PLN 81.7m. However, the premium earned was PLN 6,552.3m and was 0.6% higher than in the prior year.
Additionally, in 2012, the value of claims and benefits included the one-off effect of the decline in the technical rate in the form of an increase in the value of capitalized annuities of
A one-off income was recognized in 2013 with regard to a settlement agreement with a reinsurer relating to the
The operating profit of the group and individually continued insurance amounted to PLN 1,603.4m and was 16.8% higher than in the previous year. This was a result of:  A gross written premium of PLN 6,415.2m, which was 0.8% higher than in 2012. Because of the discontinuation of the short-term endowment insurance offering with a single premium, this almost entirely represented the premiums paid regularly. In 2013, a stable growth trend was maintained in regular premiums as a result of the development of group protection insurance (an increase in the average premium and in the number of insured, including new sales), sales of riders and an increase in the sum insured in individually continued products, the acquisition of premiums in group health insurance (new customers in outpatient insurance and introduction of a new drug product into the range), as well as the continuation of the cooperation with bank intermediaries in sales of protection insurance.
PLN 4,299.5m (a 3.8% increase). In addition to the increase in the group and individually continued protection portfolio, the increase in the frequency of events also contributed to this increase.
decline was mainly the result of lower personnel costs, as a result of reorganization and employment restructuring, as well as the decline in advertising expenses (a rebranding campaign was conducted in 2012).
In 2013, the operating result of the individual life insurance segment amounted to PLN 139.9m, i.e. it was 33.8% higher than in the prior year. The main factors affecting the level of the segment’s operating results were:  A substantial increase in the gross written premium – it amounted to PLN 1,329.9m and was 22.0% higher than in the prior year. This was the result of high sales of investment products offered in cooperation with banks
income allocated and income from investmenttype products). This amounted to PLN 305.0m, i.e. was 12.1% lower than in the prior year.
In ve st m e n t in co m e
Operating profit of the group and individually continued insurance segment (in PLN million)
and PZU Życie) plus the surplus of income earned over the risk-free rate on investments reflecting the value of
Additionally, the investment segment includes income from other free funds in the PZU Group.
Income on operating activities in the investments segment amounted to PLN 896.6m (external operations only) and was 41.2% lower than in the previous year.
This was mainly the effect of a decline in bond prices.
In 2013, the operating profit in the pension insurance segment amounted to PLN 137.4m, i.e. it increased by 39.6% compared with the prior year. This was the result of:  Fee and commission income which amounted to
PLN 218.3m, i.e. it increased by 9.6% compared with the prior year. This change was the result of: ­ an increase of PLN 11.8m in fee income from contributions due to the statutory increase in rates from 2.3% to 2.8% of the base contributions; ­ an increase of PLN 16.6m in the management fee resulting from a higher level of assets; ­ a drop of PLN 10.3m in income from the reserve account.
Guarantee Fund decreased (by PLN 3.5m), while the Transfer Agent’s fee was also lower.
P re m iu m e a rn e d n ve st m e n t in co m e
A d m in is tr a ti v e e x p e n se s
Group involving the discontinuation of the materiality principle, as of 1 January 2013, the company offering life insurance started to be included in the consolidation. Therefore, the data for this segment for 2013 includes the data of two companies, while the data for 2012 only has the data of the non-life company which had been subject to consolidation until this time.
The significant improvement in the segment’s results was the effect of:  An increase in the gross written premium. It amounted to PLN 203.6m, i.e. it increased by 43.2%. In 2013, it comprised PLN 46.6m of premiums of the life insurance company, which had not been subject to consolidation in 2012.
 An increase in acquisition expenses. They amounted to PLN 62.4m compared with
This result arose from the following factors:  An increase in gross written premium. It amounted to PLN 262.3m, and included
 A decline in the result on investing activities. In 2013, investment income amounted to
 An increase in net claims and benefits. They amounted to PLN 139.1m, including claims and benefits relating to the life insurance company, which was not consolidated in 2012, of
PLN 20.4m. The non-life insurance company recorded a relatively low increase in claims and benefits. The company disbursed PLN 118.7m on claims and benefits, which was 6.3% more than in the previous year. The loss ratio also improved (from 65.0% to 60.7%). In life insurance, the amount of claims and benefits was 32.4% higher than in the previous year because of the increase in technical provisions
 An increase in acquisition expenses. The respective expenses of the segment amounted to PLN 67.1m, including PLN 10.5m of acquisition expenses incurred by the life insurance company. The increase in acquisition expenses resulted mainly from an increase in sales of insurance.
In v e st m e n t in co m e
O p e ra ti n g r e su lt fo r 2
 A lower positive balance of net technical provisions. This amounted to PLN 172.3m compared with PLN 1,171.5m in the prior year.
This difference arose from the changes in the cover portfolio of short-term endowments of an investment nature, mainly through the bancassurance channel, i.e. lower sales, endowment disbursements and income from investing activities.
 Lower acquisition expenses. These amounted to PLN 18.3m, i.e. they were 41.3% lower than in the prior year. This was the effect of a decline in the sales volume. Additionally, in 2012, costs were incurred on the launch of individual pension security accounts (IKZE) on the market.
ROE amounted to 24.1% and was 0.1 p.p. higher than in the prior year. The profitability ratios achieved in 2013 by the PZU Group exceed the levels achieved by the whole market (according to the data for three quarters of 2013).
A cq u is it io n e x p e n se s
Basic profitability ratios of the PZU Group 2013 2012 2011 2010 2009
(operating profit / gross written premium) x 100% 22.3% 19.8% 28.7% no data no data *As of 2010 a change in the ABC indirect costs allocation model.
The main elements of the risk management strategy include:  the system of acceptable limits on the level of risk and restrictions defined by the Management
The risk management system at PZU and PZU Życie is based on three elements:  organizational structure - comprising the demarcation of responsibilities and tasks performed by the individual organizational units in the risk management process;  actions taken with the use of hedging and risk transfer techniques in order to adjust the risk profile and appetite for risk to strategic plans;  methods for identifying, measuring, assessing, monitoring and reporting risk.
The first three competence levels comprise:  the Supervisory Board, which supervises the risk management process and assesses its adequacy and effectiveness as part of its decision-making powers defined in the
Technology Function;  the third line of defence - comprises internal audit, which conducts independent audits of the elements of the risk management system, as well as control activities embedded in the
Company’s activities. This function is performed by the Internal Audit Department.
The risk management strategy, which was updated by the Management Boards in 2013, defines the maximum/minimum parameters of the appetite for risk, risk profile and tolerance limits that lead to active and informed changes in the level of risk accepted by the
 Risk profile. These are quantitative limits which define the appetite for risk of the PZU Group more precisely.
 Tolerance limits. These are additional risk limits introduced to mitigate potential risks.
The process of risk identification, measurement, assessment, monitoring and reporting, as well as the process of taking management actions, is subject to internal control at the PZU Group to ensure its compliance with internal and external regulations, constant improvement and adequacy to the PZU Group business profile.
 Risk assessment. Overall risk assessment is reflected on the risk map, which presents a systematic visualization of the levels of the PZU
Group’s risk exposure. Measurable risks are assessed by the Risk Department. Nonmeasurable risks are assessed by experts and their assessment is taken into account in the overall risk measurement.
 Reporting. This process allows efficient risk communication and supports risk management at various decision-making levels from the level of the employee to the Supervisory Board.
PZU Group. Depending on the type and characteristics of the risk, these actions can include the avoidance of risk, the transfer of risk, the mitigation of risk, the acceptance of risk levels and tools which support these actions, i.e. limits, reinsurance programmes and underwriting policy reviews.
The PZU and PZU Życie risk profile did not change significantly in 2013, except for market risk. The change in the market risk profile was due to the fact that PZU Życie paid a dividend in the form of transfer of share fund units, as well as because of the implementation of a new internal model for calculating market risk. The main risks incurred by these companies include insurance risk, market risk, credit risk, concentration risk, operational risk and compliance risk.
Insurance risk measurement is based in particular on:  the analysis of selected ratios;  the scenario method - analysis of impairment arising from an assumed change in risk factors;  the factor method - a simplified version of the scenario method, reduced to one scenario per risk factor;  statistical data;  exposure and sensitivity measures;  the expertise of the Company’s employees.
The PZU Group manages insurance risk in particular by:  specifying the tolerance to and monitoring insurance risk;  business decisions and sales plans;  calculating and monitoring the adequacy of technical reserves;  tariff strategy, as well as monitoring current 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.
The PZU Group takes the following actions to mitigate the insurance risk:  definition of the scopes of liability in the general terms of insurance or templates of financial insurance agreements;  definition of exemptions from liability in the general terms of insurance or templates of financial insurance agreements;  co-insurance and reinsurance actions;  adequate tariff policies;  adoption of conservative assumptions for calculating provisions using methods which are in compliance with the applicable legal regulations;  underwriting procedure;  claims handling procedure;  sales decisions and plans;  prevention.
The process of identifying market risk related to insurance liabilities starts simultaneously with the process of creating an insurance product and involves identifying the relationship between the amount of financial flows associated with this product and the market risk factors. Identified market risks are assessed in terms of materiality, i.e. based on whether the materialization of a risk would be related to a loss that could affect the PZU Group’s financial position.
Market risk is monitored on two levels: internally at the organizational units responsible for operating market risk management and independently by the Risk Department. Market risk monitoring involves analysing the risk levels and the utilization of limits. Monitoring is performed in daily or monthly cycles adequately to the defined limits.
Credit risk is measured with the use of the following tools:  exposure measures (the amount of the gross and net credit exposure and maturity-weighted net credit exposure);  VaR, i.e. Value at Risk - a risk measure quantifying the potential economic loss, which will not be exceeded over a period of one year with a 99.5% probability under normal market circumstances.
Credit and concentration risk monitoring involves analysing the risk level, assessing creditworthiness and determining the level of utilization of the limits set.
Management actions with respect to credit risk and concentration risk include, in particular:  concluding transactions aimed at mitigating credit risk, such as selling a financial instrument, closing a derivative or purchasing a hedging derivative;  accepting security;  reinsuring a financial insurance portfolio;  diversifying a portfolio of financial assets and insurance, mainly with respect to the state, sector;  setting limits of exposure to a single entity, group of entities, sectors or states.
The structure of credit and concentration risk limits for the individual issuers is determined by the CRC in line with the risk tolerance determined by the Management
Board. Additionally, the CRC sets detailed limits on amounts and qualitative restrictions.
Operational risk is defined by the PZU Group as a possibility of incurring a loss arising from inappropriate or incorrect internal processes, human actions, the operation of systems or external events.
The following solutions are applied by the PZU Group to mitigate the operational risk level:  updating and optimizing processes and procedures;  changing the structure of checkpoints, reconciliation and validation;  automation of control systems;  contingency plans;  monitoring and analysis of the number of security incidents;  analysis of employee turnover and actions taken to minimize the risk level in this area, such as appropriate staff selection, improvement of employee qualifications, incentive systems;  monitoring and analysing the reasons for failures of the key IT systems.
The PZU Group companies manage their operational risk in accordance with the guidelines defined by the
PZU Group, taking into account their specific nature and the scale of their activities. The Management Board and Supervisory Board members regularly receive information on the operational risk level.
Compliance risk is the risk of legal sanctions, financial losses or a loss of reputation arising from noncompliance of the PZU Group with the law, internal regulations or standards of conduct adopted by the PZU
The activities in the compliance area include in particular:  developing solutions for implementing compliance risk management principles;  promoting and monitoring compliance with internal regulations and standards of conduct in the compliance area at the PZU Group;  monitoring the compliance risk management process at the PZU Group.
PZU Group’s organizational units and, additionally, by the Compliance Department. Compliance risk is identified and assessed for the individual internal processes of the insurance company defined in the
Additionally, the Compliance Department identifies compliance risk on the basis of entries in the register of conflicts of interest, gifts, benefits and irregularities, as well as the enquiries received.
 intangible, such as loss of reputation, including damage to the PZU image and brand.
Management Board every year by 15 March of the following year. No material compliance risk incidents were identified in 2013.
internal regulations from the point of view of compliance, participating in the process of agreeing marketing activities;  avoiding risk through the prevention of involvement of PZU Group companies in activities which do not comply with the regulatory requirements or good market practices or which could have an adverse effect on their image.
The analysis does not take into account the impact of changes in valuation of the deposits taken into consideration in the calculation of the provision on the net financial result and equity financial assets exposed to exchange risk include deposit transactions and debt securities used to hedge payments from technical reserves denominated in foreign currencies, as well as exposures to equity instruments quoted on stock exchanges other than
The increase in the sensitivity of the financial assets portfolio to changes in valuation of listed equity instruments as at the end of 2013 compared to the end of 2012 arises from the higher exposure in financial instruments exposed to other price risks.
Interest rate risk decrease by 100 bp 433 464 315 360
Equity instruments price risk increase by 20% 396 456 234 304
The table also presents the impact of changes in the assumptions regarding annuity insurance in life insurance and the impact of changes in the assumptions regarding reserves for insurance contracts and investment contracts with DPF in life insurance, excluding annuity insurance.
Mortality at 90% of the currently assumed rate (141) (133) (141) (133)
Mortality at 90% of the currently assumed rate (13) (13) (13) (13)
PZU’s risk is also mitigated through reinsurance of the financial insurance portfolio.
In 2013, the main partners providing obligatory reinsurance cover to PZU were Swiss Re, Hannover Re,
Lietuva and PZU Ukraine. The Company participates both in obligatory and optional reinsurance contracts of the aforementioned companies. In addition, PZU
Outward reinsurance contracts concluded by PZU Życie protect PZU Życie’s portfolio against the accumulation of risks (catastrophic treaty), protect individual policies with higher sums insured and protect the group child’s serious illness insurance portfolio.
The partners granting reinsurance cover to PZU Życie comprised the following reinsurance companies: RGA,
Gen Re, Arch Re and Lloyd’s. PZU Życie’s reinsurance partners have high S&P ratings, which gives the
PZU also maintains assets for covering technical reserves in excess of the required level. As at the end of 2013, the assets to technical reserves ratio amounted to 115.5% for PZU and 115.8% for PZU Życie. The details are presented in the Appendix.
Amount of the PZU Group’s own funds of (in PLN million)
European (CEE) companies. It consists of companies that meet certain quality criteria regarding social and ecological aspects.
PLN 385.00 (on 5 May) to PLN 477.9 (on 6 November).
WIG20, including the largest companies, lost 7.1% and the broad market index WIG gained 8.1%.
PZU stock is liquid. At the end of 2012, 65% shares were traded. Average daily turnover of PZU shares in 2013 amounted to 188,219 shares and the highest level
Meeting stringent information governance requirements for public companies and fulfilling information needs of different groups of stakeholders, the Management
In 2013 the major goal of investor relations was to provide information on the activities and performance of the PZU Group in a transparent manner and to create a positive image of the entity among investors to ensure investors' confidence and satisfaction of shareholders.
Key corporate events in 2013 that generated most investor relation activities included quarterly publication of the financial performance and the general shareholders' meeting.
London, New York and Prague) with global institutional investors;  two conferences for institutional investors in
Activities of PZU regarding investor relations are highly appreciated both by investors, analysts and media.
PZU: o Przemysław Dąbrowski won the first place as CFO Best for Investor Relations in Poland, obtaining 57.14% of votes.
Thomson Reuters, is recognized as one of the key industry rankings and the source of knowledge of best practices on the capital market, including communication with investors. High standards and quality of the survey are confirmed by Deloitte, its external auditor.
 The first place for the best annual report for 2012 among banks and financial institutions during The Best Annual Report contest organized by Instytut Rachunkowości i
Annual Report contest has been organized since 2005 and is to promote annual reports with most value for shareholders and investors.
In 2013, recommendations for PZU stock were issued by 22 domestic and foreign financial institutions. In total, the sell side analysts issued 50 recommendations.
Neutral and Hold recommendations prevailed (about 40% of all recommendations issued).
higher compared to that at the beginning of the year, while the maximum target price was PLN 520 and 8.4 Dividend policy
Policy is to reduce the cost of capital through optimization of the balance sheet structure by way of replacing equity with less expensive borrowed capital at the same time ensuring high security and maintaining funds for development.
Group for the years 2013-2015 assumes dividend payment calculated on the consolidated net profit and capital surplus, where the total dividend to be paid out based on capital surplus 2013 – 2015 cannot exceed
The planned new capital policy implementation schedule assumes:  paying a portion of the surplus capital of PLN
(paid on 19 November 2013);  issue of subordinate debt of up to PLN 3 bn;  for 2014 - 2015, paying other portions of the surplus capital as dividend, up to PLN 1.3 bn.
Dividend payment from capital surplus will depend on the issue of subordinated debt (up to PLN 3 bn) in line with the requirements of the Act on Insurance Activity and Solvency II. If the subordinated debt is not issued or it its amount is insufficient, or in case the Polish
the following:  focus on TSR;  maintaining a safe level of own funds. Assuming maintenance of: o solvency margin coverage ratio of the PZU
Poor’s AA rating;  sufficient funds for development and acquisitions in the coming years.
On 23 May 2013, General Shareholders’ Meeting distributed the net profit for 2012 of PLN 2,580.7 bn in the following manner:  PLN 2,564.7 m for shareholders’ dividend (PLN
29.70 per share);  PLN 6.1 m to supplementary capital;  PLN 10.0 m to appropriations to the Company’s
On 26 August 2013, pursuant to Article 349 of the Code of Commercial Companies, the Management Board of
PZU passed a resolution accepting the payment of the interim dividend.
According to the resolution, 12 November 2013 was the dividend date, while 19 November 2013 was the payment date.
The supervisory body recommended the dividend to be paid only by insurance companies that meet all of the following criteria:  received BION risk assessment above 2.5 for 2012;  in 2013 did not disclose shortage of own funds to cover the solvency margin or guarantee capital or a shortage of assets to cover technical provisions (in quarterly or monthly periods);  in 2013, were not included in a recovery plan referred to in Article 187.1 to 187.3 and 187.8 of the Act on Insurance Activity;  as at 31 December 2013 their capital requirement coverage ratio (defined as the minimum of own funds/solvency margin and own funds/guarantee capital) reached at least 160% for section I companies or 200% for section II companies;  whose stress tests carried out as at 31
A with a stable outlook, while the credit rating for a foreign currency was A- with a stable outlook.
Net profit of PZU Group (in PLN mln) 3 29.7 3 255.2 2 345.4
Percentage of net profit of PZU paid as dividend nd 99,4 75.0
Company name Rating and outlook Update Previous rating and outlook Previous update
CSR activities support achievement of business objectives of PZU and include mostly the following areas:  Client relations: ethics in cooperation as the basis of client relations; top service standards;  Social actions, including care for financial awareness and complex security;  Employee relations: building performanceoriented organizational culture;  Environmental impact, in particular including employee education.
PZU aims at achieving top service standards and providing its clients with insurance protection adequate to their varying needs. The Company respects principles included in Code of Good Insurance Practices introduced by the Polish Chamber of Insurance (PIU).
In order to ensure appropriate terms of cooperation with clients and make them feel secure, PZU analyses their needs using a variety of tools to include:  Client satisfaction survey. The Company performs regular surveys of client’s satisfaction and loyalty. In 2013, 50,000 clients were surveyed, participating in one of the key processes including: sales of new policies, loss handling, post-sale support and policy renewal.
Among others, client satisfaction with loss handling has been surveyed on a monthly basis.
Shopper method was also used to assess the work of branches, and client satisfaction with the contact center was tested.
The research carried out in PZU allows not only determining clients' needs but also identifying areas for improvement and organizational strengths.
 Communication with clients. PZU has established an exceptional advisory body, the Client Council. It includes ten clients appointed for a single-year term of office. They provide opinions regarding selected initiatives of the firm, regarding among others: service quality, manners of communicating with clients, service processes, marketing materials, social actions. Along with the Client Council, posts in
social media and at You Tube are used to learn clients' views. Complaints are also an important source of information. Bearing in mind sensitivity of communication with unsatisfied clients, new, more client-friendly principles of complaint handling have been adopted.
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 special care for protecting of interests of individuals, in particular processing of data in accordance with the law, collect them for determined, legal purposes and refraining from further processing if not compliant with these purposes.
Availability of PZU services is another important advantage recognized by clients. Most outlets are located in towns up to 15 thousand of inhabitants and materially contribute to their growth.
PZU cares for appropriate relations with its suppliers and expects them to respect all valid regulations pertaining to their scope of operations. In particular, we focus on ensuring appropriate cooperation with agents, providing them with support programs, training
(e.g. Akademia Agenta) and a new internal communication portal. Candidates for agents are trained as well. In 2013, 384 training sessions were held of r 7.5 thousand people.
and compliance have been included in the obligatory training module for all new hires.
Each employee is obliged to follow the document and submit comments regarding its contents. Only such procedures allow maintaining suitably high ethical standards in the organization and ensuring appropriate quality of its operations.
PZU, and that should be treated as fraud, identifies procedures for employees to follow if a fraud is detected, and most of all, things to do to prevent fraud.
Any doubts, suggestions and irregularities may be reported on the phone, via mail, fax or during meetings with Compliance Coordinator, or to a special e-mail address (zareaguj@pzu.pl).
Implementing of Insurance Products focuses on monitoring of the abusive clause records and continuous review of template agreements, as well as on compliance with recommendations of FSA, Office for
A project regarding improvement of marketing communications initiated in 2012 is a unique initiative, not only in the financial industry.
brand including wisdom, simplicity and imagination is of special importance for us.
The Group has a written set of values and ethical principles called Good Practices in PZU. It has been assumed that each employee is a PZU brand ambassador and should be a role model, promoting ethical standards and compliance with norms that underlie the Company’s reputation. Among others, the document states that in PZU relations are based on equal opportunities. In all processes, in particular in recruitment, evaluation of personal performance, promotion, professional development and participation in training, employees are offered equal opportunities regardless of their sex, age, efficiency, nationality, religion, political views, union membership, gender and type of employment (permanent or temporary, FTE or less).
In 2013, PZU signed the Diversity Chart joining the group of companies that support and promote equal treatment of employees. This is an international initiative promoted by the European Commission and coordinated in Poland by Responsible Business Forum.
Regular employee involvement surveys taken by external entities and a number of initiatives, e.g.
Employee Days are aimed at preventing discrimination in the firm’s structures. The Employee Days are direct meetings of employees with HR Division aimed among others at collecting views regarding changes implemented in the organization. In 2013, they were organized in over 30 PZU entities employing nearly 8,000 people. Respect for an individual is also demonstrated in the form of fair, non-discriminating remuneration. We want our employees to be paid on a level comparable to other entities operating in the industry. The issue of remuneration and additional benefits is presented in the section entitled
Open communication with employees is among the key objectives of our HR policy. The Whistleblowing System provides a communication path between PZU and its employees and other cooperating entities, e.g. agents.
Gaining direct information from all structural levels, we allow employees, agents and other stakeholders sharing their opinions on the functioning of our organization.
PZU’s Warsaw Marathon promoting health care and active lifestyle;  We continued the cooperation with Tatra
Mountain Rescue Service (GOPR) and selected groups of Voluntary Water Rescue Service
(WOPR);  We co-funded purchases of rescue equipment for fire brigades using the prevention fund;  We continued cooperation with Misie Ratują
Dzieci Association involving a long-term prevention and treatment of traffic accident effects on children;  In cooperation with Stowarzyszenie Pomocy
Impaired Driver Assistance Association) we carried out Auto Mobility Centrum program aimed at eliminating barriers for physically impaired individuals allowing them safe driving through substitution of physical dysfunctions;  We continued the Bezpieczna Flota project addressed to professional drivers;  We organized sports competitions for the mentally handicapped in cooperation with
Special Olympics Poland;  We co-funded the operations of Zdążyć z
Pomocą Foundation involving purchases of artetherapy equipment;  We supported improvement in the safety of the Royal Łazienki Museum in Warsaw consisting in expansion of the technical safety system in the museum buildings and physical protection of people and property on the premises of the Museum.
In 2013, PZU acted as a sponsor and patron of various cultural and sport events – both local and countrywide.
Theater in Kraków and Jaracz Theater in Łódź. Our contribution allowed organization of Rzeszów Carpathia
Hewelianum in Gdańsk. Another year we have sponsored Road to Harvard, an opportunity for outstanding students.
Recognizing the importance of sport and healthy life style, PZU got involved in Cavaliada, a cycle of equestrian events held every year in Warsaw, Poznań
Poland. The organizers offered guests with the relax zone and games for kids and adults.
The Foundation provides financing of projects carried out by non-government organizations and other organizational units, which statutory objectives are coincident with the areas of its activities.
 education, mostly supporting of initiatives that provide young people with equal opportunities of intellectual, professional and cultural development;  social care and assistance, including supporting, promoting and developing activity of impaired people;  culture and art, in particular supporting promotion of knowledge of Polish art and culture, artists, talented youth and organization of artistic events;  health care, in particular supporting broadlydefined prevention initiatives.
PZU Foundation is financing mostly NGO projects supporting education initiatives in rural areas and small towns. In 2013, under Z PZU po lekcjach initiative, 20 organizations won subsidies for projects that extend the educational offer in small locations, to include:  Fundacja Edukacyjnej Przedsiębiorczości in Łódź
Foundation in Warsaw to be used for cofunding of historical workshops for students and teachers;  Fundacja Młodzieżowej Przedsiębiorczości in
Warsaw to fund a finance and insurance education project called Od Grosika do
Further, the Foundation granted one-off support to a number of other organizations.
PZU Foundation supports and promotes social inclusion of impaired individuals and co-funds employees of PZU
Group facing personal problems. In 2013, seventeen organizations were awarded in Młodzi Niepełnosprawni competition with grants for social inclusion projects.
One-off support was granted to the following organizations: Tatrzańskie Pogotowie Ratunkowe,
Polish Oncologic Union in Warsaw, co-funding project that involved training of medical personnel in psychooncology.
PZU Foundation has been supporting initiatives promoting Polish culture and art, supporting artists and talented youth. In 2013, first time grants were awarded during PZU z Kulturą contest to 41 organizations from small towns that organized trips for kids and youth to culture centers.
In 2013, the Foundation donated a set of medals from the collection of Jan Henryk Dąbrowski to Muzeum
Akademia Rozwoju Filantropii w Polsce, PZU Foundation initiated a countrywide social program called Family
Stowarzyszenie Wiosna, twenty Volunteer Leaders were trained, selected from among most active PZU Group employees, who coordinated preparation of Xmas packages for families around the country
PZU was involved in a number of events aimed at sharing of knowledge and experience with business environment. PZU participated in organization of: Economic Forum in Krynica, III European New Ideas
In November 2013, PZU Group won the first prize in the fourth edition of Charity Leaders contest as the company who spent most funds for social purposes.
We won the award for the second subsequent year with the record donated amount exceeding PLN 65 mln.
responsible internal resource management and of building environmental sensitivity and awareness among stakeholders: employees, clients, business partners, suppliers and representatives of local communities.
PZU cares for natural environment through:  economic management of resources and raw materials. Using electronic data carries and limiting the use of paper in business is an important aspect of this activity. In order to reduce power consumption, we install energysaving lighting and heating systems. Waste management and aiming at its full recycling
 Employee education. Key initiatives include: campaigns regarding use of consumables, recycling, e.g. involving employees in collection of mobile phones and environmental campaigns.
Since the date the Company’s shares have been admitted to trading on a regulated market PZU has followed the corporate governance rules laid down in
(www.pzu.pl) in the section dedicated to PZU’s shareholders – Investor Relations.
Insurance (“PIU”), an organization associating insurance companies operating in the Polish market is another document determining the manner of business operations and of developing relations with stakeholders. The document is available on the website: praktyk/project/132/pagination/1
Good Practices of Companies Listed on WSE except from the one referred to in Section IV.10, 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. Further, PZU does not comply with recommendations of Section I.5, I.9 and I.12.
With regard to the principle referred to in Section IV.10, 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’ meetings applicable in PZU
allow for exercising rights from shares and protect interests of all shareholders. The communication regarding non-compliance with the principle included in
Recommendations concerning good practices of companies listed on WSE should be emphasized:  As for the recommendation included in Section 1.5 concerning the policy of remunerating members of management and supervisory bodies, remunerations of members of the Supervisory Board are determined by the General Shareholders’ Meeting and those of the Management Board are set based on a resolution of the Supervisory Board.
Commission of 14 December 2004 fostering an appropriate regime for the remuneration of directors of listed companies (2004/913/EC), supplemented by recommendation of EC of 30
April 2009 (2009/385/EC). Moreover, PZU did not present a declaration presenting remuneration policy on its corporate website.
 At the same time, please note that implementing the Ordinance on current and periodic information8, the Company discloses information regarding remuneration, awards or bonuses for each member of the managing and supervisory bodies in PZU on the annual basis.
Shareholders’ Meeting, respectively and other factors, such as sex, are not taken into account.
Moreover, in our view, principles concerning participation in shareholders’ meetings applicable in PZU allow for exercising rights from shares and protect interests of all shareholders.
The announcement on non-compliance with these recommendations was not issued in line with the waiver of the obligation to publish issuers’ reports referred to in
Good practices of companies listed on WSE, in accordance with the resolution of the Management
Board of WSE dated 11 December 2007 regarding partial waiver of the obligation to publish reports on corporate governance adopted on the WSE Main
Data is prepared in the source systems using formal operating and acceptance procedures which specify the competencies of individual persons.
PZU monitors the changes in the external regulations concerning e.g. the accounting policy (procedures) and
reporting requirements of insurance undertakings and carries out appropriate adaptation processes.
Annex of 2 August 2013 modified the scope of work specified in the aforementioned agreement for the separate financial statements of PZU for the 6month period ended 30 June 2013 so that the review of the condensed interim separate financial statements of
PZU and of annual consolidated financial statements of the PZU Group;  review of interim separate financial statements of PZU and of interim consolidated financial statements of the PZU Group.
December 2016 with an option to extend the agreement for further two financial years ending, respectively, on
10.5 Share capital and shareholders of PZU; stock held by members of its authorities
The share capital of PZU is divided into 86,352,300 ordinary shares with the face value of PLN 1 each, giving right to 86,352,300 votes on the General
As at 31 December 2013 the State Treasury holding 30,385,253 shares, i.e. 35.2% of the share capital of the Company and gave the right to 30,385,253 votes
In 2013 the shareholding structure of PZU did not change. The Management Board of the Company has no knowledge about concluded agreements which may result in changes in the proportion of shares held by the shareholders.
No. Body / Name and surname Number of shares held as at 13 March 2013
5 Barbara Smalska (Director until 14 March 2013) 0 0 X
6 Tobiasz Bury (Director since 16 January 2014) 50 50 X
Shareholders’ Meeting in the form of a resolution passed by a majority of three fourths of votes. In cases specified in the Act on Insurance Activity such change must be approved by the FSA and then recorded in the National Court Register. The Supervisory Board can approve the unified amended text of the By-laws.
The General Shareholders’ Meeting is the highest body of PZU. The general operational principles and the rights of the General Shareholders’ Meeting have been determined by the Code of Commercial Companies and the By-laws.
PZU, include passing resolutions concerning the following:  examination and approval of the Management
Board report on the company’s activities, financial statements for the previous financial year and acknowledgment of the fulfilment of duties by members of the company’s authorities;  profit distribution or loss coverage;  making decisions concerning claims for redressing damage inflicted upon formation of the Company or exercising management or supervision;  disposal of the enterprise or its organized part or its lease or establishment of a limited property right;  redemption of shares or issue of bonds;  creating reserve capitals and making the decision whether to use them and if so, how;  division of the Company, its combination with another company, its liquidation or dissolution;  appointing and dismissing members of the Supervisory Board, subject to the right granted to the State Treasury to appoint and dismiss one member of the Supervisory Board;  establishing the rules of remunerating members of the Supervisory Board;  acquisition or disposal of real property, perpetual usufruct or share in real property or in perpetual usufruct with a value exceeding the equivalent of a gross amount of EUR 30.0m
Meeting is required to pass resolutions relating to the following:  preference shares;  Company’s business combination by transferring all its assets to another company;  its merger by forming a new company;
The General Shareholders’ Meeting is held:  as an Ordinary General Shareholders’ Meeting which should be held within six months from the end of each financial year;  as an Extraordinary General Shareholders’
The General Shareholders’ Meetings are held in Warsaw and convened by placing an appropriate announcement on PZU’s website in accordance with the method for providing current information specified in the Act on public offering, conditions governing the introduction of financial instruments to organized trading, and public companies of 19 July 2005, i.e. in the form of current reports. Such announcement should be made not later than 26 days before the date of the General
Shareholders’ Meeting are available on PZU’s corporate website (www.pzu.pl) in section "Investors relations", tab "General Shareholders’ Meeting". A duly called
Board, the General Shareholders' Meeting is opened by the Chairman of the Management Board or a person designated by the Management Board.
The General Shareholders’ Meeting may adopt resolutions regardless of the number of attending shareholders or number of represented shares.
One share of PZU gives the right to a single vote at the General Shareholders’ Meeting, including restrictions with respect to exercising the voting rights described in the Company’s By-laws. The shareholder has the right to vote in a different manner under each share held.
concerning e.g. professional and personal relations, especially with members managing or supervising PZU
Treasury the right to appoint and dismiss one member of the Supervisory Board by way of a written statement submitted to the Management Board. The right will expire once the State Treasury ceases to be the Company’s shareholder.
In 1996-2000 he worked as a senior investment officer in the International Finance Corporation (The World Bank Capital Group, Washington,
Member of the Management Board of BGŻ S.A. in charge of corporate and treasury banking, which he held until 2007. From 2007 to 2008 he was Deputy Chairman and CFO at PKN Orlen S.A. in charge of finance and investor relations functions.
He is an engineer and MBA graduate. He is an experienced and highly qualified manager with advanced knowledge of tools for restructuring, efficiency improvement, especially in financial management and investment valuation. He has been involved in many projects carried out by enterprises from various industries; he has worked with commercial and investment banks, brokerage offices and other players on the capital market. He has been in charge of finance, preparation and implementation of investment projects and has co-authored development strategies. He has broad experience in managing commercial companies; among others, he was member of the Warsaw Stock
Chairman and CFO of the listed company Arksteel, head of credit at Societe Generale, a researcher and lecturer at the Faculty of Production
From 2009 he was Director in the Ministry of the State Treasury in charge of capital market transactions and corporate governance in financial institutions. At present he is Member of the Supervisory Board of PZU and PKO BP SA.
He graduated from the Faculty of Law at the Jagiellonian University in Kraków in 1972. He was an academic teacher at the Jagiellonian
Southampton. He worked in the General Inspectorate of Banking Supervision, the Department of International Financial Institutions and the Foreign Department of the National Bank of Poland, and Bank Gospodarki Żywnościowej S.A. He was member of the Internal Audit
SA; Deputy Head of the Marketing Department in Polski Bank Inwestycyjny; Deputy Head of the Promotion and Communication Department in PKO BP SA; Director of the Office of the Management Board in Telewizja Familijna; Deputy Chairman of the Management Board of Bank
Pocztowy SA. He has also gained broad experience in administration during his employment as Director of the Office of the Head of the Chancellery of the Sejm; Secretary of State in the Chancellery of the Prime Minister, including Deputy Head of the Chancellery – Member of the Cabinet; Head of the Standing Committee of the Cabinet; Secretary of the Capital City of Warsaw. Since 2009, he has been Chairman of the Polish Social Insurance Institution. His extensive experience as member of supervisory bodies extends to companies PKP Polskie Linie
Kolejowe SA, Przedsiębiorstwo Robót Drogowo Mostowych w Tomaszowie Lubelskim, Metro Warszawskie, Bank Gospodarstwa Krajowego,
Rzeczpospolita and Gazeta Wyborcza daily newspapers. In 1999 - 2004 he was Chief Economist Bank Pekao S.A. In 2004 – 2010 he served as Member of the Monetary Policy Council of the National Bank of Poland. In March 2010 he was appointed member of the Economic Council to the Chairman of the Council of Ministers.
Faculty of Warsaw University of Technology. In 1988-1989 participated in post-graduate courses at Gutenberg University in Mainz,
In 1990-1991 was an advisor in Central Europe Trust sp. z o.o. Since 1991, member of several supervisory boards, including International
Towarzystwo Ubezpieczeń na Życie S.A., Związek Banków Polskich (ZBP), Nordea Powszechne Towarzystwo Emerytalne S.A., KGHM
Bank Polska S.A. In 2012-2013 the first deputy chairman in KGHM Polska Miedź SA.
He has won a number of prestigious awards, including Rector Award for Scientific Achievements (annually since 1997), Award of the Minister of Education for a book Integracja europejska. Szansa dla Polski? and Banki a gospodarstwa domowe - dynamika rozwoju. Member of scientific organizations and professional editing boards of periodicals, among others Foundations of Management (member), Journal of
Warsaw, head of National Economy Unit at Management Faculty, University of Warsaw, Director of European Center at University of
Maciej Piotrowski - Member of the Supervisory Board In 1989 Maciej Piotrowski graduated from Faculty of Fundamental Problems of Technology at Wrocław University of Technology. In 19981990 was a student at post-graduate Foreign Trade courses at Wrocław University of Economics; from 1990 to 1991 he studied finance at the same University, and in 1990-1994, he participated in Ph.D. studies at Wrocław University of Technology. In 199501997 participated in
Management Board Chairman in Towarzystwo Emerytalne Telekomunikacji Polskiej S.A. in Telekomunikacja Polska S.A. Capital Group. In 2008-2013 was Deputy CEO in charge of finance and administration in Polska Agencja Żeglugi Powietrznej, and in 2013 temporarily acted as its CEO. Since January 2014, Deputy Chairman of the Management Board in Bank Gospodarstwa Krajowego.
He held positions in supervisory boards of various institutions, to include: Supervisory Board Chairman in Bank Gospodarstwa Krajowego,
Member of the Supervisory Commission of Bank Przemysłowy in Łódź established by National Bank of Poland, Supervisory Board Member in
In accordance with the By-laws, the powers of the Supervisory Board include:  review of the Management report on the activities of the Company and financial statements for the previous financial year in terms of their compliance with the accounting records, documents and facts;  review of the motions of the Management
Board;  examination and evaluation of issues submitted by the Management Board for discussion during the General Shareholders’ Meeting.
 conclusion of a material agreement as understood by the Ordinance on current and periodic information by the Company and its related party, excluding standard agreements concluded by the Company on an arm’s length basis as part of its operating activities (consent will be required on the date of the first listing on WSE);  conclusion of the agreement with the underwriter referred to in Article 433.3 of the Code of commercial companies;  advance payment against expected dividend;  creation and closing of regional and foreign branches.
The By-laws stipulate that the Supervisory Board should meet at least once every quarter. The Supervisory
Board may delegate its members to fulfil specific supervising activities on their own and to this effect appoint temporary committees. The scope of responsibility of a delegated member of the Supervisory
Board may be adopted using means of direct distant communication and circular vote. Additionally, the Bylaws stipulate that a vote may be cast in writing through another member of the Supervisory Board.
Members of the Management Board, employees of the Company competent for the discussed issue, selected by the Management Board and other persons invited by the Supervisory Board may take part in the meetings of the Supervisory Board, however, they cannot cast votes. In specific cases, the Supervisory
The By-laws provide for appointing an Audit Committee by the Supervisory Board. The Committee is composed of three members, including at least one independent members qualified in accounting or auditing. Detailed tasks and terms and conditions of appointing members of the Audit Committee and its functioning have been specified in a resolution of the Supervisory Board, which views relevant competencies and experience of the candidates for members of the Committee.
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.
Board, once the Company’s shares are listed on a regulated market, as understood by the Act on trading in financial instruments of 29 July 2005, the Supervisory
In accordance with the By-laws, detailed responsibilities and the method of appointing members of the Promotion and Compensation Committee, the way it works and remuneration are specified in a resolution of the Supervisory Board. The Committee should include at least one independent member. If the Supervisory
The Supervisory Board decided that the promotion and compensation committee would be composed of five persons. Composition of the Promotion and
As at 31 December 2013 the composition of the Committee had not changed.
April 2013, it is an advisory and consultative body to the Supervisory Board and is to improve efficiency of the Board’s supervisory activities related to consulting of all strategic documents presented by the Management
The composition of the Committee in 2013:  Waldemar Maj – Chairman
In accordance with the By-laws of PZU, the Management Board is composed of three to seven members appointed for a shared term which includes three consecutive full financial years.
Members of the Management Board, including the Chairman of the Management Board, are appointed and dismissed by the Supervisory Board; however, members of the Management Board are appointed and dismissed by the Supervisory Board at the request of the Chairman of the Management Board. The Chairman of the Management Board of the new term appointed before the end of the current term may apply to the Supervisory Board for appointing other members of the Management Board of the new term before the end of the current term.
Therefore, since 1 January 2014, composition of the Management Board has been as follows:  Andrzej Klesyk – Chairman
From 2003 to 2007 he was a Partner and Managing Director of The Boston Consulting Group in
Andrzej Klesyk graduated from the Faculty of Economy of the Catholic University of Lublin. He was one of the first Poles to complete a two-year MBA course at Harvard Business School, the USA.
September 1997 to September 1998 he was a Member of the Management Board of PZU Życie. In the period from September 1998 to March 2000 he was the General Sales Director and from April 2000 to August 2001 a Member of the Management Board of STUnŻycie ERGO HESTIA SA. From April 2002 he was a Sales Director and from October 2002 to June 2004 he was the Chairman of the Management Board and the Sales Director at SAMPO Towarzystwo Ubezpieczeń na Życie SA. In
August 2004 he was appointed the Director of the Group Insurance Office Director in PZU Życie and since January 2006 he was the Coordinating Director in charge of Corporate Clients. He has been in the Management Board of PZU Życie since March 2007 and since August 2007 he has held the position of the Chairman of the Management Board. From 1 February 2010 to 14 March 2013 Director in PZU
in particular in the consumer and SME sectors. She joined the PZU Group in 2008 and worked as a Director of the Product Management Office, Managing Director in charge of Mass Client Sector and
Przemysław Dąbrowski, Member of the Board in PZU / PZU Życie
Przemysław Dąbrowski graduated from Warsaw University, Information Technology Department and a Post-Graduate Management Course. He graduated from MBA studies at the University of Illinois and from the Warsaw-Illinois Executive MBA program. He has vast experience in financial management services for the insurance sector, in managing financial investments and large financial transactions.
Creative Team SA (the Elektrim Group). From 2001 to 2006 he was the Planning and Controlling
Director at PZU SA. In 2006-2008 he worked at AT Kearney and Accenture as a Manager and a Senior
Rafał Grodzicki – Member of the Board of PZU Życie, Director in PZU Group
Rafał Grodzicki graduated from Warsaw School of Economics. He has extensive management experience in the banking and insurance sector gained in numerous Polish and foreign institutions. He joined the PZU Group in February 2004 holding the following positions: Director of the SME Insurance
Office, Coordinating Director in charge of Agency Network Development and 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 the PZU Group in February 2010. He manages the Operational Function (Contact Centers and Operation Centers).
Przemysław Henschke – Member of the Board of PZU Życie, Director in PZU Group
Manager of the implementation and then the CIO. He also acted as the CIO in Lucas Bank, where he managed the replacement of the banking system and IT reorganization in the Credit Agricole Group in
responsible for the IT structure implementation in the Polish branch and he co-designed universal IT
Sławomir Niemierka graduated from Warsaw University, Law and Administration Department and a Post-Graduate Course - Law and Economy in the European Union . He is a qualified legal counsel. He participated in Polish and international training courses in financial supervision and risk management in financial institutions. He authored and co-authored a number of publications on financial law and bank supervision. He was an academic teacher at post-graduate courses at Polish Academy of Sciences,
Warsaw University and the Academy of Insurance and Finance. For many years he worked in the National Bank of Poland - the General Inspectorate of Banking Supervision, where he headed the Inspection Office responsible for inspections carried out in banks, branches of foreign banks and credit institutions in Poland, in particular inspections of internal controls and risk management systems. Member of a Steering Committee of the General Inspectorate of Banking Supervision in charge of the implementation of the second Basel Accord, supervision over risk models, operational risk and accounting standards. He was in a Team in charge of the development of the risk management system in the National Bank of Poland. As a Member of the Management Board of the Bank Guarantee Fund he supervised the operational risk management system, inspections and monitoring of banks financially supported by the Fund. He joined the PZU Group in 2008 as a Managing Director in charge of Audit. On 19 March 2012 he was appointed a Member of the Management Board of PZU Życie. On 19 March 2012 appointed a Director of the PZU Group in charge of internal control, security and risk management.
Bogusław Skuza, Member of the Management Board of PZU until 31 December 2013
International Trade Faculty. He has vast experience in the financial sector, in particular in insurance.
In the years 1979-1985 he worked in the Loss Adjustment Department of TUiR Warta SA. From 1985 to 1991 he was the General Representative of TUiR WARTA SA for the USA and Canada. In 1991-1992 he was a Manager of the Insurance and Claim Department at Gdynia America Line Inc., while in the years 1992-1999 he worked as a Country Manager and the Deputy Chairman of the Management
Ubezpieczeń SA. From 2008 to 2010 Bogusław Skuza was a Member of the Management Board of the Group and a CEE Regional Managing Director in Intrum Justitia AB. Also, he held the position of the Chairman of the Supervisory Board of Intrum Justitia entities in Poland, the Czech Republic,
Slovakia and Hungary. In the years 1992-1998 he held the position of the Founder Member and the Secretary General of the Association of Polish Insurance and Reinsurance Brokers and in the years 2002-2008 he held the position of a Member of the Management Board of the Polish Insurance
Tomasz Tarkowski, Member of the Board in PZU / PZU Życie
Tomasz Tarkowski graduated from the Faculty of Automotive and Construction Machinery Engineering at the Warsaw University of Technology and from the Academy of Finance (formerly Academy of
School University of Navarra and post-graduate studies in road traffic safety and business insurance.
He has been collaborating with the PZU Group since 1996. Initially, he worked in internal control and insurance fraud departments. In the years 2002-2005 he worked in the loss adjustment function as the Head of the Technical Department in the Loss Adjustment Office. From 2006 to 2007 he was a Director of the Loss Adjustment Centre and a Loss Adjustment Director in a Regional Branch of PZU
in Warsaw. In 2007-2011 he was a Member of the Management Board of PZU Ukraine, where he supervised the loss adjustment, product management and risk assessment departments. He was a Member of the Supervisory Board of SOS Service Ukraine, a subsidiary of PZU Ukraine, responsible for assistance services. Since February 2011 he has been a Director of the PZU Group in the Head office of PZU SA and the Proxy of the Management Board of PZU Życie in charge of Loss Adjustment.
He has held the position of a Member of the Management Board of PZU since April 2011 and the position of a Member of the Management Board of PZU Życie - since July 2011. He is in charge of loss adjustment and assistance functions.
Ryszard Trepczyński, Member of the Board in PZU / PZU Życie
Ryszard Trepczyński graduated from Warsaw School of Economics, the Management and Marketing
2002 he was employed in the Financial Investment Office of PZU Życie – initially as an Asset Manager and subsequently as the Head of the Debt Instruments Portfolio Management Department. From
March 2009 he held the position of the Deputy Chairman of the Management Board in charge of investments. He has held the position of a Member of the Management Board of PZU and PZU Życie since July 2011. Ryszard Trepczyński is in charge of the Investment Division.
Tobiasz Bury – Member of the Board of PZU Życie, Director of the PZU Group
Harvard Business School Advanced Management Program. He joined the PZU Group in 2009. He held the position of Director Managing the Agency Network and Director in Charge of Mass Sales in PZU
Group. On 16 January 2014 he was appointed a Member of the Management Board of PZU Życie.
The regulations of the Management Board determine:  the scope of Management Board's competencies and activities that require approval or confirmation by the Supervisory Board;  competencies of the Chairman and Members of the Management Board;  principles and organization of Board’s activities, including its meetings and decision making procedures;  rights and obligations of Board members upon dismissal.
Board, resolutions of the Management Board are especially required for:  adoption of a long-term plan for development and operations of the Company;  adoption of an action and development plan for the PZU Group;  adoption of an annual financial plan and a report on its implementation;  approval of the financial statements for the previous financial year and the management report on the activities of the Company;  approval of a motion concerning profit distribution or loss coverage;  determination of premiums in the compulsory and voluntary insurance and general voluntary insurance terms and conditions;  determination of the scope and size of outward reinsurance and the tasks for inward reinsurance;  adoption of an annual audit and control plan and a report on its implementation with conclusions;  determination of the terms and conditions of investments, prevention and sponsoring;  giving sureties and guarantees (excluding insurance operations) and taking out and giving credit facilities or loans by the Company
Board or a person designated to administer the work of the Management Board during their absence and if the meeting is attended by at least half of the members of the Management Board.
The Chairman of the Management Board takes 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 Chairman of the Management Board.
The By-laws of PZU do not provide for any special rights of the Management Board concerning decisions to issue or redeem shares.
Members of the Management Board, approved by resolution of the Supervisory Board, do not include compensation for resignation or dismissal from their positions without a valid reason, or if the dismissal results from business combination through acquisition of the issuer.
Separate non-competition agreements regulate among others refraining from post-employment competition with PZU in exchange for damages.
In 2012-2013, PZU Group companies included in consolidation did not grant any loans or similar benefits to members of their management boards, higher level managers or members of their supervisory boards.
Positions of PZU Group Directors were established in relation to the implementation of the management model, according to which members of the Management
Board of PZU Życie SA as Group Directors are in charge of the same business areas and functions in both
Effective 16 January 2014 Tobiasz Bury was appointed a Member of the Management Board in PZU Życie.
spółka komandytowa - which audited the annual consolidated financial statements was selected in accordance with the provisions of law and that the entity and certified auditors which audited the financial statements met the requirements to express an unbiased and independent opinion on the audited annual consolidated financial statements, in accordance with the applicable provisions of law and professional standards.
 On 3 September 2013, PZU entered into an agreement with PZU Życie (the “Agreement”), under which PZU Życie paid dividend for the financial year ended 31 December 2012, in the form of non-monetary assets – dematerialized investment certificates issued by closed-end investment funds managed by TFI PZU, held by PZU Życie, in the amount of PLN 2,373.0m and in the amount of PLN 1,469.8m in the form of cash paid. Detailed information on the Agreement and its terms has been presented in current report 59/2013 dated 4 September 2013 and current report 61/2013
 During the 12-month period ended 31 December 2013, PZU did not conclude any related party transactions which could be considered significant
 Operations of PZU are not of a seasonal or cyclical nature to the extent that would justify application of the suggestions presented in International Financial
Revenue from commissions and fees 319 962 237 102 281 351 288 037 340 876
Basic and diluted owners’ earnings per ordinary issuer’s share (in PLN)
Net profit of PZU (issuer) 5 106 345 2 580 720 2 582 303 3 516 709 2 510 379
Reinsurers’ share in technical provisions 526 605 749 334 700 713 771 850 748 313
Assets used in continuing operations 62 183 524 55 862 598 52 129 282 50 670 557 53 287 438
Appropriations of net profit during the financial year (negative value) (1 727 046)
Provisions for bonuses and discounts for the insured: Other liabilities, including current income tax
1. Securities issued or guaranteed by the State Treasury and international organizations to which the Republic of Poland belongs 2. Bonds issued or guaranteed by local authorities or associations of local authorities 26 253 0.2% no limits 7. Investment certificates in investment funds 1 627 130 9.9% 10%
11. Receivables from the State Budget 33 968 0.2% no limits 12. Fixed assets, other than real estate, if depreciated using the prudence principle 98 574 0.6% 5%
14. Deferred acquisition costs compliant with the principles of determining provision for unearned premium in section I of the attachment to the act and in compliance with the premium provision calculation in section II
C. Surplus (shortage) of assets covering technical provisions 2 548 806 15.5%
* The ceiling is the maximum coverage of technical provisions regarding aggregated receivables from cedents, reinsurers, policy holders, insurance agents and reinsurers’ share in the technical provisions.
acquisition costs ratio (including reinsurance commission)* 18.8% 19.4% 17.3% (0.6) p.p.
Data from the income statement – mass- market insurance (non-life insurance)
acquisition costs ratio (including reinsurance commission)* 16.4% 17.7% 19.2% (1.3) p.p.
Operating profit (loss) excluding one-off events 1 476 325 1 561 157 1 349 144 (5.4)%
* ratios calculated with gross premium written ** ratios calculated with gross premium written, excluding one-off events
Data from the income statement – individual insurance * ratios calculated with gross premium written
Data from the income statement – Ukaine segment – non-life insurance 13/12 * ratios calculated with net premium earned
Data from the income statement - Ukaine segment – life insurance 13/12 * ratios calculated with gross premium written
Data from the income statement – Lithuania segment – non-life insurance 13/12 * ratios calculated with net premium earned
Data from the income statement – Lithuania segment –life insurance 13/12 * ratios calculated with gross premium written