During the 12 months of 2018, PZU’s market capitalization increased by PLN 4.6 billion. Taking into account the PLN 2.2 billion dividend paid to the shareholders, the annual rate of return on the Company’s stock was 10.1%. The benchmark WIG index recorded a 9.5% y/y loss in the same period.
In the global financial markets, the beginning of 2018 was marked by continuation of very good sentiment prevailing across almost all asset classes in 2017. On 23 January 2018, the WIG index, following the rise in global risk appetite, reached its historic high of 67,529.39 points. The rest of the year, however, was dominated by much worse sentiments on the Polish market. At yearend 2018, the WIG index was down 9.5% y/y, having stopped at 57,690.50 points. The main trading floors in London, Frankfurt and Paris experienced a similar turn of events, having recorded slumps of over 10% y/y. In the United States, the main S&P 500 index ended the year only slightly better with a loss of 7% y/y. The MSCI ACWI (All Country World Index) (composed of stocks from 46 different countries, of which 23 are classified as developed markets and the other 23 are considered emerging markets) dwindled 11.2% y/y in 2018, thus wiping off half the upsurge generated in 2017.
Much like in 2017, the situation on the financial markets was largely affected by the activities of central banks. Investors’ attention was focused in particular on the rhetoric and decisions of the American central bank (the Fed), in particular on as many as 4 interest rate hikes. The last such hike was effected on 19 December (to 2.25-2.5%) and was accompanied by a declaration of two more interest rate hikes in 2019. In parallel, throughout 2018 the Fed kept lowering market liquidity through a quantitative tightening operation, i.e. reducing its balance sheet by restraining the reinvestment of maturing bonds.
Also the European Central Bank announced a reduction in the amount of cheap money in circulation, to be effected by way of termination of its quantitative easing program by the end of 2018 (at the same time announcing no interest rate hikes by the end of 2019 and maintaining the reinvestment of interest and principal from maturing bonds). In August 2018, the central bank of England also raised interest rates (to 0.75%), admitting the possibility of subsequent hikes, in particular in the light of potential turbulence associated with Brexit.
Actions taken by major central banks, aimed at gradual tightening of monetary policy, translated into lower liquidity and more constrained access to cheap money. The first consequence of this was a decline in confidence in high-risk assets, in particular emerging markets securities. The effect of the outflow of capital was intensified by the sharp appreciation of the dollar (between the beginning and end of 2018, the US dollar appreciated against the Polish zloty by 8% to PLN 3.76). The unenthusiastic attitudes towards these markets (the contagion effect) were further exacerbated by serious currency turbulences in Argentina and Turkey. The MSCI index of emerging markets dwindled 16.6% y/y.
The outflow of capital from emerging markets affected also the Polish capital market, as it is dominated by foreign investors (at yearend 2018, their share in this market was 59%). Furthermore, the weakness of the Polish market was also affected by local factors related to financial problems experienced by the debt collection company GetBack and accusations of corruption against the former head of the Polish Financial Supervision Authority (KNF), which had
Compared to emerging markets, the S&P 500 index, supported by additional appreciation of the dollar, performed much better, setting new records all the way up until September 2018. However, the last quarter of 2018 saw a rapid outflow of capital from the US stock market (at yearend 2018, the S&P 500 dropped 7% y/y to 2,485.74 points). The weaker wrap-up of the year was due not only to the deterioration of sentiments towards the American economy caused by the weakening fiscal stimulus (resulting in a potential slowdown of economic growth), but also to the discounting of the effects of escalating tensions between the United States and China. SECTION 2.3. SITUATION ON THE FINANCIAL MARKETS
WIG20 versus the MSCI EM and DM and S&P500 market indices
The yields on Polish treasury bonds declined (as their prices increased) along the whole yield curve, with the largest movement recorded on annual and 10-year bonds. Throughout 2018, the yields on 10-year treasury bonds slumped by 49 bps from 3.30% to 2.81%. The yields on 5-year treasury bonds declined by 36 bps and stood at 2.29% at the end of the year, while the yields on 2-year bonds dropped by 37 bps to 1.34% during the year. The yield of Polish debt treasury securities with 1-year maturity fell by 56 bps to 0.91% at the end of the year. The benchmark index of Polish treasury bonds TBSP (fixed-coupon and zero-coupon bonds) improved 4.7% y/y in 2018. SECTION 2.3 SITUATION ON THE FINANCIAL MARKETS
PZU made its debut on the Warsaw Stock Exchange (WSE) on 12 May 2010. Since day one, it has been included in the following indices: WIG20, WIG, WIG30, WIG-Poland, WIGdiv, WIG20TR and MSCI Poland. Since 2012, the PZU stock has also been taken into account in the sustainable development RESPECT Index (confirmed on 12 December 2018).
Warsaw Stock Exchange indices In 2018, the Polish blue chip index (WIG20) oscillated between 2,083 and 2,630 (in 2017: between 1,957 and 2,552), ending the year’s last session at 2,276 (down 7.5% y/y). The performance of the index of small and medium-sized companies in this period was even poorer. The mWIG index dropped 19.3% y/y and sWIG index plummeted 27.6% y/y.
After adjusting the price of PZU stock for disbursed dividends ( the price at yearend 2018 increased 10.7% y/y. The highest price levels were close to historical highs recorded in 2017, yet they were not beaten.
The P/E ratio (price / earnings) for PZU’s stock at the end of 2018 was 11.8x
PLN 69.6 million while the average number of trades per session was
The percentage of foreign investors in PZU’s shareholder structure at the end of 2018 was including the percentage held by North American investors 13.2% (PLN 5.0 billion)
The number of conferences for institutional investors 14 foreign 6 local non-deal roadshows in New York City, Boston, Chicago and Tokyo
Number of recommendations issued for PZU shares in 2018: 16 highest target price at the end of December 2018: PLN 54.0 average target price at the end of December 2018: PLN 48.9
The percentage of retail investors in PZU’s shareholder structure at the end of 2018 was 7.2% (PLN 2.7 billion)
PZU’s min/max share price at session closing from May 2010 to 2018
PZU’s share price adjusted for dividends paid from May 2010 to 2018
The PZU stock price in 2018 peaked on 26 January at PLN 47.34 per share. This level turned out to be the end of a strong upward trend followed in 2017. For the remainder of the year, the stock performed in a highly volatile manner, following in the footsteps of Polish benchmark indices. The increase in PZU’s relative strength vis-à-vis the WIG index transpired only in the last quarter of the year. At yearend 2018, the value of PZU stock (net of the disbursed dividend) increased 4.1% y/y as the WIG20 index decreased 7.5% y/y. In income terms (taking the dividend into account), throughout 2018 PZU recorded a 10.1% y/y rate of return compared to the WIG drop by 9.5% y/y.
The trading volume (in OTC block trades) of PZU’s stock in 2018 was 9.5 million shares (up 3.9% y/y). This accounted for approx. 2.3% of the trading volume in session transactions in the whole of 2018.
Confirmation by the S&P Global Ratings agency of the PZU credit rating and credit perspective
Reclassification of Poland from emerging markets to developed by the FTSE Russel agency
Update of the PZU's strategy until 2020 - #newPZU - more than insurance
The dividend yield on PZU’s stock disbursed in 2018 (of PLN 2.50 per share), calculated using the price per share of PLN 42.16 as at the end of 2017, was 5.9%. This was 4 p.p. higher than the dividend yield for the WIG20TR index2. The dividend yield for the WIG-Banks index was 3.4%.
P/E Share price / net earnings per share 11.8x 12.6x 14.8x 12.5x 14.1x
EPS (PLN) Net profit (loss) / number of shares outstanding * Calculation based on the PZU Group’s data (according to IFRS); price per share and book value at yearend; net profit for 12 months; number of PZU shares: 863,523,000 ** restated data
Closing price on the last trading session of the year (PLN) 43.90 42.16 33.21 34.02 48.60
Average trading volume per session (shares) 1,681,702 1,795,331 2,225,087 1,872,705 1,635,531
In 2018, the share prices of the banks controlled by PZU, i.e. Pekao (a member of the PZU Group since 7 June 2017) and Alior Bank (a member of the PZU Group since 18 December 2015), went down 9.7% (taking account of the dividend) and 33.1%, respectively. The relatively poorer performance of Alior Bank compared to the WIG-Banks index resulted to a certain extent from investors’ concerns about the execution of Alior Bank’s ambitious strategy in the context of profound changes in its management and speculations about the bank’s possible continued participation in the consolidation of the banking sector in Poland.
PZU shareholder structure - main investor groups 8.4 PZU’s investor relations
Meeting stringent information governance requirements for public companies and fulfilling information needs of different groups of stakeholders, the Management Board of PZU undertakes various investor relations activities aimed at improving transparency in the company and procuring equal access to information. Therefore, PZU has consistently applied the “Principles for PZU to Conduct its Information Policy for Capital Market Participants”.
According to a survey7 carried out at the end of 2018, PZU’s shareholder structure remained stable and diversified. The share of foreign investors increased 0.6 p.p. y/y to 35.0% at the expense of domestic investors, which resulted predominantly from a lower exposure of retail investors. The (benchmark) year 2017 was a record year for this group of investors, which was related, without limitation, to very large improvements in major market indices (WIG20 by 26.4% and WIG by 23.2%). At the same time, the share of retail investors in trading on the whole regulated market in 2018 decreased 5 Nationale-Nederlanden Open Pension Fund and Nationale Nederlanden Voluntary Pension Fund. 6 Current Report 21/2018 7 Shareholder structure survey by IPREO
Open-end pension funds and fund management companies in the shareholder structure of PZU in 2014-2018
In 2018, the structure of Polish institutional shareholders remained stable. At yearend 2018, the shares of open-end pension funds and fund management companies in PZU’s share capital were 17.4% (-0.6 p.p.) and 4.9% (+0.5 p.p.), respectively.
As regards European institutional shareholders (excluding the State Treasury of the Republic of Poland), the leading position was again kept by investors from the United Kingdom. However, in contrast to 2017, the exposure of German funds increased, with their share up from 1.7% to 2.5% (calculated in relation to European institutional shareholders, excluding the State Treasury).
In 2018, PZU continued to hold regular meetings with representatives of its Management Board devoted to the publication of the Company’s quarterly results. Another significant event was the announcement of the Company’s strategy. All corporate events held with capital market
In 2018, the new version of the www.pzu.pl website also contains a revamped section on investor relations. www. pzu.pl/ri. The improved website provides easy access to an abundance of information. The refreshed version of the website can also be used conveniently on a smartphone and the visual message has been made more attractive through the use of micro animations. The change in the communication method is supported by UX GLOSSARY (user experience) solutions.
Activities addressed to institutional investors In 2018, PZU representatives participated in the following: • 2 non-deal roadshows in New York City, Boston, Chicago and Tokyo (3 in 2017); • 14 international finance conferences attended by global institutional investors (12 in 2017); • 6 conferences for institutional investors held in Warsaw
(4 in 2017); During which 241 meetings (161 in 2017) with 437 managers (368 in 2017) were held.
Board and the community of investors, both in the local market and in the global market; • ensure understanding and approval for PZU’s business strategy among investors and analysts; • secure a deep and broad market for PZU’s shares and bonds by continuing investor-friendly measures to build a diversified base (in terms of geography, numbers and profile) of an appropriate number of well-informed investors familiar with the company, in particular by increasing pressure on acquiring investors from Asia; • ensure a reliable valuation for PZU’s stock by providing sellside analysts of investment banks and brokerage houses GLOSSARY with high quality information about PZU’s operations, industry trends, drivers of financial performance and feedback after analysis of their recommendations; • ensure sell-side research coverage, in particular among international investment banks; • provide the PZU Management Board with regular feedback concerning the perception of PZU among capital market players and broad knowledge of current and potential shareholders of the company; • monitor investor sentiment towards PZU shares and changes in the shareholder structure in order to adopt the most adequate investor relations measures and tools; • develop digital tools to address investor needs better, i.a. implement new solutions in the online annual report and enhance the functionality of the investor relations service; • extend the scope of non-financial reporting.
In 2018 PZU’s average target share price according to analysts oscillated around PLN 49, implying 35% share price upside. At yearend 2018, the upside narrowed to roughly 11%; at the end of December 2018 the PZU share price was PLN 43.90, while the average target price was PLN 48.90.
In H1 2018 analysts issued recommendations with a wide range of target prices. In H2 the range between maximum and minimum target price started to dwindle, due to the structural evolution in analyst recommendations from neutral to overweight. In the final quarter of 2018 the minimum target price was higher than the share price. At the closing of the final session in 2018, the minimum target price was already 2.1% below the share price.
At the end of 2018, PZU had 11 current recommendations (6 buy, 3 overweight and 2 sell). In 2018 “buy” recommendations were prevalent. In contrast with 2017, no “sell” recommendation was issued.
Target prices for PZU stocks, based on recommendations valid at the end of December 2018
◦ the remaining part will be distributed as an annual dividend or will increase retained earnings (supplementary capital) if in the given year significant expenditures are incurred in connection with execution of the PZU Group Strategy, including in particular, mergers and acquisitions; with a reservation that: • according to the Management Board’s plans and risk and solvency self-assessment of the parent company, the own funds of the parent company and the PZU Group following the declaration or payment of a dividend will remain at a level that will ensure fulfillment of the conditions specified in the capital policy; • when determining the dividend the regulatory authority’s recommendations concerning dividends will be taken into consideration.
PZU Group’s Capital and Dividend Policy in 2016 – 2020 was adopted in a PZU Supervisory Board resolution in 2016. SECTION 7.9 CAPITAL MANAGEMENT. According to this Policy, the PZU Group endeavors to manage capital effectively and to maximize the rate of return on equity for the parent company’s shareholders, in particular by maintaining the level of security and retaining capital resources for strategic growth objectives through acquisitions.
As recommended by the regulatory authority, dividends should be paid only by insurance undertakings meeting certain financial criteria. At the same time, the dividend payout should be limited to no more than 75% of the profit earned in 2018, while the coverage of the capital requirement for the quarter in which the dividend was distributed should be maintained at no less than 110%.
Up to the date of preparing this Report on the activities of the PZU Group, the Management Board has not adopted a resolution concerning the distribution of 2018 profit.
PZU’s earnings and dividend per share in 2010-2018 * the payout ratio net of the dividend payout from excess capital (PLN 2 per share) ** up to the date of preparing this Activity Report, the Management Board has not adopted a resolution concerning the proposed distribution of profit for 2018 Source: PZU data
Earnings per share (EPS) attributable to the parent company for a given year (PLN) Dividend per share (in PLN) from the profit for a given year (DPS)
Consolidated profit attributable to the parent company (in PLN m) 3,213 2,895 1,935 2,343 2,968
PZU SA’s standalone profit (in PLN m) 2,712 2,459 1,573 2,249 2,637
Dividend per share on the date of record (PLN) 2.50 1.40 2.08 3.00 3.40
Ratio of dividend payout to consolidated profit attributable to the parent company***
(a) Movement in the share price y/y 4.1% 26.9% (2.4)% (30.0)% 8.3%
* yield calculated as the dividend (as at the record date) in relation to the share price at the end of the previous reporting year ** up to the date of preparing this Activity Report, the Management Board has not adopted a resolution concerning the proposed distribution of profit for 2018 ***not restated data for 2018
Dividend paid by PZU from its earnings in the 2014-2018 financial years 8.7 Debt financing of PZU, Pekao and Alior Bank
The issue was aimed at supplementing PZU’s equity, following the acquisition of a 20% stake in Bank Pekao, in order to maintain the Solvency II ratio at a level no lower than 200%, as defined in the PZU Group’s Capital and Dividend Policy. SECTION 8.7 PZU GROUP’S CAPITAL AND DIVIDEND POLICY.
The Bank did not hold any bond issues under the Second Public Issuance Program in 2018. On 12 October 2018 the Second Public Issuance Program and the basic prospectus expired.
On 30 November 2018 the Bank issued 1,520 short-term ordinary bearer series L bonds with a nominal value of PLN 10 thousand, each and a total value of PLN 15.2 million under the procedure anticipated by Article 33 item 2 of the Bond Act. The bonds bear interest at a fixed interest rate of 2.15% per annum. The bonds are for 7 months with their redemption falling on 1 July 2019. These bonds are not listed.
Bonds issued by Pekao Bank Hipoteczny For the purpose of diversification of financing sources, in 2018 Pekao Bank Hipoteczny issued bonds with the value of PLN 300.0 million. The bonds were issued in the issuer’s bond issue program up to PLN 1 billion. In 2018 Pekao Bank Hipoteczny S.A. obtained the Covered Bond Label quality certificate, which attests to security and quality of the issued covered bonds and the highest transparency standards for investors in place.
Bonds issued by Pekao Leasing sp. z o.o. In addition, the Pekao Group held as at 31 December 2018 liabilities for the issuance of own bonds by Pekao Leasing Sp. z o.o. totaling PLN 1.68 billion. The bonds with a maturity of up to 1 month account for 18.0%, up to 3 months for 34.6%, up to 6 months for 28.1%, up to 1 year for 8.2% and up to 3 years for 11.1% of the total nominal value.
Issuer rating Since 2004, PZU and PZU Życie have been subject to regular reviews by S&P Global Ratings (S&P) agency. The credit rating assigned to PZU and PZU Życie results from an analysis of the financial information, competitive position, management and corporate strategy as well as country financial situation. It also includes a rating perspective (an outlook), namely, an assessment of the future position of the company in the event specific circumstances occur.
Sovereign rating On 12 October 2018, S&P Global Ratings raised Poland’s rating to A- for long-term liabilities in foreign currencies and A/A-1 for long- and short-term liabilities in the local currency, respectively. The rating short-term liabilities in foreign currency remained constant in the S&P rating at A-2.
Country Rating and outlook Updated on Rating and outlook Updated on
EUR 350 million till 7 March 2019 BBB+ 21 January 2016 A- 12 October 2015
EUR 500 million till 7 March 2019 BBB+ 21 January 2016 A- 20 June 2014
Eurobond rating On 20 June 2014, Standard & Poor’s assigned an A-rating to the unsecured Eurobonds issued by PZU Finance AB in October 2015. These bonds have been assimilated and now form a single series with the “tap” bonds with the nominal value of EUR 500 m issued by PZU Finance AB (publ) on 3 July 2014. On 12 October 2015, the S&P assigned an A- rating to the new issue. On 21 January 2016, the Eurobonds rating was cut to BBB+ (investment grade), which resulted from reduction of PZU issuer rating, which in turn was caused by sovereign rating downgrade.
S&P Global Ratings (counterparty rating in the event of forced restructuring)
On 17 October 2018 Fitch Ratings lowered the IDR long-term rating from “A-” to “BBB+”; raised the IDR long-term rating outlook from “Negative” to “Stable” and lowered the Viability Rating (VR) from “a-” to “bbb+”. Fitch Ratings confirmed the Bank’s other ratings at unchanged levels.
Moody's Investors Service Ltd. (ratings not procured by the bank) Pekao Bank Poland
Meet Alicja, a student of sociology at the University of Warsaw and our intern this year. Alicja is supporting recruitment and the work of HR Business Partners. She often runs meetings in our field offices. In her free time, she reads crime stories and enjoys tending to her flower garden.
In this section: 1. Corporate governance principles applied by PZU 2. Application of Good Practices of Companies Listed on WSE 3. Application of Corporate Governance Rules for Regulated Institutions 4. System of control applied during the preparation of the financial statements 5. Audit firm auditing the financial statements 6. Share capital and shareholders of PZU; stock held by members of its governing bodies 7. PZU’s Articles of Association 8. Shareholder Meeting, Supervisory Board and Management Board 9. Compensation of the members of governing bodies
This document was accepted by WSE’s Supervisory Board on 4 July 2007 and has undergone several modifications since then. The document entitled “Best Practices of WSE Listed Companies 2016” adopted by a WSE Supervisory Board resolution on 13 October 2015 has been in force since 1 January 2016. Its current wording is available on the website devoted to the corporate governance of companies listed on WSE jak również na and on PZU’s corporate website (www.pzu.pl), in the section entitled “Investor Relations”.
The set of principles expressed in the Best Insurance Practices adopted on 8 June 2009 by the General Assembly of the Polish Chamber of Insurance (“PIU”), an organization whose members are insurance undertakings operating on the Polish market informs how PZU conducts its business operations and shapes relations with its stakeholders. This document is available on the website: Furthermore, our own code entitled PZU Group’s Best Practices defines the principles for how we mold relations with our stakeholders. This document is available on our website: On 22 July 2014 the Polish Financial Supervision Authority (“KNF”) published Corporate Governance Rules for Regulated Institutions. The Corporate Governance Rules constitute a set of guidelines that should be applied by regulated entities from 1 January 2015 under the applicable laws giving consideration to the rule of proportionality. The Corporate Governance Rules are available on PZU’s website.
Presently, PZU shareholders may follow the broadcast of the Shareholder Meeting. However, the Company has not elected to introduce an electronic shareholder meeting. According to PZU, there are many technical and legal factors that may affect the proper course of the Shareholder Meeting. The legal doubts pertain to the ability to identify shareholders and check the legitimacy of participants in the shareholder meeting. The risk of the occurrence of technical difficulties, e.g. with the internet connection or possible external interference in the IT systems may disrupt the work of the Shareholder Meeting and evince doubts concerning the efficacy of the resolutions adopted during its course. The appearance of these risks may affect the proper application of this rule to a full extent.
Furthermore, the following rules are not applicable to PZU: • principle I.Z.1.10, providing for the publication of financial projections, if the company has decided to publish them, published at least in the last 5 years, including information about the degree of their implementation, because, as at the date of publication of this report, PZU has not published any financial projections or estimates; • principle III.Z.6., concerning cases of non-separation of an internal audit function within the company’s organizational structure, because this function has been separated in PZU’s organizational structure; • recommendation IV.R.3., concerning situations where securities issued by a company are traded in different countries (or in different markets) and in different legal systems, because PZU securities are traded only on the Polish market.
Information on the status of PZU’s application of the recommendations and rules laid down in the Best Practices of WSE Listed Companies 2016 is available on PZU’s website: In conjunction with the work conducted in 2018 to modify the PZU Group’s website and its implementation with a new look, incidental difficulties may have transpired in respect of accessing some of the material and content on the website. The scope of information on the site and access thereto are monitored on an ongoing basis. In the event of detecting any technical problems posing an impediment to specific resources, efforts are promptly taken to reinstate the website’s full functionality.
Information on the application of the Rules was presented by the PZU Management Board and Supervisory Board during PZU’s Ordinary Shareholder Meeting held on 30 June 2015. The PZU Ordinary Shareholder Meeting declared that, acting within its powers, it will be guided by the Corporate Governance Rules in the wording issued by the Polish Financial Supervision Authority on 22 July 2014, except for certain specific rules waived by the PZU Ordinary Shareholder Meeting.
Corporate Governance Rules concerning the enabling of all shareholders to participate in the Shareholder Meeting, including by procuring the possibility of actively participating electronically in the Shareholder Meeting, it should be noted that, presently, PZU shareholders may follow the broadcast of the Shareholder Meeting, however the Issuer decided not to introduce the so-called e-Shareholder Meeting, because, in PZU’s opinion, there are a number of factors of a technological and legal nature which may affect the proper conduct of the Shareholder Meeting. Legal concerns include the possibility of identifying the shareholders and verifying their legitimacy; the risk of the occurrence of technical difficulties, e.g. with the Internet connection or possible external interference in the IT systems, may disrupt the work of the Shareholder Meeting and evince doubts concerning the efficacy of the resolutions adopted during its course; the materialization of the above risks may affect the proper application of this rule to its full extent; • in reference to the rule laid down in § 21 sec. 2. of the Corporate Governance Rules according to which within the supervising body there should be a separate function of the chairperson in charge of managing the work of the supervising body, and the selection of the chairperson of the supervising body should be accomplished on the basis of experience and team management skills while giving consideration to the criterion of independence, it should be emphasized that, in accordance with the Commercial Company Code GLOSSARY and PZU’s Articles of Association, the function of chairperson has been established within the PZU Supervisory Board; the PZU Supervisory Board’s composition and the chairperson’s function are shaped in accordance with the criteria of independence stated in the Statutory Auditor Act GLOSSARY; the selection of the Supervisory Board Chairperson is accomplished on the basis of the criterion of knowledge, experience and skills that confirm the competences required to discharge duly the duties of supervision; applying the criterion of independence to the chairperson according to the KNF Office’s explanation GLOSSARY of this rule may evince doubts concerning a possible collision with the legal regulations pertaining to shareholder rights; • in respect of the rule laid down in § 49 section 3 of the Corporate Governance Rules concerning the appointment and dismissal, in a regulated institution, of the person managing the internal audit cell and the person managing the compliance cell with the consent of the supervising body or the audit committee, it should be pointed out that PZU applies the rules laid down in § 14 of the Rules to their full extent, which means that the PZU Management Board is the sole body empowered to, and responsible for, managing the Company’s activity; moreover, according to the labor law regulations, the managing body exercises labor law activities; on account of the foregoing, PZU has adopted a solution that anticipates that the selection and dismissal of the person managing the internal audit cell is accomplished while taking into account the opinion of the Supervisory
Governance Rules reading as follows: “The implementation of personal rights or other special rights for shareholders of the regulated institution should be justified and serve the accomplishment of the regulated institution’s material operating goals. The possession of such rights by shareholders should be reflected in the wording of the primary governing document of the regulated institution.” – the waiving of this rule is due to the unfinished process of the Company’s privatization by the State Treasury; • the rule laid down in § 12 section 1 reading as follows: “Shareholders are responsible for recapitalizing without delay a regulated institution in a situation in which it is necessary to maintain the regulated institution’s equity at the level required by the legal regulations or oversight regulations as well as when the security of the regulated institution so requires.” – the waiving of this rule is due to the unfinished process of the Company’s privatization by the State Treasury; • the rule laid down in § 28 section 4 reading as follows: “The decision-making body assesses whether the implemented compensation policy fosters the regulated institution’s development and operating security.” – the waiving of this rule is due to the overly broad scope of the subject matter of the compensation policy subject to assessment by the decision-making body. The compensation policy in respect of persons who discharge key functions but are not members of the supervising body or the managing body should be subject to assessment by such persons’ employer or principal, i.e. the Company represented by the Management Board and supervised by the Supervisory Board.
Financial statements are prepared within the PZU Finance Division including the PZU Head Office (including the Accounting Department) and central units operating based on the applicable regulations. The PZU Finance Division is supervised by a PZU Management Board Member.
Supervisory Board committees: audit committee, nomination and compensation committee, strategy committee
PZU has been a signor of the Charter of Diversity since 2013 common shares with a par value of PLN 0.10 each make up PZU’s share capital
of the PZU and PZU Życie Management Board members are women of PZU’s Supervisory Board members are women
Corporate Governance Rules for Regulated Institutions in accordance with the declaration of 2015
Consolidated financial reporting is governed by a number of internal regulations concerning the accounting principles (policy) adopted by the PZU Group and applied accounting standards as well as detailed schedules including the key activities and control points with assigned liability for timely and correct completion.
On 18 February 2014, the PZU Supervisory Board selected KPMG Audyt Spółka z ograniczoną odpowiedzialnością Sp.k. with its registered office in Warsaw, ul. Inflancka 4A, 00-189 Warsaw, entered by the National Chamber of Statutory Auditors on the list of audit firms under no. 3546 as the entity to audit the financial statements for the years 2014-2016, and on 27 April 2017 the PZU Supervisory Board exercised the option of extending this cooperation to include 2017-2018.
Main assumptions underlying the policy for selecting the audit firm. The following are among the main assumptions underlying PZU’s policy for selecting the audit firm: • ensuring that the process of selecting the audit firm is done correctly and determining the responsibility and the duties of the participants in this process,
• analyzing the recommendations given by the Audit Committee when selecting the audit firm; • giving consideration to the rule of rotating the audit firm and the key statutory auditor in the embraced time horizon.
The main assumptions underlying the Policy for the provision of permitted non-audit services by the audit firm conducting the statutory audit, by entities related to this audit firm and by a member of the audit firm’s network: • ensuring correctness in the process of procuring permitted services; • determining the responsibility and the duties of the participants in this process; • defining the catalogue of permitted services; • establishing the procedure for procuring permitted services.
In recent years, PZU’s additional cooperation with KPMG Audyt has covered, without limitation, audits of solvency and financial standing reports required by the Solvency II Directive.
Fee charged byaudit firm auditing the PZU Group’s financial statements (PLN thous.)
Fee charged by audit firm auditing PZU’s financial statements (PLN thous.)
On 30 June 2015, PZU’s Ordinary Shareholder Meeting adopted a resolution to split all PZU shares by decreasing the par value of each PZU share from PLN 1 to PLN 0.10 and increasing the number of PZU shares making up the share capital from 86,352,300 to 863,523,000 shares. The split was effected by exchanging all the shares at a ratio of 1:10. The share split did not affect the amount of PZU’s share capital.
A notification pertaining to movement in the equity stake held in PZU SA by the NN open-end pension fund and the NN voluntary pension fund was transmitted to PZU on 12 June 2018. This notification indicated that as a result of a transaction to buy PZU shares settled on 6 June 2018, OFE and DFE increased their shareholding in PZU to 43,456,903 shares, representing 5.03% of PZU’s share capital and giving
According to the Articles of Association, the shareholders’ voting rights have been limited in such a manner that no shareholder may exercise more than 10% of the total number of votes in existence in PZU at its Shareholder Meeting on the date of holding a Shareholder Meeting subject to the reservation that for the purposes of determining the obligations of the buyers of significant equity stakes contemplated by the Act on Public Offerings and the Insurance Activity Act, such limitation of voting rights shall be deemed not to exist. The restriction on voting rights does not apply to the following: • shareholders who on the date of adopting the Shareholder
Meeting resolution implementing this limitation were entitled to shares representing more than 10% of the total number of votes; • shareholders acting with the shareholders specified in the item above pursuant to executed agreements pertaining to jointly exercising the voting rights attached to shares.
In line with PZU’s Articles of Association, these voting restrictions will expire starting from the moment when the equity stake held by the shareholder who held shares giving the right to more than 10% of the total number of votes in PZU when the Shareholder Meeting adopted the resolution drops below 5% of the Company’s share capital.
Shares or rights to shares held by members of management or supervisory bodies and PZU Group Directors As at the date of publication of this Activity Report, Tomasz Kulik, Member of the PZU Management Board held 2,847 PZU shares, which the Company reported in current report 23/2018. As at the date of the Activity Report for 2017 (i.e. 15 March 2018) none of the members of the Management Board or the Supervisory Board or the Directors of the Group held any PZU shares or rights thereto.
The powers of the Shareholder Meeting, in addition to those specified in the Commercial Company Code or the Articles of Association, include the adoption of resolutions concerning the following: • examination and approval of the Management Board’s report on the Company’s activity and the Management Board’s report on the activity of the PZU Group and the Company’s financial statements and consolidated financial statements of the PZU Group for the previous financial year and granting a discharge to individual members of the Company’s corporate bodies on the performance of their duties;
Board, subject to the personal right granted to the State Treasury to appoint and dismiss one member of the Supervisory Board; • establishing the rules for remunerating members of the Supervisory Board; • purchase or transfer by the Issuer of real estate, perpetual usufruct or a share in real estate or perpetual usufruct whose gross value exceeds the equivalent of EUR 30.0 million (thirty million euros), subject to § 18a of the Articles of Association.
A majority of 90% of votes at the Shareholder Meeting is required to pass resolutions relating to the following: • preference shares; • Issuer’s business combination by transferring all its assets to another company; • merger by forming a new company; • dissolving the Company (also as a result of moving its registered office or the head office abroad); • liquidation, transformation or reduction in the share capital through the redemption of a portion of shares without a concurrent capital increase.
Members of the Supervisory Board are appointed by the Shareholder Meeting for a joint term of office which lasts three consecutive full financial years. At least one member of the audit committee appointed by the Supervisory Board must hold qualifications in accounting or auditing financial statements within the meaning of the Act on Statutory Auditors, Audit Firms and Public Supervision. Furthermore, in accordance with the said Act, the majority of the audit committee members should meet the statutory independence criteria (independent member) concerning, without limitation, professional or family ties, especially to managers or supervisors of PZU or PZU Group entities. An independent supervisory board member is obligated to present a written declaration on satisfying all the independence criteria and advise the Company of ceasing to satisfy these criteria. In addition, the Articles of Association give the State Treasury the right to appoint and dismiss one member of the Supervisory Board by way of a written statement submitted to the Management Board. This right will expire if the State Treasury ceases to be a Company shareholder. A candidate to be a Supervisory Board member named by the State Treasury
Accordingly, the composition of the PZU Supervisory Board was as follows: • Maciej Łopiński – Supervisory Board Chairman; • Paweł Górecki – Supervisory Board Deputy Chairman; • Alojzy Nowak – Supervisory Board Secretary; • Bogusław Marian Banaszak – Supervisory Board Member; • Marcin Chludziński – Supervisory Board Member; • Agata Górnicka – Supervisory Board Member; • Katarzyna Lewandowska – Supervisory Board Member; • Robert Śnitko – Supervisory Board Member; • Maciej Zaborowski – Supervisory Board Member.
The current term of office of the PZU Supervisory Board started on 1 July 2015 and ended after the elapse of three full financial years, i.e. on 31 December 2018. 2016 was the first full financial year of this term of office. The mandates of members of the Supervisory Board will expire not later than on the date of the Shareholder Meeting approving the financial statements for the last full financial year of their term.
Presented below is the period of discharging the function in the Supervisory Board (according to the composition as at 31 December 2018): Powers The Supervisory Board continuously oversees the Company’s business in all areas of its operation. In accordance with the Articles of Association, the powers of the Supervisory Board include: • evaluating the Management Board’s report on the
Graduate of the University of Gdańsk. Editor-in-Chief of Tygodnik Gdański, a journalist of Głos Wybrzeża and Tygodnik Czas, among others. A member of parliament in the 7th term of office. Secretary of State in the Office of President Lech Kaczyński in 20052010 and in turn in the Office of President Andrzej Duda in 2015-2016. He has many years of experience in company law and corporate governance also gained in supervisory bodies in commercial law companies, among others, KGHM Poland Miedź SA, PZU Asset Management SA, Telewizja Polska SA.
Professor ordinary at the University of Warsaw, a graduate of the Department of Foreign Trade of the Central School of Planning and Statistics. Completed, among others, economics studies at the University of Illinois UrbanaChampaign in the US and completed studies in banking, finance and capital markets at the University of Exeter in the UK. Head of the Department of National Economy at the Management Faculty of the University of Warsaw, Director of the European Center of the University of Warsaw, Dean of the Management Faculty of the University of Warsaw. Member of the National Development Council at the President of the Republic of Poland, adviser to the Prime Minister. He has extensive experience in corporate governance, gained, among others, while serving as a member of the supervisory boards of PTE WARTA S.A., PKO BP S.A. and JSW S.A.
Graduate of the Faculty of Journalism and Political Science at the University of Warsaw and. She has obtained a postgraduate diploma in media management from the Kozminski University in Warsaw. From 2006 to 2012 she was professionally associated with Telewizja Polska S.A., in 2012-2013 she was a Project Coordinator at the Bank Zachodni WBK S.A. Foundation, in 20132014 she was an Assistant to the President of the Bank Zachodni WBK S.A. Management Board. From 2014 to 2015, she was the Manager of the Office of the Management Board and Supervisory Board at Bank Zachodni WBK S.A. Since December 2015, she has served as the Director of the Political Office at the Ministry of Development.
statements and consolidated financial statements of the PZU Group for the previous financial year for compliance with the accounting ledgers and documents as well as the facts; • approving the solvency and financial condition report of the Company and the solvency and financial condition report of the PZU group; • evaluating the Management Board’s motions to distribute the profit or cover the loss; • submitting a written report to the Shareholder Meeting on the results of the evaluation referred to in the foregoing items and submitting a concise annual evaluation of the Company’s standing with an assessment of its internal control system and the system for managing significant risks to the Company, and an annual report on the Supervisory Board’s work; • concluding, terminating and amending agreements with Management Board members and setting the rules for their compensation; • appointing, suspending and dismissing the President of the Management Board, Management Board members or the entire Management Board and making decisions to discontinue such a suspension; • granting consent to transferring an insurance portfolio in its entirety or in part; • accepting motions submitted by the Management Board to purchase, subscribe to or sell ownership interest and shares in companies and on the Company’s participation in other entities – the Supervisory Board may define the maximum amount, the terms and conditions and the procedure that the Management Board may use to conduct the foregoing activities without the obligation to obtain approval from the Supervisory Board, except in cases where the decision in this respect is made by the Shareholder Meeting pursuant to § 18a of the Articles of Association; • seconding members of the Supervisory Board to perform temporarily the functions of members of the Management Board who have been dismissed, resigned or cannot perform their functions for other reasons; • accepting instructions on how the Company’s representatives should vote at Shareholder Meetings of PZU Życie in matters on increasing or decreasing the share capital, issuing bonds, selling or leasing PZU Życie’s enterprise or establishing a usufruct right on the enterprise, dividing PZU Życie, merging PZU Życie with another company, liquidating or dissolving PZU Życie; • selecting the audit firm to carry out the mandatory audit of the financial statements, including the annual financial statements of the Company and the annual consolidated financial statements of the PZU Group, and the solvency and financial condition report of the Company and the solvency and financial condition report of the PZU Group, and reviews of the financial statements in accordance with the obligations following from the prevailing laws; • deciding on the consolidated text of the revised Articles of Association,
• approving the Company’s long-term development plans and annual financial plans prepared by the Management Board; • approving the Bylaws of the Management Board; • examining and consulting matters submitted by the
Moreover, one of the the Supervisory Board’s powers is to give consent to the following: • acquisition or disposal of real property, perpetual usufruct or share in real property or in perpetual usufruct with a value exceeding the equivalent of EUR 3.0 million; • execution of a material agreement, as construed by the the Regulation on Current and Periodic Information, by the Company with its related party, except for standard agreements executed by the Company on an arm’s length basis as part of its operating activities; • executing an agreement with an underwriter of the kind referred to in Article 433 § 3 of the Commercial Company Code; • paying out an interim dividend; • creating and shutting down regional or foreign branches; • executing an agreement to provide legal, marketing, public relations and public communication services or management consulting services if the total net fee to be paid for such services is greater than PLN 500 thousand annually; • amending an agreement to provide legal, marketing, public relations and public communication services or management consulting services by increasing the said fee above and beyond the net amount of PLN 500 thousand annually; • executing an agreement to provide legal, marketing, public relations and public communication services and management consulting services which do not specify the maximum amount of the fee; • executing a donation or other agreement having a similar effect, the value of which exceeds PLN 20 thousand or
Corporate governance 0.1% of total assets within the meaning of the Accounting Act of 29 September 1994, determined on the basis of the most recent approved financial statements; • executing a debt release or other agreement having a similar effect, the value of which exceeds PLN 50 thousand or 0.1% of total assets within the meaning of the Accounting Act of 29 September 1994, determined on the basis of the most recent approved financial statements.
Mode of operation The Supervisory Board adopts the Rules and Regulations of the Supervisory Board which define its organization and manner of acting. The Rules and Regulations of the Supervisory Board were adopted by its Resolution of 24 February 2016 (as amended), specifying the composition of the Supervisory Board and the way in which its members are appointed, the tasks and the scope of its activities and the manner of convening its meetings and conducting debates.
The Articles of Association 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 and the committee is specified in a resolution of the Supervisory Board.
The Articles of Association provide for the appointment of an audit committee by the Supervisory Board. The audit committee shall include at least three members. Pursuant to the Act of 21 June 2017 on Statutory Auditors, Audit Firms and Public Supervision, at least one member of the audit committee appointed by the Supervisory Board should hold qualifications in accounting or auding financial statements. Furthermore, the majority of the audit committee members, including its chairman, should meet the statutory independence criteria (independent member) concerning, without limitation, professional or family ties, especially to managers or supervisors of PZU or PZU Group entities. The detailed tasks and for appointing members of the audit committee and its operation are specified in a resolution of the Supervisory Board which takes into account the relevant competencies and experience of candidates in respect of the matters entrusted to this committee.
In accordance with the rules and regulations of the audit committee adopted by a resolution of the Supervisory Board, the audit committee is an advisory and consultative body to the Supervisory Board and is appointed to improve the effective supervision of the correctness of financial reporting and the effectiveness of internal control, including internal audit and risk management, exercised by the Supervisory Board. Moreover, the audit committee may request the Supervisory Board to commission the performance of specific control activities in the Company, and such commissioned control activities may be performed by an internal unit or an external entity.
On 9 February 2018 the PZU Supervisory Board resolved that the audit committee will be composed of 3 persons and simultaneously established the following composition of the committee: • Alojzy Nowak – Committee Chairman; • Marcin Chludziński – Committee Member; • Maciej Zaborowski – Committee Member.
All Members of the audit committee have the knowledge and skills in the industry in which PZU operates.
In accordance with the Articles of Association, detailed responsibilities and the method of appointing members of the nomination and compensation committee, the manner of its operation and remunerations are defined by a Supervisory Board resolution. The committee should include at least one independent member. If the Supervisory Board includes five members elected in a vote, the nomination and compensation committee is not appointed and its tasks are carried out by the entire Supervisory Board.
According to the regulations of the nomination and compensation committee adopted by a resolution of the Supervisory Board of 4 April 2013, the committee is an advisory and consultative body to the Supervisory Board and is appointed to improve the effectiveness of the Supervisory Board’s oversight activities related to establishing the management structure, including organizational issues, the remuneration system and principles and the selection of properly qualified staff.
Composition of the nomination and compensation committee as at 1 January 2018: • Aneta Fałek – Committee Chairwoman; • Paweł Górecki – Committee Member; • Katarzyna Lewandowska – Committee Member.
Composition of the strategy committee as at 1 January 2018: • Alojzy Nowak – Committee Chairman; • Bogusław Banaszak – Committee Member; • Marcin Chludziński – Committee Member; • Agata Górnicka – Committee Member; • Robert Śnitko – Committee Member; • Maciej Zaborowski – Committee Member.
In connection with the changes in the PZU Supervisory Board, on 14 March 2018 the PZU Supervisory Board resolved that the strategy committee will be composed of 6 persons and established the following composition of the committee: • Alojzy Nowak – Committee Chairman; • Marcin Chludziński – Committee Member; • Agata Górnicka – Committee Member; • Robert Jastrzębski – Committee Member; • Robert Śnitko – Committee Member; • Maciej Zaborowski – Committee Member.
Management Board Composition In accordance with the Articles of Association of PZU, the Management Board is composed of three to seven members appointed for a shared term which includes three consecutive full financial years.
A Management Board Member must fulfill all of the following conditions: • holds a graduate degree or a graduate degree received abroad and recognized in the Republic of Poland pursuant to separate regulations,
As at 31 December 2018, the Management Board composition was unchanged.
In accordance with the Rules and Regulations of the Management Board, resolutions of the Management Board are especially required for: • adoption of a long-term plan for the Company’s development and operations; • adoption of an action and development plan for the PZU
Company’s activity and the Management Board’s report on the activity of the PZU Group and the Company’s financial statements and consolidated financial statements of the PZU Group for the previous financial year; • acceptance of the solvency and financial condition report of the Company and the solvency and financial condition report of the PZU Group; • acceptance of the Company’s own risk and solvency assessment report and the Group’s own risk and solvency assessment report; • adoption of a report on representation expenditures and expenditures for legal, marketing, public relations and public communication services and management consulting services; • approval of a motion to distribute profit or cover loss;
In accordance with the Rules and Regulations, meetings of the Management Board are held at least once a fortnight. The President of the Management Board directs the work of the Management Board and its powers include the following in particular: • defining the scope of responsibility of each member of the
The Management Board prepares and presents to the Shareholder Meeting a report on representation expenditures and expenditures for legal, marketing, public relations and public communication services and management consulting services.
President has the casting vote. The Management Board, with the consent of the President, may adopt resolutions in writing, on paper or in electronic form (i.e. using means of remote communication and a qualified electronic signature). The Articles of Association also provide that meetings of the Management Board may be held using means of direct remote communication.
The President of the Management Board makes decisions in the form of orders and official instructions. Other members of the Management Board administer the operations of the Company within the scope specified by the President.
PZU’s Articles of Association do not provide for the Management Board to have rights concerning decisions on issuing or redeeming shares.
Presented below are the scopes of responsibility of the Management Board members in office as at the end of 2018: First and last name (Management Board composition at the end of 2018) In the PZU Group
Roger Hodgkiss PZU Management Board Member since 19 January 2016 /PZU Życie Management Board Member since 29 January 2016 mass non-life insurance (sales and sales network management, products and tariffs), corporate non-life insurance (sales and sales network management, underwriting, financial insurance), direct sales, CRM and development of sales tools, retail sales efficiency
Małgorzata Sadurska PZU Management Board Member since 13 June 2017 / PZU Życie Management Board Member since 19 June 2017 bancassurance, strategic partnership programs, supervision over PZU Group’s foreign companies, real property, procurement, environmental protection at the PZU Group
Tomasz Karusewicz PZU Życie Management Board Member / PZU Group Director since 29 January 2016 IT, insurance operations
Dorota Macieja PZU Życie Management Board Member / PZU Group Director since 15 March 2017 marketing, client relations management, corporate communication, sponsoring, prevention and CSR
He graduated from the Faculty of Law and Administration at the University of Łódź and completed post-graduate studies in business insurance at the Kraków Academy of Economics, MBA Finance & Insurance at the Łódź University of Technology / Illinois State University, and Ph.D. studies at the Economics Faculty of the Finance, Banking and Insurance Institute of Łódź University. In 2006-2009, Member and then Vice President of the TFI PZU SA Management Board. Since 2015, he has been working for TFI BGK S.A., where he has been discharging the function Management Board Member. President of the ŁSSE S.A. Management Board, Member of the Morizon S.A. Supervisory Board (in 20152016 ), Chairman of the Dom Invest Sp. z o.o. Supervisory Board (since 2016).
PZU Życie Management Board Member / PZU Group Director since 29 January 2016
The rules for compensating Management Board members are shaped by the Supervisory Board in accordance with Resolution No. 4 adopted by PZU’s Extraordinary Shareholder Meeting on 8 February 2017 in the matter of determining the compensation of the Management Board members, as amended by Resolution No. 38 adopted by PZU’s Ordinary Shareholder Meeting on 29 June 2017 and the requirements set forth in the Act of 9 June 2016 on the Rules for Shaping the Compensation of Persons Managing Some Companies.
The following persons served as directors of the PZU Group throughout 2018: • Aleksandra Agatowska; • Tomasz Karusewicz; • Bartłomiej Litwińczuk; • Dorota Macieja • Roman Pałac.
The compensation paid to members of PZU’s key management staff (PZU Management Board Members, higher level managers and Supervisory Board members who discharged their duties for at least one day in 2018 and 2017).
including bonuses and special awards: including bonuses and special awards: Management Board, of which: 3,857 - 6,870 2,042
including bonuses and special awards: including bonuses and special awards: Marcin Gargas nd. - 18 -
including bonuses and special awards: including bonuses and special awards: Management Board, of which: 90 - 2,835 801
In addition, e-learning training entitled “Mobbing – legal and psychological aspects” is available to all employees. This training deals not just with mobbing but also discrimination and equal treatment in employment opportunities.
Respecting the personal dignity of employees is an important aspect of organizational culture.
Cooperation with international public institutions PZU Group companies cooperate among others with the European Bank for Reconstruction and Development (EBRD) and the European Investment Fund. EBRD acquired PLN 300 million in securities under the subordinated bond issue in 2017.
Under Solvency II PZU has the possibility of consulting the European Insurance and Occupational Pensions Authority (EIOPA).
In 2017 PZU issued subordinated bonds with a nominal value of PLN 2.25 billion.
The bond redemption date is 29 July 2027 with an early repayment option on 29 July 2022. Section 8.7 DEBT FINANCING PZU, PEKAO AND ALIOR BANK
Related party transactions on terms other than on an arm’s length basis In 2018, neither PZU nor its subsidiaries executed any transaction with their related parties which were of material significance individually or collectively and were executed on terms other than based on an arm’s length principle.
Tax Group The tax group agreement for fiscal years 2018-2020 was signed on 20 September 2017. According to the agreement, the tax group consists of PZU, PZU Życie, LINK4, PZU CO, PZU Pomoc, Ogrodowa-Inwestycje, PZU Zdrowie, PZU Finanse, PZU LAB, Ipsilon, Omicron Bis, Tulare Investments and Battersby Investments.
On 8 November 2017, PZU executed a mandate contract with Alior Bank on periodic granting of insurance guarantees constituting unfunded credit protection and a framework mandate agreement on the periodic granting of counterguarantees (Current Report No. 64/2017). The maximum exposure limit for guarantees is PLN 5 billion (say: five billion Polish zloty) and is in force for a period of 3 years.
The PZU Group and the Issuer are in very good financial standing and satisfy all the safety criteria imposed by the legal regulations and the Polish Financial Supervision Authority.
Management Board’s Report on the Activity of the PZU Group and PZU SA for 2018 has 240 consecutively-numbered pages.
We know how important it is to have a feeling of purpose at work - that is why our employees have regular opportunities to demonstrate their creativity and share their experience with other experts. Working in IT in PZU means more than just programming. We devise solutions that have a direct impact on the quality of our clients’ lives.
Learn more about IT in PZU: 11. Appendix: PZU Group’s financial data
Basic and diluted Issuer’s profit per ordinary share (in PLN) 3,14 2,85 1,82 2,60 3,05 *including shares in consolidated funds
Entities measured using the equity method 17 20 37 54 66
Actuarial profits and losses related to provisions for employee benefits - 4 3 (4) (6)
Appropriations on net profit during the financial year - - - - -
Provisions for bonuses and discounts for the insured 7 14 5 2 2
Liabilities directly associated with assets qualified as held for sale 49 3 33 - 252
Revaluation of reserves for claims for compensation for vegetative states (148) - - - -
2. Net claims and benefits ratio (net claims and benefits/net earned premium) x 100 65.2% 70.0% 68.4% 68.2% 70.3%
Reinsurance commission and share in profits (6) (9) (14) (14) (27)
Insurance profit margin (excl. conversion effect)* 22.1% 20.6% 25.8% 22.4% 25.9%
Insurance profit margin (excl. one-off events)* 22.1% 20.6% 22.6% 22.4% 25.9%
Insurance claims and change in other technical provisions net (976) (1,672) (1,043) (1,091) (1,250)
Data from the profit and loss account – investment contracts (PLN million) 2018 2017 2016 2015 2014
Data from the profit and loss account- banking activity (PLN million) 2018 2017 2016 2015 2014
Data from the profit and loss account – Ukraine segment (PLN million) 2018 2017 2016 2015 2014 * ratios calculated with net premium earned
Data from the profit and loss account – Baltic states segment (PLN million) 2018 2017 2016 2015 2014
Exchange rate EUR/LTL in PLN 4.2669 4.2447 4.3757 4.1848 1.2133 * ratios calculated with net premium earned
PRIIP – Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No. 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurancebased investment products reinsurance – transfer to some other insurance undertaking – the reinsurer – of all or part of the insured risk or class of risks along with the pertinent portion of the premiums. As a result of reinsurance, a secondary split of risks transpires to minimize the risks to the insurance market outward reinsurance – reinsurance activity whereby the insurer (cedent) transfers a portion of the concluded insurance to a reinsurer or reinsurers in the form of a reinsurance agreement inward reinsurance – reinsurance activity whereby a reinsurer or reinsurers accept a portion of insurance or a class of insurance transferred by a cedent technical provisions – provisions that should ensure full coverage of current and future liabilities that may result from executed insurance contracts. The following, in particular, are for accounting purposes part of technical provisions: provision for unearned premiums, provision for outstanding claims and benefits, provision for unexpired risks, provision for investment risk borne by policyholders and provision for bonuses and discounts for insureds
GDPR – Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC
UOKiK – Office of Competition and Consumer Protection. The shaping of anti-monopoly policy and consumer protection policy is one of the powers of the President of the Office of Competition and Consumer Protection, inter alia, by conducting anti-monopoly proceedings in cases of practices limiting competition and in cases of practices violating the collective interests of consumers, www.uokik.gov.pl
VIX – index of the volatility of stock market prices expected by Wall Street investors based on option prices. The higher this index goes, the greater the fear on the market and the greater the opportunities are to buy discounted equities
WIBOR6M – reference interest rate for a loan for 6 months on the Polish interbank market
leverage ratio of PZU Group - quotient of the debt from long-term financial liabilities (excl. bank deposits, deposit certificates and credit received in connection with the preferential financing of loans) and the sum of: debt from long-term financial liabilities and PZU Group’s equity less: the value of intangible assets, deferred acquisition costs and deferred tax assets, which have been presented in consolidated financial statements of PZU Group.
prudent person principle – principle expressed in article 129 of the Solvency II Directive of the European Parliament and of the Council on the Taking-up and Pursuit of the Business of Insurance and Reinsurance that imposes on insurance undertakings and reinsurance undertakings the requirement of investing assets in the policyholders’ best interest, properly matching investments to liabilities and duly incorporating the various types of financial risk, such as liquidity risk and concentration risk