PZU’s dividend policy rests on the following principles: • The PZU Group endeavors to manage capital effectively and 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; • 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.
5 On 3 October 2016 the PZU Supervisory Board adopted a resolution (Current Report 61/2016 of 4 October 2016) to approve the PZU Group’s Capital and Dividend Policy for 2016-2020
The dividend record date for the financial year ended 31 December 2018 was set for 14 August 2019 and the dividend payment date was set for 5 September 2019.
The Polish FSA’s recommendation on paying dividends from 2019 profits On 3 December 2019 the Polish Financial Supervisory Authority took a stance on the dividend policy of insurance and reinsurance undertakings.
6 The BION assessment is a thorough process involving the utilization of all available information in the regulator’s possession regarding an insurance undertaking / reinsurance undertaking, including information obtained from licensing activities, desktop research and on-site inspection-related activities in an insurance undertaking / reinsurance undertaking as well as inquiries / questionnaires addressed to an insurance undertaking / reinsurance undertaking
PZU’s book value per share and gross accumulated dividends per share (PLN) (2010-2019)
At the same time, KNF permitted a dividend payout equal to the entire 2019 profit (implying that it is not permissible to make distributions from any of the other capital accounts) provided that the capital requirement coverage (after expected dividends are deducted from own funds) as at 31 December 2019 and for the quarter in which the dividend is paid, is at least 175% for insurance undertakings operating in section I and at least 150% for insurance undertakings operating in section II.
PZU PZU bonds: PLPZU0000037 for a total of PLN 2.25 billion
On 30 June 2017, PZU effected the largest issue of subordinated bonds (in Polish zloty) in the history of the Polish financial sector, which at the same time was the first issue in Poland complying with Solvency II requirements. The bonds with a nominal value of PLN 2.25 billion bear interest at WIBOR6M + 180 bps. The maturity date is 29 July 2027, or 10 years after issue with an early redemption option 5 years after the issue date.
Consolidated profit attributable to the parent company (in PLN m) 2,343 1,935 2,895 3,213 3,295
Ratio of dividend payout to consolidated profit attributable to the parent company
(b) Dividend yield during the year (%)* 6.2% 6.1% 4.2% 5.9% 6.4%
** 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 2019
Earnings per share (EPS) attri. to the p arent comp any for a given year (PLN ) Dividen d per sh are (in PLN) from th e profit for a given year (DP S)
The PZU Group (through its wholly-owned subsidiary, PZU Finance AB) issued Eurobonds totaling EUR 850 million, listed on the Official List, Main Securities Market of the Irish Stock Exchange and on the Catalyst ASO WSE/Bondspot market. The listed series of the bonds (PZU0719) consisted of two assimilated series (under a single ISIN code: XS1082661551) with a nominal value of EUR 500 and 350 million issued on 3 July 2014 and 16 October 2015, respectively.
Alior Bank Opening of Alior Bank S.A.’s new Long-Term Bond Issue Program Pursuant to the resolution adopted by the Bank’s Supervisory Board on 5 August 2019 the Bank opened a Long-term Bond Issue Program (Long-term Program) making it possible to hold multiple issues of unsecured bonds. The total nominal value of the bonds issued under the Long-term Program will not exceed PLN 5 billion.
A bond offering program for issues of unsecured, unsubordinated or subordinated, bearer bonds for up to PLN 1.5 billion was set up under this Long-term Program on the basis of the Bank’s Management Board decision of 10 September 2019. The Offering Program will be covered by a basic prospectus prepared by the Bank according to Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.
The application to approve the prospectus was submitted to the Polish FSA on 4 October 2019. As of the date of the publication of this report, the prospectus has not been approved by the Polish FSA.
Bond issues and redemptions conducted by Alior Bank in 2019 The Bank did not conduct any bond issues in 2019. On 4 October 2019 the Bank’s Management Board adopted a resolution on the early redemption on 21 October 2019 of series C own bonds with a total nominal value of PLN 80 million issued on 21 October 2014 by Meritum Bank ICB SA (presently Alior Bank S.A.) whose final redemption date was 21 October 2022. These bonds were redeemed and retired.
Bank Pekao Covered bonds Under the covered bonds program established in 2010, Pekao, acting through its subsidiary Pekao Bank Hipoteczny, issues long-term debt securities secured on its loan portfolio. The issue program is limited to PLN 2 billion. Pekao Bank Hipoteczny’s covered bonds have been rated by Fitch at A- with a stable outlook (1 notch above the rating for Pekao Bank Hipoteczny whose risk Fitch assesses at BBB+).
All the series of the subordinated bonds issued by Pekao are listed on Catalyst’s alternative trading system.
In 2019 Pekao Bank Hipoteczny held 2 bond issues under the issuer’s bond issue program for up to PLN 1.0 billion: PLN 150 million with a maturity of 6 months and PLN 150 million with a maturity of 1 year.
Regularly renewed securities with maturities ranging from 3 months to 1 year are the most prevalent among the issues conducted by Pekao Leasing (issue program of PLN 3.0 billion) and Pekao Faktoring (issue program of PLN 5.0 billion). The total liabilities under these two entities’ issues as at 31 December 2019 were PLN 3.077 billion.
At the same time, S&P stated that the rating may increase over the period of the next 12-18 months, provided that stability of management and good financial results are maintained (including high profitability in non-life and life insurance). Other conditions included maintenance of stable level of risk in the PZU Group and solvency at least at the level of AA and the capacity to pass the stress test (S&P).
Sovereign rating On 12 April 2019, S&P announced its decision to affirm Poland’s rating at A-/A-2 for long- and short-term liabilities in foreign currency, respectively, and at A/A-1 for long- and short-term liabilities in the domestic currency, respectively. The rating outlook remained stable.
The PZU Group on the capital and debt markets revenue that resulted, among others, from the good situation on the labor market. The agency also noted the significant progress in the closing of the VAT gap. S&P projects the deficit of the general government sector to GDP at less than 3% in 2019-2022, at 1.5% in 2019 and 2.6% subsequently. According
Financial strength rating A- /Positive/ 14 June 2019 A- /Stable/ 25 June 2018
On 31 December 2019 Bank Pekao’s financial creditworthiness ratings were as follows: Rating (Fitch) Bank Pekao Poland
On 17 June 2019 the S&P Global Ratings agency (“S&P”) raised Pekao’s rating outlook from stable to positive and raised its standalone credit profile from “bbb” to “bbb+”. The long-term rating stayed at the same level of BBB+.
Alior Bank’s rating On 30 January 2019 Fitch Ratings lowered Alior Bank’s ratings outlook from positive to stable. On 27 January 2020 Fitch Ratings Ltd. upheld the Bank’s long-term rating in foreign currency at the level of ‘BB’ and raised its short-term domestic rating from ‘F2(pol)’ to ‘F1(pol)’ in connection with the improvement in the evaluation of the Bank’s funding composition and liquidity.
Detailed information is provided on PZU’s website on the application of the Corporate Governance Rules, including rules that are partially applied, namely: • in reference to the rule laid down in § 8 sec. 4. the
The PZU Ordinary Shareholder Meeting has waived the following rules: • the rule laid down in § 10 section 2 of the Corporate
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 rules laid down in Chapter 9 entitled “Exercising rights from assets acquired at a client’s risk” – PZU does not offer products entailing asset management at a client’s risk.
Application of Best Practices of WSE Listed Companies In 2019, PZU complied with the recommendations and principles set forth in Best Practices of WSE Listed Companies 2016, except for recommendation IV.R.2. which provides for a possibility for shareholders to participate in a Shareholder Meeting using means of electronic communication, in particular via the following: • real-time transmission of the Shareholder Meeting; • real-time bilateral communication where shareholders may take the floor during a Shareholder Meeting from a location other than the shareholder meeting; • exercising, in person or by proxy, voting rights during a Shareholder Meeting.
Furthermore, the following rules are not applicable to PZU: • rule I.Z.1.10, providing for posting financial projections on the corporate website, insofar as the company has decided to publish them, published for at least the last 5 years, including information about their execution because, as at the date of publication of this report, PZU has not published any financial projections or estimates; • rule III.Z.6., concerning cases of non-separation of the 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.
9.2 System of control in the process of preparing financial statements
Financial statements are prepared in the Finance Division and central units operating based on the applicable regulations. The PZU Finance Division is supervised by a PZU Management Board Member.
PZU has been a signatory of the diversity charter since 2013 ordinary shares with a nominal value of PLN 0.10 each forming PZU’s share capital
Endorsement and application of the percentage of the PZU shareholder structure held by the State Treasury of the PZU Supervisory Board
Application of all the recommendations and rules expressed by 2016 best practices of public companies except for the recommendation pertaining to holding an e-shareholder meeting
PZU Group’s Code of Best Practices is a set of ethical standards and standards of conduct according to which all PZU
Daily application of Corporate Governance Rules for Regulated Institutions in accordance with the 2015 declaration
Women constitute of the Management Boards in PZU and PZU Życie
The audit committee members have knowledge and skills pertaining to the insurance industry, which is construed as at least one audit committee member having knowledge and skills in the field of insurance or various audit committee members having knowledge of specific branches within this field.
A statutory auditor appointed by the PZU Supervisory Board, based on a recommendation of the audit committee, reviews interim standalone and consolidated financial statements, audits annual standalone and consolidated financial statements and audits annual solvency and financial standing reports required by the Solvency II Directive (for PZU and the PZU Group).
On 23 May 2019 KNF gave a permit to PZU to extend for another two years the maximum period for the engagement for KPMG Audyt to audit the standalone and consolidated financial statements. In this manner the Supervisory Board made the decision to continue cooperation with the auditor to audit the 2019-2020 financial statements.
In 2019 the audit firm auditing the financial statements rendered permitted non-audit services to PZU. The Company conducted an assessment of the audit firm’s independence and the PZU Supervisory Board consented to the rendering of the foregoing services.
1 January –31 December 2018 1 January –31 December 2019 audit of financial statements 7,813 8,371 other assurance services 4,814 5,148
1 January –31 December 2018 1 January –31 December 2019 compulsory audit of the annual financial statements / consolidated financial statements 609 828 other assurance services, including a review of financial statements/consolidated financial statements 759 878 tax advisory services - -
On 24 November 2015 the Management Board of the National Depository for Securities (Krajowy Depozyt Papierów Wartościowych, “KDPW”) adopted Resolution No. 789/15 on setting 30 November 2015 as the date for splitting 86,348,289 PZU shares with a par value of PLN 1 each into 863,482,890 PZU shares with a par value of PLN 0.10 each.
The State Treasury is the sole PZU shareholder holding a majority equity stake as of 31 December 2019 and as of the date of publishing these financial statements.
On 24 July 2019, PZU received a notification pertaining to movement in the equity stake held in PZU by Nationale Nederlanden Otwarty Fundusz Emerytalny.
PZU’s Articles of Association may be amended by the Shareholder Meeting provided that a resolution is adopted by a majority of three fourths of the votes, the Polish Financial Supervision Authority’s approval is issued in the cases referred to in the Insurance Activity Act and the amendments are entered in the National Court Register. The Supervisory Board has the powers to approve the consolidated amended text.
• decisions on claims to remedy damages incurred during the incorporation of the Company or in its administration or oversight; • transfer or lease of a business or an organized part thereof or establishing a limited right in rem thereon; • redemption of shares or issue of bonds; • establishing reserve capital accounts and making decisions on their allocation or manner of allocation; • split of the Company, merger of the Company with another company, winding up or dissolving the Company; • appointment and dismissal of members of the Supervisory
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; • setting the rules for shaping the compensation of Management Board members.
◦ lending for use agreements and other agreements to hand over an asset to other entities for gratuitous use, the market value of the subject matter of a legal act is defined as the value of benefits that would be due if a lease or rental agreement was executed instead, for: - one year if the asset is to be handed over on the basis of a contract entered into for an unspecified term, - the full duration of the term of validity in the case of contracts executed for an unspecified term,
Act of 29 September 1994, determined on the basis of the most recent approved financial statements.
Shareholder Meeting resolutions concerning the following issues require a three-fourths majority of votes: • amendments to the Articles of Association; • decrease in the share capital; • transfer or lease of a business or an organized part thereof or establishing a limited right in rem thereon.
A Shareholder Meeting is held: • as an Ordinary Shareholder Meeting which should be held within six months from the end of each financial year; • as an Extraordinary Shareholder Meeting which is convened in cases specified in the generally applicable law and the Articles of Association.
The Management Board convenes an extraordinary shareholder meeting at its own initiative or in response to the written motion of the Supervisory Board, a shareholder or shareholders representing at least one-twentieth of the share capital. A motion can be filed electronically.
Shareholder rights and the method of exercising them at the Shareholder Meeting are specified in the Commercial Company Code and the Articles of Association. Only persons who were shareholders of the Issuer sixteen days prior to the date of the Shareholder Meeting have the right to participate in the Meeting (date of registration of attendance at the Meeting).
According to the Articles of Association, shareholders’ voting rights are restricted in a way that no shareholder may exercise at a Shareholder Meeting more than 10% of the overall number of votes existing in the Company on the date of the Shareholder Meeting, with the reservation that, for the purposes of determining the obligations of the buyers of large blocks of shares contemplated by the Act of 29 July 2005 on Public Offerings and the Conditions for Offering Financial Instruments in an Organized Trading System and on Public Companies and the Insurance and the Reinsurance Activity Act of 11 September 2015, such restriction of voting rights will
9.7 Supervisory Board and Management Board - composition, powers, method of operation
Supervisory Board’s composition In accordance with the Articles of Association, the Supervisory Board is composed of seven to eleven members. The number of Supervisory Board members is specified by the Shareholder Meeting.
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 should meet the requirements set forth in Article 19 of the Act of 16 December 2016 on Rules for Managing State Property. According to this article, the entity eligible to exercise the rights to shares owned by the State Treasury or a state legal person as a candidate to be a member of the supervising body designates a person holding a positive opinion from the Council for companies with State Treasury shareholding and state legal persons who: • holds the pertinent education and experience supported by an academic title or certificate enumerated in a law; • is not employed by the company, does not do work for it, or provide services to it, on the basis of some other legal relationship; • does not hold shares in a subsidiary except for shares permitted to be traded on a regulated market within the meaning of the Financial Instruments Trading Act of 29 July 2005; • is not employed by the company, does not do work for it, or provide services to it, on the basis of some other legal relationship; • is not engaged in activities that are at odds with his/her duties as a member of a supervising body or that could evince a suspicion of partiality or interest or generate a conflict of interest with the company’s business; and • meets the requirements for a member of a supervising body as laid down in separate regulations.
Name Period of acting in the capacity of a PZU Supervisory Board member
Paweł Górecki Supervisory Board Deputy Chairman since 9 January 2018 (on the Supervisory Board since 8 February 2017)
PZU’s Ordinary Shareholder Meeting appointed the following Supervisory Board members to serve on the new term of office in 2020-2022 as of 24 May 2019: Maciej Łopiński, Robert Jastrzębski, Alojzy Nowak, Marcin Chludziński, Agata Górnicka, Robert Śnitko, Maciej Zaborowski, Elżbieta Mączyńska–Ziemacka, Tomasz Kuczur and Krzysztof Opolski. Paweł Górecki was appointed by the State Treasury to the Supervisory Board pursuant to § 20 Section 7 of PZU’s Articles of Association.
On 27 May 2019 PZU’s Supervisory Board selected its chairman, deputy chairman and secretary from among its membership. The PZU Supervisory Board composition was as follows: • Maciej Łopiński - Supervisory Board Chairman; • Paweł Górecki - Supervisory Board Deputy Chairman; • Alojzy Nowak - Supervisory Board Secretary; • Marcin Chludziński - Supervisory Board Member; • Agata Górnicka - Supervisory Board Member; • Robert Jastrzębski - Supervisory Board Member; • Tomasz Kuczur - Supervisory Board Member; • Elżbieta Mączyńska-Ziemacka - Supervisory Board Member; • Krzysztof Opolski - Supervisory Board Member; • Robert Śnitko - Supervisory Board Member; • Maciej Zaborowski - Supervisory Board Member.
The current term of office of the PZU Supervisory Board will end after the elapse of three full financial years, i.e. on 31 December 2022. 2020 will be the first full financial year. The mandates of Supervisory Board members will expire no later than on the date of the Shareholder Meeting approving the financial statements for the last full financial year in which they server in their capacity, i.e. for 2022.
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 2005-2010 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.
Warsaw University, the Collegium Civitas and the Łazarski University as a lecturer.
Council, a consultative and advisory body for the President of the Republic of Poland.
Przemysłu S.A. Management Board where he was in charge of restructuring processes, mergers and acquisitions. He defined the strategic directions of growth for Agencja
Rozwoju Przemysłu S.A. He was in charge of restructuring projects involving such companies as Przewozy Regionalne, H.
Center of the University of Warsaw, Dean of the Management Faculty of the University of
Minister. Has extensive experience in corporate governance, including, among others, as a
Master of political science at the Faculty of Journalism and Political Science of the University of Warsaw. She received a postgraduate diploma in media management from the Kozminski University in Warsaw. She acquired professional experience: in 2006-2012 in Telewizja Polska S.A., in 2012-2013 as a Project Coordinator at the Bank Zachodni WBK S.A. Foundation and then as CEO’s Assistant in Bank Zachodni WBK S.A. from 2013 to 2014 and subsequently as the Manager of the Management Board and Supervisory Board Office in Bank Zachodni WBK S.A. from 2014 to 2015 then in 2015-2017 as Director of the Political Office at the Ministry of Development and in 2017-2018 as chief advisor at the Prime Minister’s Office. Since April 2018 she has been a Director of the External Relations Office at PKN ORLEN S.A. and Chairwoman of the ORLEN Foundation Council.
June 2013, she has been a member of the Supervisory Board of PKO BP S.A.
Lawyer and political scientist. He graduated from the Faculty of Law and Administration of the University of Warmia and Mazury in Olsztyn majoring in law and from the Bydgoszcz Academy (currently, the Kazimierz Wielki University in Bydgoszcz). He was awarded a Ph.D. degree in law by the Faculty of Law and Administration of the University of Warmia and Mazury. He holds a Ph.D. Hab. degree from the University of Wrocław in social sciences, specializing in political systems. A Professor Extraordinarius at the Faculty of Humanities of the Kazimierz Wielki University in Bydgoszcz. A member of the Local Government Board of Appeals in Bydgoszcz. Member of the Academic Council of the “Sejm Review” journal. He was appointed by the Minister of Science and Higher Education to serve as a member of the Interdisciplinary Team for projects submitted within the framework of the “Support for Scientific Journals” initiative.
Founder and long-term editor-in-chief of the “Economics. Market, economy, society” journal. Head of the Ph.D.
Economics of Warsaw University. Head of the Editorial Board of the “MAZOVIA –
Regional Studies” journal and a member of the Academic Council of the “Safe
Giełdowe S.A. In 2009-2010 he managed the team of strategic advisors to the
Academic teacher, deputy department director at the Ministry of Finance. Graduate of the London School of Economics and Political Science, University of London, School of Oriental and African Studies, University of London, Faculty of Economics at the Radom Technical University. Holder of a Scholarship awarded by the Minister of National Education (Minister of Science and Higher Education), the United Kingdom’s Ministry of Foreign Affairs and non-governmental organizations from the United Kingdom and the United States. Ph.D. in economics obtained from the Warsaw School of Economics. Member of the International Institute for Strategic Studies.
Graduated from the Law and Administration Department at the University of Warsaw. Completed post-graduate studies in intellectual property law and postgraduate studies in evidence law. He is also a graduate of the Harvard Law School (ALP), Center for American Law Studies, Leadership Academy for Poland. Advocate and professional mediator of the Mediation Center at the Polish Bar Council. Lecturer of advocate training at the Bar Association in Warsaw. Currently, he runs his own legal practice and is a Managing Partner at the law firm Kopeć Zaborowski Adwokaci i Radcowie Prawni sp.p. Member of the State Tribunal since February 2018. He has acquired experience in corporate governance as a member of the supervisory boards in various companies.
Supervisory Board’s powers The Supervisory Board exercises permanent supervision over the Company’s operations in all areas of its activity. In accordance with the Articles of Association, the powers of the Supervisory Board include: • evaluating 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 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, giving consideration to the rules defined by the Shareholder Meeting, in accordance with § 18 item 12 of the Articles of Association; • 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
Moreover, one of the the Supervisory Board’s powers its 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 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.
Supervisory Board’s method of operation The Supervisory Board adopts the Bylaws of the Supervisory Board which define its organization and manner of acting. The Rules and Regulations were adopted by a Supervisory Board resolution of 24 February 2016, specifying the composition of the Supervisory Board and the way in which it is appointed, the tasks and the scope of its activities and the manner of convening its meetings and conducting them.
Supervisory Board, delegation of members of the Supervisory Board to temporarily fill in for members of the Management Board and for resolutions on appointing, suspending and dismissing the President, members of the Management Board or the entire Management Board as well and making decisions to stop such suspension, which are adopted in a secret ballot. Moreover, a secret ballot may be held at the request of a member of the Supervisory Board.
In accordance with the Rules and Regulations of the Supervisory Board, apart from appointing the audit committee and the nomination and compensation committee, provided for in the Articles of Association to properly perform its supervision, the Supervisory Board may appoint other permanent advisory and consultative committees whose competencies, composition and manner of operation are laid down in the rules and regulations of the committee in question adopted by the Supervisory Board. The Bylaws provide for the possibility for the Supervisory Board and its appointed committees to use the services provided by experts and consulting firms.
The audit committee was appointed by a Supervisory Board resolution of 3 June 2008.
The following persons sat on the audit committee as at 1 January 2019: • Alojzy Nowak – Committee Chairman; • Marcin Chludziński – Committee Member; • Maciej Zaborowski – Committee Member.
On 27 March 2019 the PZU Supervisory Board resolved that the audit committee will number 4 people and simultaneously established the following composition of the committee: • Alojzy Nowak – Committee Chairman; • Marcin Chludziński – Committee Member; • Robert Śnitko – Committee Member; • Maciej Zaborowski – Committee Member.
Alojzy Nowak, Krzysztof Opolski, Robert Śnitko and Maciej Zaborowski submitted a declaration of being independent members within the meaning of Article 129 Section 3 of the Act on Statutory Auditors, Audit Firms and Public Supervision. All audit committee members submitted a declaration of having the knowledge and skills in the industry in which PZU operates.
The following audit committee members hold qualifications in accounting or auditing financial statements: Alojzy Nowak, Krzysztof Opolski, Robert Śnitko and Marcin Chludziński.
The qualifications of committee members in accounting and auditing financial statements and the knowledge and skills in the insurance industry stem from the education, experience and professional practice gained by the various committee members.
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.
On 27 March 2019 the PZU Supervisory Board resolved that the nomination and compensation committee will number 6 people and simultaneously established the following composition of the committee: • Paweł Górecki – Committee Chairman; • Katarzyna Lewandowska – Committee Member; • Agata Górnicka – Committee Member; • Alojzy Nowak – Committee Member; • Robert Jastrzębski – Committee Member; • Maciej Łopiński – Committee Member.
The nomination and compensation committee composition was extended to 7 people on 29 November 2019 while establishing the following composition: • Robert Jastrzębski – Committee Chairman; • Agata Górnicka – Committee Member; • Paweł Górecki – Committee Member; • Tomasz Kuczur – Committee Member; • Maciej Łopiński – Committee Member; • Elżbieta Mączyńska-Ziemacka; • Alojzy Nowak – Committee Member.
According to the rules and regulations of the strategy 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 issuing opinions on all strategic documents presented by the Management Board (in particular, the growth strategy) and providing the Supervisory Board with recommendations on planned investments that materially affect the Company’s assets.
As at 31 December 2019, the composition of the committee was unchanged.
During regular meetings held in 2019 the Supervisory Board’s committees discussed in detail the most important issues relating to the various areas of the company’s business, which must be approved by the Supervisory Board in accordance with the prevailing regulations.
The table above illustrates the attendance of Supervisory Board members in Supervisory Board meetings in 2019.
The attendance of Supervisory Board members in Supervisory Board meetings in 2019
Management Board composition In accordance with PZU’s Articles of Association, the Management Board is composed of three to eight members appointed for a joint term of office spanning three consecutive full financial years.
A Management Board Member may not be a person who fulfills at least one of the following conditions: • acts as a social associate or is an employee of an MP’s office, senator’s office, MP-senator’s office or office of a member of European Parliament pursuant to an employment agreement or provides work on the basis of a mandate agreement or other similar agreement; • is a member of a political party’s governing body externally representing a political party and authorized to take down obligations; • is employed by a political party pursuant to an employment agreement or provides work on the basis of a mandate agreement or other similar agreement; • is an elected official of a company trade union or a company trade union in a group company; • his/her public or business activity raises conflict of interest with the Company’s business.
The appointment of Paweł Surówka was for the joint term of office commencing as of the date on which the PZU Supervisory Board resolution on his appointment was adopted and will span three full financial years from 2020-2022.
On 28 March 2019, the PZU Supervisory Board adopted resolutions to appoint the following persons to the PZU Management Board for its new term of office: • Tomasz Kulik, entrusting him with discharging the function of Management Board Member; • Maciej Rapkiewicz, entrusting him with discharging the function of Management Board Member; • Małgorzata Sadurska, entrusting her with discharging the function of Management Board Member; • Marcin Eckert, entrusting him with discharging the function of Management Board Member; • Adam Brzozowski, entrusting him with discharging the function of Management Board Member; • Elżbieta Häuser-Schöneich, entrusting her with discharging the function of Management Board Member.
Adam Brzozowski and Elżbieta Häuser-Schöneich were appointed on the day following the day of holding the PZU Ordinary Shareholder Meeting approving the financial statements for the 2018 financial year for a joint term of office commencing at the time of appointing the CEO of PZU and spanning the three full financial years from 2020 to 2022.
The other persons were appointed on 28 March 2019 for a joint term of office commencing at the time of appointing the CEO of PZU and spanning the three full financial years from 2020 to 2022.
The mandate held by PZU Management Board Member Roger Hodgkiss expired on 24 May 2019 in connection with the holding of the PZU Ordinary Shareholder Meeting.
Aleksandra Agatowska was appointed to the PZU Management Board on 24 October 2019.
Management Board consisted of the following persons: • Paweł Surówka – President of the Management Board; • Tomasz Kulik – Management Board Member; • Maciej Rapkiewicz – Management Board Member; • Małgorzata Sadurska – Management Board Member; • Marcin Eckert – Management Board Member; • Adam Brzozowski – Management Board Member; • Elżbieta Häuser-Schöneich – Management Board Member; • Aleksandra Agatowska – Management Board Member.
On 19 February 2020, Aleksandra Agatowska resigned from the position of Member of the PZU Management Board.
Up to the date of publication of this report, the Management Board composition has not changed.
In accordance with the Rules and Regulations of the Management Board, Management Board resolutions are especially required for: • adoption of a long-term plan for the Company’s development and operations; • adopting 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; • accepting the solvency and financial condition report of the Company and the solvency and financial condition report of the PZU Group; • accepting the Company’s own risk and solvency assessment report and the PZU Group’s own risk and solvency assessment report;
In accordance with the Rules and Regulations, Management Board meetings are held at least once a fortnight. The work of the Management Board is headed by the President of the Management Board whose powers include in particular: • defining the scope of responsibility of each member of the
The work of the Management Board is headed by the President of the Management Board who defines the scope of responsibility for each member of the Management Board.
Name (Management Board composition at the end of 2019) In the PZU Group
Paweł Surówka CEO of PZU from 13 April 2017 / CEO of PZU Życie from 23 June 2016 to 13 April 2017 internal audit, compliance, reinsurance, corporate communication, sponsoring, strategy and projects, PZU Group’s business development, corporate sales, cooperation with the brokerage channel, individual health products
PZU – mass products and insurance programs, tariff actuarial services, product research PZU i PZU Życie – effectiveness of the retail sales network and commission systems
Maciej Rapkiewicz PZU Management Board Member since 22 March 2016 / PZU Życie Management Board Member since 25 May 2016 risk
PZU and PZU Życie – oversight over international companies, procurement, assurbanking, bancassurance and strategic partnership programs
Bartłomiej Litwińczuk PZU Życie Management Board Member / PZU Group Director since 19 August 2016
CEO of PZU from 13 April 2017 / CEO of PZU Życie from 23 June 2016 to 13 April 2017 / Chairman of the Bank Pekao Supervisory Board since 8 June 2017
Graduate of Universitẻ Panthẻon Sorbonne, Ecole des Hautes Etudes en Sciences Sociales (EHESS) and Hochschule für Philosophie in Munich. He is a CFA Charterholder. In 2016, he was head of corporate and investment banking in Germany of PKO Bank Polski, Poland’s biggest bank. He set up PKO’s Frankfurt branch, the first outlet of this kind of a Polish bank. He started his career with Merrill Lynch Bank of America in Paris where he was responsible for the biggest private and institutional clients from CEE. In the Boryszew Group (Management Board Member) he was responsible for the restructuring of its German automotive division. He is fluent in four languages. He has been named Young Global Leader (YGL) by the World Economic Forum. One of the most effective managers of stock listed companies in Poland according to Harvard Business Review.
Member of the PZU Management Board since 25 May 2019 / PZU Group Director at PZU Życie since 25 May 2019
He studied economics and banking at universities in Poland and received his degree in management from Kingston University in London. He gained experience working for international corporations, consulting firms and the startup community, including as InsurTech Leader at EY in the Asia-Pacific region or as Head of Operations and Technology for Octo UK. During his career, he developed digital strategies, implemented innovative solutions and customized products with a transformative approach to insurance pricing and analytics. He worked with companies such as Allianz Insurance, BMW, Coverbox, InsureTheBox, Swiss Re and Zurich Insurance.
PZU Management Board Member since 14 October 2016 / PZU Życie Management Board Member since 19 October 2016 / Alior Bank’s Supervisory Board Chairman since 9 September 2017 / TFI PZU’s Supervisory Board Chairiman since 26 June 2018
He graduated from the Warsaw School of Economics. He also completed MBA studies at the University of Illinois and the Warsaw-Illinois Executive MBA program and is a graduate of the Harvard Business School Advanced Management Program. A member of The Association of Chartered Certified Accountants (ACCA). Through most of his professional career, he was associated with the Aviva Group (former Commercial Union). Prior to his appointment to the PZU Management Board, he served as the Director of the Planning and Controlling Department. He prepared the PZU Group’s strategy for the years 2016-2020 and the PZU Group’s capital and dividend policy.
PZU Management Board Member since 13 June 2017 / PZU Życie Management Board Member since 19 June 2017
Graduate of the Law and Administration Faculty of the Maria Curie-Skłodowska University in Lublin and a post-graduate course in Organization and Management at the Lublin School of Business. She completed her Master of Business Administration at the Faculty of Management at the Lublin University of Technology. From 2002 to 2005, she was a Member of the Puławy County Board. From 2005 to 2015, she was a member of the Sejm of the Republic of Poland. She was also member of the National Council of the Judiciary of Poland, Chairwoman of the Supervisory Board of the ZUS Social Insurance Institution. In 2007, she was the Secretary of the State on labor and social policy at the Prime Minister’s Office. In 2015-2017, she served as Head of the Chancellery of the President of the Republic of Poland.
ACEO of PZU Życie since 19 February 2020 / PZU Życie Management Board Member since 25 March 2016 / PZU Management Board Member since 24 October 2019 till 19 February 2020 and PZU Group Director (from 25 March 2016 to 23 October 2019, reappointed from 20 February 2020)
Graduate of the Jagiellonian University majoring in Economic Sociology and Market Research. She gained her professional experience working for ING Życie, ING Powszechne Towarzystwo Emerytalne and ING Spółka Dystrybucyjna. She also collaborated with the team of the Public Policy Evaluation and Analysis Center. For HDI (currently Warta S.A.), she managed the product marketing team, developing and executing sales support campaigns. Then she headed the Marketing Intelligence team at Sony Europe. At Philips S.A. she managed the Marketing and Business Intelligence team in 17 countries of the region. As an external consultant, she advised among others Aviva on the implementation of distribution channel projects.
PZU Życie Management Board Member and PZU Group Director since 19 August 2016
Graduate of Polish philology at the University of Warsaw. Associated with the PZU Group since 2016. As a director, she supervised prevention and sponsoring activities at PZU and PZU Życie. In 2010-2016, she coordinated and managed publishing and film production projects. In 2008-2010, she served as deputy director and director of Channel 1 of Telewizja Polska SA. Earlier, in 2007, she headed TVP1’s News program. For many years, a journalist working for Tygodnik Solidarność, Wprost and Radio Free Europe. During martial law in Poland, she was associated with the underground publishing house “Wola”.
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) 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 foregoing rules stipulate that the total compensation due to a Management Board member for rendering management services and discharging other obligations ensuing from the Management Services Provision Agreement concluded for the term of serving in the Company’s Management Board consists of the following: • fixed compensation – flat monthly base compensation (for a calendar month) that cannot exceed the reference range established pursuant to art. 4 section 2 of the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies without prejudice to the situations outlined in art. 4 section 3 of the aforementioned act; • variable compensation – supplementary compensation for a given financial year depending on the extent to which management objectives are attained, within the catalogue of management objectives defined pursuant to the aforementioned act, and which include, among others, growing the Company’s value and improving its economic and financial ratios. The variable compensation for a given financial year may not exceed 100% of the annual fixed compensation in the previous financial year for which the amount of variable compensation due is to be calculated. In addition, a significant portion of the variable compensation is awarded in the form of deferred variable compensation. Deferred variable compensation is payable over 3 years. After the elapse of 12, 24 and 36 months, respectively from the date of allocation, a Management Board member may acquire the right to 1/3 of the deferred variable compensation for a given year subsequent to satisfying the conditions defined in the Management Services Provision Agreement.
In 2019, the PZU Group companies subject to consolidation did not grant any loans or similar benefits to members of their management boards, higher level managers or members of their supervisory boards.
Below is the compensation or non-cash benefits paid or transferred in 2019 or 2018 to the current and former members of the PZU Management Board, PZU Group Directors and Supervisory Board members.
The Company does not have any pension liabilities or similar benefits to former managers, supervisors or former members of its administrative authorities or liabilities taken out in connection with these benefits.
PZU employs best practices promulgating diversity and it cares about equal treatment for employees.
Respecting human rights is assigned special significance in HR policy when it comes to organizational culture. This involves counteracting mobbing and discrimination, offering equal opportunities to all employees regardless of their professional position in the PZU Group, sex, age, disability, race, religion, nationality, political convictions, union membership, ethnic origin, ethnic origin, denomination, sexual orientation, employment for a specified or unspecified term or on a fulltime or part-time basis while respecting the right of assembly and the right to strike.
Representation of the Management Board of the Parent Company regarding the preparation of the standalone and consolidated financial statements and the activity report According to the best knowledge of the PZU Management Board, the PZU Group’s annual consolidated financial statements and the Issuer’s annual financial statements and the comparable data have been prepared in compliance with the prevailing accounting standards and fairy, accurately and clearly reflect the assets and financial position of the PZU Group and of the Issuer and their financial results. According to the best knowledge of the PZU Management Board, the report on the activity of the PZU Group and PZU SA contains a fair picture of the growth, accomplishments and position of the PZU Group and the Issuer, including a description of the main threats and risks.
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.
In 2018 Bank Pekao signed an agreement with the European Investment Fund pertaining to the portfolio guarantee line.
Information about significant executed agreements In 2019 and 2018 no significant contracts were executed in respect of the Issuer’s operations.
Tax Group A Tax Group [Polish: Podatkowa Grupa Kapitałowa] was established under an agreement signed on 20 September 2017 by and between 13 PZU Group companies: PZU, PZU Życie, Link4, PZU CO, PZU Pomoc SA, Ogrodowa-Inwestycje, PZU Zdrowie SA, Tulare Investments sp. z o.o., Battersby Investments SA, Ipsilon sp. z o.o., PZU Finanse sp. z o.o., PZU LAB SA (formerly: Omicron SA), Omicron Bis SA. The Tax Group has been established for a period of 3 years – from 1 January 2018 to 31 December 2020. PZU is the parent company representing the Tax Group.
Under their investment activity in 2019 PZU, PZU Życie and the funds managed by TFI PZU executed transactions to extend debt financing in the form of loans and bonds. Companies in the PZU Group extend loans to one another. The following loans were extended in 2019 to the issuer’s related entities: • loan agreement entered into by and between PZU Zdrowie and FCM Zdrowie Sp. z o.o. on 3 June 2019 for the amount of PLN 7 million maturing on 30 April 2024; • loan agreement entered into by and between PZU Zdrowie and Tomma Diagnostyka Obrazowa SA on 9 December 2019 for the amount of PLN 61 million maturing on 31 October 2024; • loan agreement entered into by and between PZU Życie and PZU Zdrowie on 17 October 2019 for the amount of PLN 195 million. The loan was disbursed on 6 December 2019. The loan maturity date is 31 October 2024; • loan agreement entered into by and between PZU and PZU Zdrowie on 1 July 2019 for the maximum amount of PLN 95 million. The first tranche of the loan in the amount of PLN 30 million was disbursed on 6 December 2019. The loan maturity date is 30 May 2024; • under the loan agreement entered into by and between PZU and PZU Zdrowie on 23 March 2015 and subsequent annexes thereto, on 29 May 2019 a tranche in the amount of PLN 75 million was disbursed. The loan maturity date is 31 December 2030.
Armatura Kraków SA chiefly funds its business using loans totaling PLN 63 million and maturing in 2021.
Granted and received guarantees and sureties In 2019 and 2018 neither PZU nor its subsidiaries granted any sureties for a loan or borrowing or guarantees to any single entity or any subsidiary of such an entity where the total amount of outstanding sureties or guarantees would be significant.
This Report on the Activity of the PZU Group and PZU for 2019 has 241 consecutively numbered pages.
Share in net profit (loss) of entities measured using the equity method 4 (3) 16 (1) (4)
Basic and diluted weighted average number of ordinary shares* 863,523,000 863,510,930 863,519,608 863,347,220 863,285,340
Basic and diluted PZU Group’s profit per ordinary Issuer’s share (in PLN) 2.71 2.24 3.35 3.72 3.82
One-off events in PZU Group -impact on gross result (PLN million) 2015 2016 2017 2018 2019
Provision for the reimbursement of fees on the premature amortization of consumer loans (TSUE)
Gain on acquisition of the spun-off part of Bank BPH - 465 - - -
Agricultural insurance claims higher than the average of the last 3 years - (237) - - -
Result of the sale of PZU Lithuania 165 - - - 1.
Gross claims and benefits ratio (simple) (gross claims and benefits/gross written premium) x 100%
8. Cost/Income ratio - banking operations - 44.4% 48.0% 42.3% 40.8%
Acquisition costs ratio (including reinsurance commission)* 18.4% 20.7% 19.9% 18.8% 19.2%
Reinsurance commission and share in profits (14) (14) (9) (6) 3
Insurance claims and change in other technical provisions net (4,718) (4,686) (5,142) (4,931) (5,057)
Insurance profit margin (excl. conversion effect) 22.4% 25.8% 20.6% 22.1% 21.3%
Insurance claims and change in other technical provisions net (1,091) (1,043) (1,672) (976) (1,640)
Insurance claims and change in the balance of other technical provisions net * ratios calculated with gross premium written
Data from the profit and loss account – banking activity (PLN million) 2015 2016 2017 2018 2019
Data from the profit and loss account – pension segment (PLN million) 2015 2016 2017 2018 2019
Data from the profit and loss account – Baltic states segment (PLN million) 2015 2016 2017 2018 2019
11. Attachment: Glossary of terms insurance agent – commercial undertaking conducting agency activity pursuant to an agreement executed with an insurance undertaking. The activity of agents focuses on acquiring customers, entering into insurance contracts, participating in the administration and performance of insurance agreements and organizing and supervising agency activity assurbanking – distribution of banking products by insurance companies bancassurance – distribution of insurance company products by the bank insurance broker – entity holding a permit to conduct brokerage activity. Performs activities on behalf or in favor of an entity seeking insurance cover
DY (Dividend Yield) – market multiple specifying the ratio of the dividend per share to the market share price
IPO (Initial Public Offering) – public offering of specific securities performed for the first time. One of the most important elements of an initial public offering is the preparation of a prospectus and the proceeding before the institution supervising admission to be traded publicly cc – The Act of 23 April 1964 - Civil Code ccc – The Act of September 15, 2000 the Code of Commercial Companies
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
Attachment: Glossary of terms the free movement of such data, and repealing Directive 95/46/ EC
credit scoring – method for assessing the credibility of an entity (usually a natural person or a business) applying for a bank loan. The result of credit scoring is ordinarily presented in the form of a score – the higher the number of points, the greater the credibility of a prospective borrower sell side – part of the financial sector involved in creating, promoting and selling equities, bonds, foreign currencies and other financial instruments; it includes investment bankers who act as intermediaries between securities issuers and investors as well as market makers who provide liquidity on the market. Sell-side analysts release research reports with investment recommendations and daily comments for the buy side, i.e. for asset managers. Research reports pertain to companies that are already public and to companies that are being floated on an exchange or that are conducting additional rights offerings gross written premium – the amounts of gross written premiums (net of the reinsurer’s share) due by virtue of the insurance contracts executed in the reporting period, notwithstanding the term of liability stemming from these agreements net earned premium – the gross written premium in a given period giving consideration to the settlement of revenues (premiums) over time through movement in the provisions for unearned premiums and the reinsurers’ share
TSR (Total Shareholder Return) – measure specifying the total rate of return obtained by shareholders by virtue of holding shares in a given company during an annual period. This measure expresses the sum total of profit stemming from the movement in the share price of a given company and the dividends paid during the time when an investor holds its shares in relation to its share value at the beginning of a given year. It is expressed as a percentage on an annualized basis
Insurance Activity Act – Act of 11 September 2015 on Insurance and Reinsurance Activity (Journal of Laws of 2015, Item 1844, as amended), with most regulations in force as of 1 January 2016. This Actintroduced Solvency II requirements in the Polish legal system up-selling – commercial technique involving the offering and selling of additional higher-priced and higher standard services to a current client venture capital – medium and long-term investments in privately-held businesses in their early stage of development combined with managerial support, conducted by specialized entities (venture capital funds). The purpose of venture capital investments is to generate a profit ensuing from the incremental growth in the value of a business by selling its stock after the elapse of a specific period