Business strategy 63 4.1 Key development directions of PZU Group in the years 2016–2020. 64 4.2 Realization of key projects and initiatives in 2015 67
Risk management 103 7.1 Risk management objective 104 7.2 Risk management system 104 7.3 Risk appetite 105 7.4 Risk management process 106 7.5 Risk profile of PZU Group 107 7.6 Sensitivity to risk 111 7.7 Reinsurance activity 112 7.8 Capital management 113
Corporate social responsibility 133 9.1 We address the needs 134 9.2 We value our people 136 9.3 We support the society 138 9.4 We care for the environment 141
Corporate governance 145 10.1 Corporate governance principles applied by PZU 146 10.2 Application of Good Practices of Companies quoted on WSE 146 10.3 Application of Corporate Governance Principles to Supervised institutions 147 10.4 Control system applied during preparation of the financial statements 149 10.5 Entity authorized to audit financial statements 150 10.6 Share capital and shareholders of PZU; stock held by members of its authorities 150 10.7 By-laws of PZU 151 10.8 General Shareholders’ Meeting, Supervisory Board, and Management Board 153 10.9 Remuneration of the members of the Group’s bodies 175
~16m clients in Poland 9.1 thousand agents in own agency network share in non-life insurance market in Poland after
share in the open pension fund market in terms of accumulated assets share in the investment fund market in terms of net accumulated assets combined ratio (COR) in non-life insurance return on equity in 2015.
No.1 in written premium on the non-life insurance market in Poland
Ladies and Gentlemen, 2015 was surely not an easy year for PZU Group. The financial result is the lowest since PZU’s IPO – the net result has dropped by 21.1% year-on-year to reach PLN 2,342.2 million.
We should put all our efforts into offering our clients the best and most innovative insurance products that will protect their future, health, and property.
To sum up: the Group’s situation is first and foremost a stimulus for change, and as such it constitutes an incentive for growth. It forces us to recalibrate our focus, to concentrate on the area that has been the cornerstone of the PZU identity for over 200 years – the insurance business. We should put all our efforts into offering our clients the best and most innovative insurance products that will protect their future, health, and property. That is why we will concentrate on ensuring that our core business is highly profitable, stable, and future-oriented in everything we do.
We are closing it with the ambition to improve on the indicators which adversely affected the Group’s results.
The demand for insurance services in 2015 remained stable, yet a higher claims ratio in group and individual life insurance and a low yield in motor insurance made it more difficult to achieve satisfactory profits. A price competition on the market has been observable for quite some time now, and last year, it aroused the interest of the Polish Financial Supervision
There was also a second important PSFA recommendation last year from the perspective of insurers, on the claims handling process. The Authority stressed the need for fair valuations and the use of original spare parts, which may in turn result in higher premiums in motor insurance.
The high investment result achieved last year put a great deal of pressure on the Group this year to match those results. Unfortunately, the higher yield of Polish treasury bonds prevented us from doing so, with net investment result being nearly 34.3% lower in 2015 than 2014. That exerted significant influence on the total performance of the Group.
I would like to thank all PZU employees for their contribution toward building the value of our company in the last year.
At the same time, I wish all the best to the new management board. I truly believe that PZU Group has many successful years ahead of it.
PZU Group is the leader of the Polish market and one of the key insurance and investment companies in CEE.
As a leader on the insurance market, the Group sets high standards for products and fulfilling the promises given to the Clients by acting as a Market Watchdog.
Number two in the ranking of mutual fund companies – share in net assets value
Zakład Ubezpieczeń S.A. (PZU, Issuer) – a company quoted on the Warsaw Stock Exchange. The history of the PZU brand goes back to 1803 when the first Polish insurance company was established.
The operations of PZU Group are focused on the 3 business segments: Insurance, Investments, and Healthcare.
For many years, PZU Group has ensured comprehensive insurance coverage in all crucial areas of private and economic life by protecting life, property, and health of its clients. The main insurance companies in Poland within the Group are the following: PZU
Inwestycje brand, PZU Group offers a wide range of asset management services, including management of open pension funds and investment funds, as well as saving schemes.
Poland, PZU has been expanding its operations into Central and Eastern Europe for the past few years. Thanks to the consistent realization of the expansion strategy, according to data for three quarters of 2015, PZU Group held first place in the CEE region. When it comes to the scale of operations and the number of clients, the Group’s primary market of operations continues to be Poland, but
Lithuania, Latvia, Estonia, and Ukraine. In 2015, the expansion into the Baltic states was concluded. PZU Lithuania was sold in September 2015. This disinvestment was the condition for obtaining permits for the acquisition of Lietuvos Draudimas, the biggest insurer in Lithuania. Today, PZU Group is number one on the markets of Lithuania and Latvia.
S.A. (Alior Bank) in 2015, opening the way to a more comprehensive involvement in Bancassurance products and initiatives. Total shares of almost 30% allow PZU Group to take control of Alior Bank and thus increase the total balance of
We ensure to Customers peace of mind and a sense of security
PZU Group aspires to distinguish itself among current and potential competition by continuing to strengthen its market position by focusing the
Innovation, and Efficiency. These values are the foundation for relations with clients, employees, and all other PZU
The Group offers products with no fine print – solutions with no hidden charges, unclear limitations or liability exclusion.
The products offered by PZU are presented in a clear and coherent way. This reduces miscommunication and guarantees that the client knows what to expect from the
Group and responsibilities that it assumed. The conception of transparency and simplicity is not limited to traditional life and non-life insurance, but also covers the so-called investment policies, i.e. insurance serving as a regular savings plan. PZU
Group positively distinguishes itself among the entities on the market who often abuse clients’ trust or simply mislead them.
Group strives to keep improving both its offer and internal processes. The PZU Group’s Innovation Strategy was introduced in 2015 to ensure understanding of the long-term goals throughout the entire organization.
PZU Lab was established for corporate clients in order to improve their risk management and consequently reduce the likeliness of events covered by the policy and lower its price.
Group’s activity provides PZU with the potential to reach cost effectiveness at a level unreachable to other players on the market. By combining above-average cost effectiveness with an innovative offer, PZU acts as the so-called market watchdog
– a leader in the field ensuring high standards of the market offer.
For years, the most important element of the Group’s activity has been insurance, representing over 90% of the profits.
with total assets exceeding PLN 4.6 billion. High competences concentrated in scope of TFI PZU and PTE PZU provide the potential for acquiring important assets of both individual and institutional investors from the market. The activity of the Investments segment focuses on taking advantage of the extensive asset management experience and skills and offering more niche investment funds besides traditional closed and open ones (stock, mixed, stable growth, debt, etc.), such as
Simultaneously, PZU holds a considerable portfolio of own investments which constitute more than insurance liabilities.
The Group is simultaneously expanding the portfolio of own medical establishments.
or received payment of benefits from PZU Życie within the last 12 months was 7 p.p. higher than that of the competition.
The Net Promoter Score (NPS) among the Group’s clients was 11%1. In turn, the NPS among Link4 clients was 10%, 3 p.p.
PZU Group is consequently trying to stay close to its current and potential clients – to their needs, ambitions, and aspirations. All undertaken activities – from insurance product concepts, through customer communication channels, to the activity in scope of Social Business Responsibility, are designed 1 Monthly survey carried out by GFK Polonia at the request of PZU. Presented data constitute an accumulated result of monthly assessments from January to December 2015 2 Monthly survey carried out by GFK Polonia at the request of PZU. Presented data constitute an accumulated result of monthly assessments from January to December 2015 to adapt PZU’s offer to the demands of its clients as closely as possible. The Group aims to address said demands as best as it can at every level of mutual relations – from the choice of insurance products, through preferred communication and sales channels, to issues associated with claims handling and benefits payments. The Group applies Big Data tools and methods in its activity to support segmentation and profiling of the clients (both individual and corporate), identification of factors contributing to client resignations, or improved handling of customer demands through application of prediction models.
PZU Group’s offer is the most extensive insurance and investment offer on the Polish market. It covers over 300 types of insurance and investment products addressed to all
The Group’s insurance products are offered under two complementary brands: the more traditional PZU brand and the Link4 brand, which is associated with direct sales channels.
Security Accounts. For several years, the Group has been assigning considerable funds to develop health insurance offer.
• Health insurance • Medicine insurance • Health care services: general health care and additional services packages
The Group’s offer is broadened with a range of investment products – open and closed investment funds – and pension products – open pension funds, individual pension accounts, individual pension protection accounts with voluntary pension fund, employee pension programs. The Group offers investment solutions adapted to the needs of all investor types, including innovative employee pension programs optimizing tax privileges associated with individual pension accounts (IKE) and individual pension security accounts
An important element of the Group’s offer is the biggest network of own branches and other options for communication between the clients and PZU on Poland’s insurance and investment market. Besides 414 own branches, the Group offers over 9000 exclusive agents, over 3100 multiagencies, almost 1000 insurance brokers, direct channels (internet, call centre), and a sales network of 10 partner banks and 6 other strategic partners.
In 2015, PZU paid almost PLN 2.6 billion as dividend for the dividend rate of 8.8% (calculated from the share price at the end of 2015, i.e. PLN 34.0). Since its IPO, PZU has already paid out nearly PLN 15 billion in dividends, while the total shareholders return (TSR) from investment in PZU shares amounted to 64.2%.
PZU Group holds exceptionally high capital security ratios in comparison to other insurance groups. And so, in accordance with the regulations of Solvency I, PZU Group held a 281.5%
ratio of solvency margin coverage with own funds at the end
On 1 January 2016, the Act on Insurance Activity of 11 September 2015 introduced new capital requirements –
Solvency II – into the Polish legal systems. In accordance with the new act, calculation of the capital requirement is based on the following risks: market, actuarial (insurance), counterparty insolvency, catastrophe, and operating. As at the end of the third quarter of 2015, the solvency ratio (calculated according to the Solvency II standard formula) was assessed at a level of 296.1%. Ratios as high as these place PZU Group among insurance groups with top capital strength.
From 2009, PZU is subject to regular ratings by Standard &
Central and Eastern Europe, PZU Group’s activity and development strategy recognize social and environmental issues, as well as ethics. PZU Group does its best to ensure that the initiatives it engages in bring positive results also in the social aspects in all the areas where the company may have an influence on the external environment in a manner that is not strictly related to business. As a mature, responsible company, the Group takes all efforts not only to provide its clients with the best offer, but also build a better, safer future together with all its stakeholders.
Sustainable development and social responsibility in business are at the same time the most straightforward way to build the best offer for the clients of PZU Group, as well as the most accurate answer to the needs of its stakeholders. In its day-to-day operations, the Group follows four rules: We address the needs – PZU provides products and services to its clients in a way best suited to their expectations,
We support the society – PZU makes efforts to establish stable, long-term relations with the local communities by supporting initiatives that have a positive impact on the community,
Introducing Solvency II requirements by implementing the new Act on Insurance and Reinsurance Activity as of the beginning of 2016.
Maintenance of solvency ratios which are higher than the average for the sector. The Solvency II ratio calculated at the end of September 2015 according to the standard formula was 296.1%.
PZU: Gross written premium (according to IFRS) at PLN 8,858.0 million, a 7.2% raise in relation to 2014. Growth of premium in motor insurance resulting from active reinsurance agreements concluded with newly acquired subsidiaries.
Leader on the Polish non-life insurance market with share of 31.2% (after 3 quarters of 2015).
Market leader with a share of 35.6%* on the motor insurance market (after 3 quarters of 2015).
Stable high profitability level exceeding the strategic objective despite pressure from higher death rate in 2015.
Net asset value of PLN 28.3 billion at the end of 2015 – annual increase of PLN 2.8 billion. External clients’ assets value of PLN 6.8 billion, annual net increase of PLN 0.8 billion.
Maintenance of the position of leader on the market of Employee Pension Programs with total net assets of PLN 3.2 billion. At the end of December 2015 TFI PZU handles the total of 117 programs for 119 thousand people.
Estonia: The entity is conducting business through the Estonian branch of Lietuvos Draudimas established through the merger of two entities – the branch of PZU Lithuania, registered in 2012, and the Estonian branch, acquired in 2014, which was operating under the Codan brand. The share in the Estonian non-life insurance market was 13.8%. The acquired written premium was EUR 38.6 million.
Ukraine: The premium gathered by PZU Group on the Ukrainian market of non-life insurance amounted to UAH 798.9 million and was 58.5% higher than in the previous year. The reasons for the increased premium included growing confidence in foreign insurance companies. The gross premium collected by PZU Ukraine Life amounted to UAH 177.8 million and was 15.2% higher than in the previous year.
PLN 1,739.3 million net result on investing activities of– lower by 34.3% compared to 2014 due to the decline in the price of debt instruments (higher yield).
Completed stage I of implementing the new Everest IT system for non-life insurance policies. Providing the system to almost 18 thousand target users.
• #4 PZU Ukraine 8.6% market share in life insurance at the end of Q3 of 2015
* Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, Czech Republic, Estonia, Lithuania, Latvia, Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia, Ukraine, Hungary.
AWARDS: Service Quality: for PZU in category of “Best Onsite Service Quality” and “Best Service Quality in Remote Communication Channels”
Marketing: 3 prizes for the “Kochasz? Powiedz STOP Wariatom Drogowym” (If you love, say STOP to Reckless Drivers) campaign
HR awards in Baltic states: Top Quality HR Top Quality Practices and Internships
Responsible Employer and HR Leader for Link4 6 place in the 2015 Employer of the Year survey
Best employer in the Latvian insurance sector (CV-online Latvia) for AAS Balta
December 1 December – 10 million policies issued via Everest platform.
October 16 October - PZU Finance AB (publ) issued bonds for the total amount of EUR 350 million.
August 3 August – pilot implementation of Everest platform in external channels.September 30 September – PZU finalized the sale of PZU Lithuania.
January 2016 19 January 2016 new CEO of PZU – Michał Krupiński.
May 30 May – PZU concluded a preliminary agreement to purchase 25.19% of Alior Bank.
November 30 November – 1:10 stock split. As a result of the split, 863,523,000 PZU shares will be quoted.
However, increase in yields of polish bonds and decline in indices on polish capital market negatively affected investments results of PZU Group.
It might be estimated that real GDP growth in 2015 reached 3.6%, compared with 3.3% the year before. The quarterly
GDP growth pace remained at the level of 3.3%–3.9% yearon -year.
In 2015, growth of investment in tangible assets was lower than in the previous year 6.1% compared with 9.8%. Good financial condition of enterprises along with steady economic growth, relatively stable capacity utilization level, high availability and low cost of credit jointly created favorable conditions for investment growth. On the other hand, the uncertainty of demand forecasts and increased volatility in the financial markets induced the companies to remain prudent.
At the same time, weakened public investment dynamics may have resulted from entering in a transitory period between two European Union financial perspectives, i.e. for the years 2007–2013 and the years 2014–2020. Unlike in 2014, the change in inventories adversely affected domestic demand and GDP dynamics in 2015.
Favorable tendencies were observed on the labor market in 2015. The recorded unemployment rate systematically dropped to reach the lowest level since the end of 2008
GDP growth in Poland in 2015 Unemployment rate in Poland at the end of 2015
In 2015,the yearly average consumer prices (CPI) were lower by 0.9% annually. After hitting the minimum in February
(-1.6% year-on-year), the annual CPI was slowly rising to reach -0.5% year-on-year at the end of the year.
Poland had no difficulties in acquiring market financing. At the end of 2015, approximately 20% of borrowing needs planned for 2016 had been financed.
A number of events that had a considerable impact on the financial markets took place in 2015. In late January, the
Reserve in 2015, contrasted with an extraordinary easing of monetary policy in the Eurozone, resulted in a significant strengthening of US dollar versus the common European currency in Q1 2015. The differences in monetary policy and in the perceived economic outlook in the Eurozone and the
Bank of Poland reference rate to 1.50% in March 2015, which ended the monetary policy easing cycle, was exceptionally significant for the Polish treasury debt securities with shorter maturity periods.
In late April and early May 2015 atmosphere on the financial markets begun to change fundamentally. Prices of shares and bonds started to drop, especially in Europe. Quieting down the fears of strengthening deflation in Eurozone contributed to a change on the interest rate market. A higher risk aversion on financial markets, i.e. due to the problematic situation in Greece and the Russian-Ukrainian conflict, adversely influenced the stock market situation. The tension escalated in late June 2015 when the Greek Prime Minister A. Tsipras announced a referendum on accepting the terms and conditions of the aid scheme for the country.
In late April and early May the WIG index exceeded the value of 57 thousand points, growing by nearly 12% since the end of 2014. However, its drop in the second half of May and June removed most of the previous increase.
August and September 2015. First of all – the situation in
Initially, the decreases resulted mainly from concerns related to the situation of Greece. They grew stronger along with the deteriorating economic and market situation in
China and its potential implication for the global economy, especially „emerging markets”. An additional burden for several companies on the Polish market – especially from the banking sector – were the media announcements of potential statutory changes, which might have negative effects on such companies’ operations (including the so-called financial institution tax) and were likely to be introduced after parliamentary elections in October 2015. SECTION 2.4.
The same factors had a strong influence on the Polish treasury bond market and led to the Polish yield curve growing steeper.
Finally, in entire 2015 the Polish one-year treasury debt securities yield dropped by approximately 30 bps to around 1.50%. Five and ten-year bonds yields increased by approximately 10 and 40 bps, respectively. The difference between 10-year and one-year bonds yield increased by around 70 bps. Correlation between the yields in Poland and yields on key global markets, such as Germany or the USA, remained high.
PLN rate in 2015 2.3 Polish insurance sector compared with Europe
Estonia and Latvia, in which PZU operates, have a ratio of 1.7% and 1.3% accordingly, which, from the point of view of market development, opens up huge opportunities for sales growth.
1 According to latest “Statistics: European Insurance in Figures” report, 6 January 2015; www.insuranceeurope.eu
External environment 2.4 Regulations on the insurance and financial markets in Poland 2015 was another year to witness intense preparations for implementation of the requirements of Solvency II directive
Act on Insurance and Reinsurance Activity in connection with the implementation of Solvency II.
provisions of Solvency II). The system is founded on the three pillars: the first pillar specifies capital requirements –
(in case of contracts concluded for more than 5 years, the commissions should be spread over a minimum period of 60 months); • to grant new entitlements to the Polish Financial
security. The recommendations fall under the „comply or explain” rule. Institutions under supervision may not follow the principles included in the recommendations; but if the company fails to implement any of the principles, either permanently or incidentally, it is obliged to inform the market of this fact and justify reasons for non-implementation of a given principle. At the same time, in accordance with its statutory entitlement, PFSA is working on further recommendations, e.g. concerning a product adequacy test and product management system.
The Act on Complaints Handling by Financial Market Entities and Financial Ombudsman dated 5 August 2015 of provisions that increase protection mainly of financial institution clients
(banks, insurance companies, pension funds). The Act specifies terms and conditions for handling complaints filed by consumers. The Act appoints a Financial Ombudsman, a new function to replace the Insurance Ombudsman. The Financial
Group. Some of them are listed below: The Act on amending the Act on the Protection of Consumers and Competition and Code of Civil Procedures Act dated 10
Amendments to the Act on the protection of consumers and competition and several other acts dated 5 August 2015. The aim of the amendment is e.g. a more efficient combating unfair market practices in financial service sector, i.e. offering a client a product which does not suit his/her needs
Office of Competition and Consumer Protection GLOSSARY, through issuing an administrative decision, will settle on an inadmissible nature of a provision included in a template contract and forbid its further use. The proceedings in this respect are to be conducted by the President of the Office of
Act simplified also the calculation of taxable revenue from premium investment as the difference between the benefit amount and the premium paid to the insurance company.
The Act amending Act on Mandatory Insurance dated 22 May 2003, the Insurance Guarantee Fund and the Polish
Between the Government of the United States of America and the Government of the Republic of Poland to Improve
The most important amendments include: with relation to income on sale of securities (tax obligation due to paid sale of securities arises upon making such a transaction), with relation to tax on dividends, a so-called „tax evasion clause”
January 2016. In accordance with the Act, as of February 2016 banks (domestic, branches of foreign banks, branches of credit institutions), insurance and reinsurance companies, cooperative saving and credit institutions, and lending companies are subject to so-called financial assets tax annually amounting to 0.44% of their assets’ value. For banks and cooperative saving and credit institutions, the value of tax-free assets is PLN 4 billion. For insurers this amount is
PLN 2 billion, and PLN 200 million for lending companies. The limits of assets’ value beyond which insurance and reinsurance companies will be subject to tax are specified for entire capital group and not respective companies.
On 9 September 2015, the Supreme Court (File no. III SZP
2/15) issued a resolution where it stated that, when seeking from the insurer claims resulting from TPL insurance of owners of motor vehicles, the injured party who is a natural person that does not conduct business activity is not deemed a consumer within the meaning of Article 24 in conjunction with Art 4 point 12 of the Act on the Protection of Consumers and Competition dated 17 February 2007, in conjunction with
Article 22(1) of the Civil Code GLOSSARY. In its resolution III
GDP growth of Baltic States in 2015 – Lithuania, Latvia, Estonia
Distribution Directive (IDD) of the European Parliament and the Council. On 24 November 2015, the European
The Bank of Lithuania informed that the economy growth rate decreased by nearly a half in 2015 compared with the previous years, mainly due to unfavorable external influence. GDP
Russia adversely impact the economy of the country, which further affects other countries economically and financially tied with Russia. A significant drop in import to Russia had an unfavorable influence of the results of Lithuanian enterprises that engage in transportation, storage, and warehousing as their re-export activity, especially considering that transportation of goods to the East, constitutes a significant part of their business.
Along with the growing number of vacancies in the economy and lower unemployment rate (to 9.00%), remuneration growth, which was partially caused by an increase in the minimum monthly salary, did not change in comparison with the previous year, which helped households to achieve higher consumption levels.
Increased export, whose dynamics was higher than import growth, translated into Latvia’s improved trade balance in the first three quarters of 2015, compared with the same period in 2014.
The inflation rate remained low and amounted to 0.3% yearon -year. The situation on the labor market improved in last couple of years, which favorable influenced general economic growth – unemployment rate is systematically decreasing, employment rate is growing, accompanied by a relatively rapid increase in remunerations. However, in the second half of the year, the registered unemployment rate increased for the first time since the 2007 crisis (by 0.1 p.p. to 8.3% of economically active persons as at the end of October 2015) year-on-year.
In the first three quarters of 2015 the Estonian economy slightly grew (0.7%). The main factor that contributed to such a growth was higher retail sales. Also depreciation of ruble, and consequently decreased export of goods and services to
A significant increase in real revenues caused also a growth in private consumption. It was also reflected in higher households savings and more intense credit activities. The unemployment rate remained stable and reached 6.4% in 2015.
depreciation vs. US dollar and euro, collapse of domestic demand, problems in the banking sector (bankruptcy of Delta
The Polish economy has so far proved resistant to global threats to GDP growth that grew more significant in the second half of 2015. They include, first of all, the economic slowdown in China and on key emerging markets and the related drop in dynamics of global trade. We assume that the
The unemployment rate continues to fall systematically and the employees’ bargaining position is improving. It is therefore expected that the pace of nominal growth of salaries will accelerate, despite the persistently low inflation rate which favors a milder pressure on salary increase. Taking into consideration a very low inflation, probably amounting to an annual average of 0% in 2016, low interest rates, and higher social transfers (the 500+ program), we estimate that the consumption dynamics may reach approximately 4.0%.
In 2016, the investments are likely to grow at a solid pace, yet slower than in 2015. The capacity utilization level is relatively high and good financial standing of enterprises and low interest rates will facilitate financing of investments.
Moreover, residential housing investments are expected to increase relatively fast. Yet, increasing uncertainty concerning e.g. demand forecasts, highlighted by enterprise sector, may prove to be a factor that limits investment demand. What is more, the cycle of investment growth in enterprises will be rather advanced in 2016. However, the effects of the new financial institution tax on crediting the economy are yet unknown. It is expected that investment in infrastructure will grow throughout the year, even though funds granted within European Union financial perspective 2007–2013 are almost finished and the new projects will only enter the implementation phase.
GDP growth of emerging markets, including China. There is a growing concern that in such conditions the drop in resource prices and the tightening monetary policy in the US may lead to a financial crisis in developing countries, where companies have been early increasing their USD-denominated debt in the recent years. Uncertainty results also from the situation in
(Islamic State). No major signs of impact of the problems of developing economies on the economic growth in the USA
Due to the aforementioned threats and relatively high risk aversion, we expect that in 2016 prices on the global (and, consequently, Polish) financial markets will remain highly volatile. This may have negative impact on investment income.
If the weakness of PLN continues, it may result in the higher costs of motor insurance due to growing spare parts prices.
Increase in individual consumption in % (year-on-year) 3.8 3.1 2.6 0.2 0.8
Increase in prices of consumer goods and services in % (year-on-year, yearend)
Nominal wage growth in domestic economy in % (year-on-year) 4.5 3.2 3.2 3.7 3.7
Poland unchanged, even though the rates are more likely to decrease due to low inflation and likely easing of monetary policy by the European Central Bank. However, the interest rates will remain low, which will continue to be a problem for achieving the guaranteed rate of return in life insurance.
Let’s get to know each other better We operate in several countries. We have one thing in common – we give people piece of mind: • in Estonia Tagame Sinu meelerahu • in Lithuania Mes suteikiame ramybę • in Latvia Mēs nodrošinām sirdsmieru • in Ukraine Даруємо спокій
We are strengthening the position of the Polish insurance leader and expanding on the international market through acquisitions of companies and implementation of product, and process innovations.
We are building the assets of people who keep their savings in Poland’s biggest investment fund company and expanding our presence on the health care market.
Contents: 1. Structure of PZU Capital Group 2. PZU, Link4 and TUW PZUW – activity on the Polish non-life insurance market 3. PZU Życie – activity on the life insurance market in Poland 4. PTE PZU – activity on the pension funds market 5. TFI PZU – activity on the investment fund market 6. Foreign activity 7. PZU Zdrowie – activity on the health care market 8. Alior Bank – banking activity 9. Other areas of activity
MPTE PZU Warsaw PZU – 99.9994% PZU Życie – 0.0002% Tower Inwestycje – 0.0002% PZU CO – 0.0002%
L4C Sp. z o.o. Warsaw LINK4 – 99.87% PZU – 0.13%
As a parent company, acting through its representatives in supervisory bodies of the companies and casting votes at shareholders’ meetings, PZU influences the process of determining strategic directions, both in the scope of activities and the finances of the entities making up PZU Group.
Group in 2015 and until the release of this report: • On 3 November 2015, PFSA issued its approval to establish a Mutual Insurance Company (Towarzystwo Ubezpieczeń
ASA. The transaction was finalized on 30 September 2015, the final price amounted to EUR 66 million. The price will be adjusted by four payments made in 6-month periods, each in the amount representing 1.5% of the capital surplus calculated as the difference between the actual share capital of PZU Lithuania, established according to the requirements of the Bank of Lithuania, and the required capital of PZU Lithuania, calculated in accordance with the provisions of law and the binding regulations of PZU
Lithuania. The sale of PZU Lithuania was a necessary condition for acquisition of Lietuvos Draudimas; • PZU Zdrowie purchased shares in the following medical companies: Nasze Zdrowie (2015), Medicus in Opole
(2015), CM Gamma (2015) and CM Cordis (2016); additionally, CM Medica bought REZO-MEDICA (2015). PZU
• in the scope of capital investment, the preliminary agreement for the purchase of Alior Bank shares constituting 25.19% of the Bank’s share capital was signed on 30 May 2015. ALIOR BANK – BANKING ACTIVITY
The non-life insurance market in Poland measured by the gross written premium grew by an annual average of 3.6%
(without PZU Życie dividend) after Q3, 2015 value of assets of non-life insurance companies at the end of Q3, 2015 20.1 PLN billion 0.4 PLN billion 0.9 PLN billion 75.5 PLN billion
W e im pl em en t m od er n in fo rm at io n an d sa le s ch an ne ls
Non-life insurance companies – share in gross written premium for 3 quarters of 2015 (%)
Source: PFSA (www.knf.gov.pl). Quarterly Bulletin. Insurance Market 3/2015. Quarterly Bulletin. Insurance Market 3/2014, Insurance Market 3/2013, Insurance Market 3/2012, Insurance Market 3/2011, Insurance Market 3/2010.
insurance (by PLN 134.7 million, +8.9%, PLN 78.7 million of which concerns direct business) and property insurance
(by PLN 107.5 million, +2.5%, including a PLN 166.0 million growth on indirect business).
The drop in premiums was most visible in insurance of financial losses (drop by PLN 278.0 million, -29.5%, PLN
The whole of the non-life insurance market in three quarters of 2015 generated a net profit of PLN 2.0 billion (drop by 34.2% compared with the same period of the previous year).
(-45.6%). The technical result of the non-life insurance market dropped by PLN 623.5 million, i.e. by 60.2% to the level of
PLN 411.6 million. This change was affected to the greatest extent by the drop of the technical result in MTPL insurance
Low profitability in motor insurance in the three quarters of 2015 may be compared to the 2010 results.
(PLN -65.2 million on direct business) and casco insurance for maritime and inland navigation (PLN -25.8 million on direct business).
The value of investments of non-life insurance companies at the end of the third quarter of 2015 (excluding subsidiary investments) was PLN 51.1 billion and rose by 1.0% from the end of 2014. The instruments issued or guaranteed by the
Within PZU Group, activities on the non-life insurance market in Poland are conducted by the parent company in the Group, i.e. PZU. Furthermore, non-life products are offered by Link4 and, since November 2015, also by Polski Zakład Ubezpieczeń
Over the past years, PZU has been controlling approximately 1/3 of the non-life insurance market. After three quarters of 2015, PZU had a 31.2%1 share in the non-life insurance market compared with 31.4% after three quarters of 2014.
After the first three quarters of 2015, the share of PZU’s technical result in the market’s technical result was 110.2%, which, along with the market share of 31.2%, confirms the high profitability of PZU insurance.
In the changing conditions and in the face of new demands and interests of the clients, PZU introduced new solutions to its insurance offer in 2015.
took part in large Polish modernization projects, including the ones in power engineering and infrastructure, by issuing security guarantees.
A platform was launched to handle financial liability insurance - PZU Gepard. The platform is designed for corporations and small and medium enterprises insuring financial liabilities at
In 2015, PZU generated a net profit of PLN 2,248.5 million, of which PLN 1,690.2 million related to the dividend from PZU
Motor insurance is the most important group of products offered by Link4, both in terms of the number of binding insurance contracts and the premium share in the total gross written premiums.
PLN 493.2 million, most of which concerned motor insurance, respectively: • value of MTPL insurance was PLN 320.9 million, which constitutes 65.1% of the entire portfolio; • value of the motor own damage insurance premium was
– support in active risk management and development of recommendations concerning reduction of suffered risk by means such as extended cooperation in the scope of Medical
Factors, including risks and dangers, which will impact the activities in the non-life insurance sector in 2016
Apart from events of a catastrophic nature (such as floods, drought and spring frost), the main factors which can affect the situation of the non-life insurance sector in 2016 include: • possible slowdown of economic growth in Poland resulting from deteriorating external conditions. In consequence, the worse financial standing of households can lead to a decline in sales of motor policies (as a result of lower new car sales), lower sales of mortgages and the related mortgage related insurance, as well as lower demand for other property insurance. The poorer financial standing of businesses can result in a growth in credit risk and an increase in the level of claims in the financial insurance portfolio.
• the reduction in the development of mortgage campaigns as a result of the introduced asset tax and stricter requirements of Recommendation S GLOSSARY on good practices regarding the management of credit exposures collateralized with mortgages; • decisions of supreme courts in the scope of monetary compensation to the closest relative from the TPL insurance of owners of motor vehicles for damage resulting from the violation of his or her personal welfare even if the damage took place before 3 August 2008; • potential raise of claims handling costs resulting from the implementation of further recommendations concerning claims handling by the PFSA; • raise of spare parts prices with effect on claims handling costs resulting from the successive drop of PLN against the euro; • implementation of the Solvency II requirements based on risk evaluation from January 2016 may change the operating model of selected areas of the insurance companies on the market (e.g. the tariff policy); • further regulations or financial burdens imposed on insurers
It should be noted that the premium decline applied exclusively to the single premium (a decline of 5.0% year-onyear ), mainly in the bancassurance channel. The dynamics for the corresponding period of 2014 were also negative at -21.2%.
The reasons of the lower single premiums in recent years include the current situation of the capital market and changes in the legal environment. The record low interest rates reduce the profitability of short-term endowment policies
or the unit-linked insurance products. Additionally, a tax on revenue from short-term life and endowment policies with fixed rate of return or interest-based return was introduced on 1 January 2015, which reduced the client interest in such products.
The aforementioned changes contributed to the fact that the segment of unit-linked products holds the highest year-onyear growth dynamics, i.e. 8.5%.
The result of the changes taking place on the market is the rising prominence of the regular premium over the single premium, which is PZU Życie’s competitive advantage on the market. Throughout three quarters of 2015 this premium was higher by 0.6% compared with the corresponding period of
PLN 10.3 billion and rose by 9% in comparison with 2013. By the end of 2015, almost 2.4% Polish employees were covered by EPP.
The total technical result reached by life insurance companies in three quarters of 2015 was lower than in the corresponding period of 2014 by PLN 598.8 million (22%) and amounted to
drop of PLN 350.0 million (-40.5%; resulting mainly from the lower investment activity result) and unit-linked life insurance
PLN 143.8 million (-29.8%; the effect of regulatory changes lowering the charges collected by insurance companies).
The value of investments of life insurance companies at the end of the third quarter of 2015 was PLN 42.4 billion and dropped by 1.7% from the end of 2014. At the same time, the high premium (which exceeded paid benefits) contributed to increasing the net assets of life insurance with investment risk falling onto the insurer (2.0% growth to PLN 55.1 billion).
PZU Życie SA (PZU Życie) operates on the Polish life insurance market within PZU Group. The Company offers a wide range of life insurance products, including group and individual protection insurance, investment, insurance, and pension products.
PZU Życie collected 29.1% of the gross written premium of life insurance companies in three quarters of 2015 to retain last year’s market share. Simultaneously, PZU Życie continued to remain the decisive leader in the regular premium segment.
Life insurance companies — share in gross written premium for 3 quarters of 2015 (%)
In 2015, besides being adapted to new legal regulations, the product offer of PZU Życie was expanded with innovative solutions designed to make it more attractive. The 2015 changes in the PZU Życie product offer include the following: • implementation of new regular premium insurance „PZU
Przyszłość. This is a new version of PZU’s offer for clients interested in employee pension programs (EPP). The main modification is the change of the investment platform; the previous equity of PZU Życie with weekly valuation have been replaced with funds from the PZU TFI offer with daily valuation. The individual program includes 6 funds with a broad investment range and the recommended program includes 4 funds.
(Four Seasons) insurance in individually continued insurance. The insurance includes a guarantee for co-funding of immediate medication and antibiotics. The product is available nationwide at all pharmacies and only requires a prescription. The co-funding is in non-cash format in roughly 1/3 Polish pharmacies; • implementation of the „Z miłości do zdrowia” (Out of love for health) additional insurance, which includes coordination of treatment progress for people recuperating from heart attacks and strokes or battling tumors. Besides medical consultations, rehabilitation, and diagnostics, the product covers psychological support and a personal assistant to lead the insured party through the treatment process. The product has the advantage of offering preventive examinations, to which the insured party will be subject throughout the effectiveness of the insurance agreement; • telemedicine (introduced as a pilot program in 2016) –
Factors, including risks and dangers, which will impact the activities in the life insurance sector in 2016
The situation on the life insurance market in 2016 will primarily be affected by: • low interest rates, which in longer period reduce the profitability of investments made from premiums collected; • lower interest in investment products – outflow of capital to alternative investment forms other than insurance policies; • economic climate on the capital markets which is difficult to predict and which determines the attractiveness of unitlinked insurance products; • guidance in the scope of insurance distribution released by the PFSA and included in the Act on Insurance Activity
GLOSSARY, which affect both the product structure and the entire insurance agency sector; • UOKiK [OCCP, the Office of Competition and Consumer
PLN 295.7 million in premiums to OFE PZU in 2015, which was 70.2% less than in the previous year. The premium level dropped mainly due to introduction of premiums voluntary payment to open pension funds resulting from the changes introduced in 2014 (the Act as of 6 December 2013 amending net asset value of open-ended pension funds at the end of of open-ended pension funds at the end of 2015 net assets value of mutual funds at the end of 2015 net inflow to domestic mutual funds in 2015 140.5 PLN billion members 252.2 PLN billion 37.9 PLN billion certain other acts concerning the purpose of defining the principles of pension payouts from funds gathered in open pension funds). At the end of 2015, Dobrowolny Fundusz
Emerytalny PZU (PZU Voluntary Pension Fund) held 56.8 thousand IKZE accounts, which held assets worth
PLN 14.3 million. As a result, it maintained its position as one of the leaders in the voluntary pension funds segment. The 2015 rate of return was 9.1%.
Factors, including risks and dangers, which will impact the activities of pension funds in 2016
PLN 252.2 billion in comparison with PLN 209.0 billion at the end of the previous year.
In 2015, the balance of public and non-public sales of solutions offered by TFI on the domestic market amounted to almost PLN 37.9 billion (according to the estimates of Analizy
Online [Online Analyses]). The fast growth of the market during the recent year was largely influenced by the inflow of assets into non-public investment funds.
Taking into account the share of the market available to a broader range of recipients, domestic investors in 2015 were most likely to invest in stock funds as well as absolute rate of return funds.
As a result of the trends described above, the Polish investment fund market has experienced a change in the structure of assets. Non-public asset, capital protection, and absolute rate of return funds are amongst the ones which have recorded the greatest growth dynamics.
Funds in Poland, in second place at the end of the year according to the joint report of Analizy Online and IZFiA. TFI
PZU is also the leader in the segment of employee pension programs among all institutions operating on this market (not only investment funds), accumulating assets worth more than
In 2015, TFI PZU’s assets grew primarily due to: • active sales of funds and sub-funds; • further development of the distribution network; • introduction of new Employee Pension Programs; • investment results generated by the fund managers.
Factors, including risks and dangers, which will impact the activities of investment funds in 2016
• establishing a model for offsetting among the funds on the
The market dynamics were generated mostly by non-life insurance (composing 20.6% of the market) with written premium growth to 12.4%. Motor insurance, which dominated the premium structure (56.6% market share) also recorded aggregated growth. Motor own damage insurance grew by 8.7% and MTPL insurance grew by 0.5%. The premium growth in motor own damage insurance resulted from both the greater number of policies and the price rise, which followed the price war.
Ten companies were operating in the non-life insurance sector at the end of 2015 (including 10 branches of insurance companies registered in other European states). The largest insurance company in Lithuania in terms of total gross written premiums from non-life insurance remains Lietuvos
The structure of life insurance was dominated by unit-linked insurance representing 72.1% of the premiums. Traditional life insurance accounted for 20.9% of the written premium.
At the end of 2015, 8 companies were active in the life insurance sector. The Lithuanian life insurance market is highly concentrated. At the end of December 2015, the share of total gross written premiums of the three largest life insurance companies amounted to 62.3%.
At the end of the third quarter of 2015, the Latvian non-life insurance market gathered the written premium of
Considering the product structure, the highest market share was held by motor own damage insurance (25.3%) and MTPL
Nine companies were operating in the non-life insurance sector at the end of 2015 (including 3 branches of foreign insurance companies), 5 of which held the share of 82.6%.
Lietuvos Draudimas is the leader of Lithuanian non-life insurance with market share of 31.1%. In 2015, it recorded a growth of the gross written premium by 6.8% compared with the previous year and reached the level of EUR 127.2 million. The greatest growth was recorded in motor (6.9%)
The life insurance activity in Lithuania is carried out by UAB
From May 2015, the entity conducting business in Estonia is a branch of Lietuvos Draudimas and was established through the merger of two entities – the branch of PZU Lithuania, registered in 2012, and the Estonian branch, acquired in 2014,
Activity of PZU Group which was operating under the Codan brand. The share in the
In 2015, the Ukrainian insurance market recorded growth. The gross written premiums on the non-life insurance market in three quarters of 2015 was UAH 20.2 billion and was higher by 29.7% than in the corresponding period of the previous year.
PZU Group conducts its insurance business on the Ukrainian market through two companies: PZU Ukraine (in terms of non-life insurance) – “PZU Ukraine” and PrJSC IC PZU Ukraine
Life (life insurance) – “PZU Ukraine Life”. In addition, LLC SOS
During three quarters of 2015, PZU Ukraine had obtained 2.7% (growth of 0.5 p.p. in relation to three quarters of 2014) of the gross written premium on the Ukrainian non-life insurance sector, which gave it seventh place on the market.
The written premium collected by PZU Ukraine Life in 2015 amounted to UAH 177.8 million and was 15.2% higher than in 2014. This growth was achieved primarily in the bancassurance and brokerage channel, mainly thanks to sales of life and endowment insurance.
Due to the uncertain political and economic situations in the country, the management boards of PZU Ukraine and
PZU Ukraine Life decided to take the following risk reduction measures: • outside of standard exceptions (war, terrorism, etc.)
insurance activity does not cover illegal actions of third parties. Furthermore, conclusion and extension of non-life insurance for natural persons and legal entities, including mortgaged property where the insurance falls within the territory of the Donetsk and Luhansk regions, is temporarily suspended; the same applies to shipping and carrier liability insurance if the transport route runs through the aforementioned regions; • regional branches in Crimea and the Donetsk and Luhansk regions were closed; • some of the financial assets were transferred to selected banks operating in Ukraine. The selected banks had to have a dominating foreign shareholder and state-owned banks had to meet the criteria presented in the internal regulations of PZU Group.
Ukrainian companies. Controlling mechanisms and scenarios of reaction to market changes have been prepared. PZU has no intention of withdrawing from the Ukrainian market. As at the signing date of this activity report, the Management
Board of PZU assumes that the companies will continue to operate according to the accepted premises. Nevertheless, the current economic instability in Ukraine may have negative consequences on the financial situation and results of the
In 2014, PZU Group made the decision to expand its medical services and health insurance. The expansion included establishment of PZU Zdrowie to serve as the platform integrating acquired medical services companies and managing health subscribers
The chain of PZU Group’s medical centers offers the following: • medical services for the local population of Płock,
Warsaw, and - as of February 2016 – also Poznań, in scope of NFZ contracts covering general health care and ambulatory special care; • services in scope of additional health care packages for corporate and individual customers in Płock, Włocławek, cities of Upper Silesia, Opole, Warsaw, and, as of February 2016, Poznań; • medical services for holders of medical insurance at PZU
offering magnetic resonance services in Płock; • CM Gamma (“Centrum Medyczne Gamma sp. z o.o.”
share of Lietuvos Draudimas in gross written premium of the non-life market in Lithuania share of AAS Balta in gross written premium of the non-life market in Latvia after Q3, 2015 share PZU in gross written premium of the non-life market in Estonia share of PZU Ukraina in gross written premium of the non-life market in Ukraine after Q3, 20154
Alior Lux S.à.r.l. & Co. S.C.A and Alior Polska sp. z o.o., which was signed on 30 May 2015, PZU acquired 18,318,473 shares of Alior Bank constituting roughly 25.19% of the bank’s share capital in three tranches for the total price of
PLN 1,634.9 million (PLN 89.25 per share). The transaction depended on conditions precedent, including no objection from PFSA, approval of OCCP, and approval of the Ukrainian anti-monopoly office.
PZU paid the following for specific tranches: • I tranche 7,244,900 shares (9.96%) for total amount of
Between 12 October 2015 and 18 December 2015, Alior Bank was considered as an associated entity.
Simultaneously, the obligations resulting from the acquisition of the third tranche of 3,828,673 shares for the total amount of PLN 341.7 million were recognized.
As at the end of 2015, there were 38 domestic banks, 561 cooperative banks, and 27 branches of credit intuitions operating on the Polish market. On 2015, similarly to the previous years, banking network diminished (by 3.8% to 14,496 locations) and the employment level dropped (by 1.0%).
year-on-year.) The net result in the banking sector was mainly influenced by the following events: decrease in interest result by 4.8% (as a result of lowering interest rates by the Monetary Policy Council) and the result from fees and commissions by 3.3%. Moreover, this drop resulted from a higher employees costs and a growth in general management costs due to increased fees payable by the banks to the Bank Guarantee Fund.
The value of assets of the banking sector as at the end of 2015 reached PLN 1,599.9 billion and was 4.4% higher than at the end of 2014. The main areas of improvement was a growth in credits for enterprises (+8.8% year-on-year)
The value of own funds in the banking sector for capital ratios reached PLN 149.2 billion as at the end of September 2015 and reached by 7.4% year-on-year. The growth was related to a decision of a considerable number of banks to retain 2014 profits as a result of resigning from and discontinuation of dividend payment.
Total capital ratio of the banking sector reached 15.6% at the end of September 2015 (a growth by 0.6 p.p. compared to the end of September 2014), and the core capital ratio, Tier I, amounted to 14.3% at the end of the above-mentioned period
Alior Bank Group generated PLN 309,0 million in net profit per shareholders of the parent entity and reached ROE of 9.5%.
The main sources of revenues at Alior Bank Group include net interest result which reached PLN 1,501.0 million – thanks to a dynamic growth in credits by means of applying an effective pricing policy and as a result of merger with Meritum Bank.
The cost/income ratio amounted to 51.1%, but it would have reached 48.1% if the costs incurred as a result of the bankruptcy of Spółdzielczy Bank Rzemiosła i Rolnictwa
Factors, including risks and dangers, which will impact the activities of Alior Bank in 2016
The situation in the banking sector in 2016 will primarily be affected by: • new tax burden applicable as of 1 January 2016 resulting from the tax on certain financial institutions REGULATIONS
PZU Pomoc SA (PZU Pomoc) is an ancillary company for PZU
With the start of May 2015, the company’s operations were divided and organized in scope of two fields, Assistance and
PZU Group’s operations on the debt market are realized through PZU Finance AB in Stockholm (Sweden). The
PLN 500 million issued by PZU Finance AB (publ.) on 3 July 2014, they constitute one series, a so-called tap issue. DEBT
PZU Finanse Sp. z o.o. is a service provider established to keep accounting records for PZU Group’s subsidiaries (with exception of PZU and PZU Życie).
Group specialize in manufacturing of bathroom and kitchen taps, aluminum central heating radiators, a wide range of valves, and sanitary ware.
On 15 January 2015, Armatura Kraków acquired control of Aquaform SA Group (indirectly also acquiring Aquaform
Morehome.pl), a manufacturer of shower cabins, bath tubs and bathroom furniture, for PLN 25.9 million (provisional settlement, because the price depends on the sales value acquired by Aquaform SA on selected foreign markets in the years 2015–2017).
PZU Group develops and evolves along with the world around it. At the very heart of its process of creating value, the Group continues to focus on the clients’ needs and expectations. The strategic operations respond to the existing and forecasted market challenges to reflect the strive for a stronger competitive position, basing on the 3 Areas of Activity (Insurance, Investments, Health Care), achieve above-average financial results, and respond to the expectation of the Group’s interested parties.
peace of mind and security. Our Clients can always rely on us. The Group’s mission in practice translates into transforming PZU from a product-centered organization into a company that focuses on the clients’ needs; • Strengthening the position of a leader at the insurance market in Poland; ◦ Retail Client Area
Competing under demanding market conditions forces the insurers to endlessly strive to expand and improve through optimizing the applied business models and extensive application of the analytical tools that use Big Data.
Eurozone indicate no considerable probability of the inflation growth to the level of 2% earlier than near the end of the Strategy’s horizon. This situation will continue to produce a difficulty in achieving a guaranteed rate of return in life insurance, and also it will have a considerable impact on the formation of the rates of return demanded by the investors, which are possible to achieve by investment and pension funds. MACROECONOMIC FACTORS CHAPTER 2.6
• Building the position of a leading company managing assets – surge growth of market share in the asset management in Poland
• Building the best competences on the market regarding Big Data in order to improve product per client (CRM), underwriting and processes
Business strategy including the requirement to keep detailed analyses of the client’s needs in sales of products with investment capital funds and providing the client with appropriate recommendations and guidelines. The regulations on paying commission to insurance agents have changed, which will lead to changes in the sales of insurance products, especially through agents. REGULATIONS ON
Meanwhile, in the case of non-life insurance products there is a constant pressure on price, which forces the insurers to compete not only on the scope of a basic service, but also the scope of additional services (assistance, direct claims handling, concierge). This requires the insurers to develop both comprehensive and flexible approach to the pricing of offered services.
“millennials” entering the labor market with lifestyles, preferences, and purchasing behaviors considerably different from their parents. This generation is much more used to all forms of digitalization in various aspects of life
(including use of financial and insurance products). This forces the insurers, PZU included, to offer the products, as well as claims and benefits handling, through mobile channels, with the application of internet marketing and social media.
The next few years are often referred to as the period of
“rapid digitalization”. It is expected that extensive use of new digital technologies will be one of the strongest trends up to the year 2020, in the scope of both the projected changes in the operating activity of insurance companies and the formation of their relations with the clients. It is expected that developed markets will see a very quick growth in the number of clients using digital channels to contact insurers within the next five years. Consequently, it will be necessary to adapt relations with the clients, but it will also be easier to decompose the value chain of insurance companies because of the escalated competition and transparent prices. At present, none of the companies operating in the financial sector should neglect remote channels as a form of distribution and client service.
The use and development of the above-mentioned tools allow for a more effective client segmentation, which in turn translates into a more flexible adjustment of the offer to the needs, as well as optimization of sales and marketing costs of an insurance company.
Insurance 1. PZU retained the top position on the non-life insurance market. According to PFSA data for the third quarter of 2015, PZU’s market share was 31.2%* (a drop of 0.2 p.p. year-onyear ).
3. Retaining the top position in life insurance with regular premium after the third quarter of 2015 with a 43.9% market share (up from last year’s 42.9%). Following the third quarter of 2015, PZU had a 29.1% share in the entire life insurance market.
Investments 1. By the end of 2015, the value of the assets managed by (AuM) TFI PZU was PLN 28.3 billion, which constituted 11.2% of the assets obtained by domestic investment funds, thus placing it second among all companies affiliated under the Chamber of Fund and Asset Management.
(2015), Medicus w Opolu (2015), CM Gamma (2015) and CM Cordis (2016); additionally, CM Medica bought REZO-MEDICA (2015).
3. The gross written premium from group medical insurance rose by 46% from 2014.
In 2015, the Group achieved the following objectives in specific Business Fields: * PZU share calculated taking into account PZU’s inward reinsurance towards Link4.
Effective distribution and customer service 1. Continued implementation associated with the introduction of a new policy system (Everest Platform) to improve PZU’s flexibility and competitiveness. In 2015, remaining non-life products and first corporate insurances were introduced. For the most part of 2015, external sales channels (multiagents, dealers, brokers) and remote channels were prepared to work with the new system.
2. Continued implementation of innovative PZU Branches – well-visible and common for the entire Group. In 2015, 45 PZU Branches were activated and 151 Branches operating under the new model have been opened since the launch of the process.
3. Continued work aimed to consolidate and improve the visualization standard of Exclusive Agent offices. In 2015, 635 offices in the new standard were opened. From the start of the project, 866 offices in the new standard were opened.
2. The regulations concerning claims paid from TPL insurance drafted by PIU (Polish Chamber of Insurance) came into effect on 1 April 2015. PZU is the initiator of the Direct Claims Handling program.
4. A new human resources and salaries system has been implemented as the first step towards standardization and improvement of HR processes in the whole company.
5. In order to optimize the costs, the next stage of the restructuring program in PZU and PZU Życie has been carried out. On 8 April 2015, the Management Boards of PZU and PZU Życie declared their intention to conduct collective redundancies in accordance with the Act on the specific principles of terminating labor relationships for reasons not attributable to employees dated 13 March 2003. The restructuring took place in the second quarter of 2015. It covered 267 people in PZU and PZU Życie, including the employment reduction which pertained to 134 PZU and PZU Życie employees.
Take advantage of our sports cards, educational and cultural offer, weekend relaxation and attractive discounts.
Introducing new technological solutions, we do our best to help our clients select the right product and make the claims handling process efficient and satisfactory.
Contents: 1. Sales and service channels 2. Human resources management 3. Marketing
PZU’s own agency network Sales through multiagencies exclusive agents multiagencies 5.1 Sales and service channels
at their own branch offices that underwent a makeover in 2014. They are well-advertised, located in attractive venues, have no architectural barriers, and provide convenient access to all clients; • bancassurance and strategic partnership programs – PZU
Group cooperated with 10 banks and 6 strategic partners in scope of protective insurance in 2015. The partners of
By the end of 2015, BLS agreement – drafted by PIU (Polish
• By means of this chat service employees of the Contact Center provide information on insurance products that help the Customer navigate through the www.pzu.pl website and suggest how to complete the forms online.
• The next step in the development of this channel will be a dynamic chat, which will respond to customer behavior on the website – e.g. in the situation of his/her lack of action.
• The Video chat enables a Customer to have meeting with a representative of PZU without leaving home.
• We want, thanks to this, to advise Customers that find themselves in various situations or to provide instruction regarding the proper completion of the most widely used web forms.
• With it the customer can, during a conversation on the helpline, choose a topic of conversation, leave a phone number and select a time limit within which he or she wishes to be contacted.
• We created the Team to Service and Monitor Social Media, which is responsible for the company’s image in the network and thus also for enhancing its image.
• It deals with, among others, topics related to the sale of insurance, claims handling service, the Assistance product, and also with communication, advertising or CSR activities.
• This is correspondence by letter, which combine substantive elements (e.g. relating to a transaction) with elements of promotion, offering customers a measurable benefit.
• The whole concept is based on the philosophy of using simple language and its leitmotif is to build positive relationships through contact with customers. Thus, our lists are of more personal in nature, and the client finds in them important information shown with the help of infographics or preventive elements related to safety.
• As a result, Customers are assured that their cases get to where they will be serviced.
Pomoc Repair Network is intended to ensure the highest quality and repair service standards to all customers who suffered damage. Every client that commissions a vehicle repair at a garage within the PZU network receives a Quality
In order to improve the non-life claims handling process, in 2015 the company continued to organize training sessions which followed the British standards of best practice in claims handling addressed to employees handling non-life claims of corporate clients.
For the customer, claims handling process is the moment of truth in contacts with the insurer and an opportunity to test the quality of the purchased product. Satisfying his or her expectations in the claims handling process is the key to building his or her ties with PZU. Therefore, in 2015 extensive measures were taken to improve and shorten the process, such as the implementation of a LEAN culture and the expansion of an automatic and simplified process of claims handling. A process of implementing a Self-handling service was started; the service allows the victim to estimate the amount of compensation in motor and non-life claims and at workshops that repair equipment damaged during overload.
Accident Victims]. These are mobile employees who meet with the victims in their houses and determine the actual life situation and the needs related to the accident they suffered from and for which PZU is liable. Provided assistance includes, among others, organization of medical, social, vocational and psychological rehabilitation in a broad sense. Assistance
They also provide assistance in completing all the formalities connected with claims handling. They assist in obtaining benefits and establishing contacts with government institutions
MOPR [Municipal Family Support Center]). They also provide psychological support to the immediate family members of the victim.
replies suggest that the clients are highly satisfied with the change. The insured perceive the change in a positive way and point out to the improved claims handling process and accident insurance benefits.
Another example of a pro-customer activity implemented by PZU in 2015 is a visual representation of claims handling stages in the Online Claim/Issue Status. After logging to his or her claim/issue at www.pzu.pl , the Client can learn how many stages the PZU claims handling process involves, become familiar with every stage, and check his or her claim/
The www.pzu.pl website features also a video with tips related to online claims handling. Short videos depict PZU employees showing the clients how quickly file a claim, change its status, or how to use the accident insurance in the case of an accident. PZU – Video tips – Online claims handling.
The quality of claims handling process and benefits payment at PZU is highly valued by the clients. At the end of Q4 2015, satisfaction rate reached 84%1. Meanwhile, NPS (Net Promoter
Organization, infrastructure and human resources platform helps boost operational effectiveness, which in turn increases possibilities of presenting a competitive offer to the clients.
At the moment, there are over 19 thousand users working at the Everest platform, including all branch employees, exclusive agents, agents-partners, and office workers. More than 13 million policies have been issued in the new system so far, including over 8 million in 2015 alone. The full implementation of the new policy system is planned to be finished in the third quarter of 2016.
Everest project, the Technology Division implemented internal strategic initiatives, which consisted of the development of a series of activities supporting key business initiatives, especially the following: • as an adjustment of the IT and security system to requirements of external acts, the process of Polish
(excluding Alior Bank employees), whereas 11 thousand people were employed in PZU and PZU Życie.
It should be noted that the proportion of women in the employment structure has been stable in recent years. Nearly 80% of PZU and PZU Życie employees had higher education.
The employee age structure also remains stable. In December 2015, nearly 70% of the employees were under 44 years old.
PZU and PZU Życie, including the employment reduction which pertained to 134 PZU and PZU Życie employees.
In 2015, PZU continued its remuneration and recruitment policy which covers all internal principles concerning salaries for relevant groups of employees. Such principles are determined in accordance with the generally applicable rules of law, PZU internal regulations and corporate governance.
by building an image of the company as an employee of choice, by effective recruitment and selection process; • supporting non-professional activities of PZU Group employees, i.e. by engaging them in the Group’s CSR
A part of remuneration subject to variations is developed on the basis of the above-mentioned factors and depends on the group of employees it concerns. The applicable remuneration policy is based on a performance result management system, competence assessment and on-going adjustment of the remuneration scheme to changing conditions. This applies especially to the variable part of remuneration and extra benefits.
They constitute a tool for managers that helps to manage targets/tasks/motivation of their teams, as well as identify and develop employees with exceptional competence levels.
Recruitment, training and building an image of an employer of choice
In 2015, a new recruitment module was successfully implemented in HRM (Saba Enterprise) application already used by the company. From 2015, by the time a job application has been accepted, the entire recruitment process takes place in a user-friendly HRM application interface which keeps the participants of the process posted about their application status. For the first time in history of recruitment at PZU, an extensive database was used which is accessible to all recruiters and improves documentation management as well as has an option to preview the candidates’ applications.
The recruiters may also automatically publish job offers in several locations and thus monitor effectiveness of selected candidate acquisition channels. The HRM system helps them 1.8% 3.0%
PZU has also mechanisms for entry into and exit from the organization. The assumption to the process of introducing a new employee is to build commitment and loyalty in an atmosphere of openness and cooperation. However, anyone parting with the organization by mutual consent is asked for his or her opinion on working for PZU Group and the reasons of their decision to change employer.
Every employee at PZU and PZU Życie benefited from an average of 27 hours of classroom trainings in 2015.
PZU continues also large-scale activities promoting its brand as an employer, which are addressed to students and professionals. Year 2015 started with a uThoruj sobie drogę
na staż (Your way to internship) recruitment campaign; as a result, over 100 students from the entire country joined the company. The company’s spring campaign actions were recognized by the jury at EB Excellence Award and EB Stars competitions. Popular social competitions, i.e. Studencki
In 2015, PZU Group made wide-ranging advertising campaigns, including: • Campaign to promote motor TPL insurance with Direct
BLS at PZU. The campaign featuring Marcin Dorociński included TV spots and online activities at tylkospokoj.pl; • „Kochasz? Powiedz STOP Wariatom Drogowym” (If you love, say STOP to Reckless
TPL insurance at PZU could pay less for filling their tanks at
LOTOS and LOTOS Optima petrol stations thanks to special discount cards; • Niestraszki (Fear-nots) campaign. The first edition of a new
In 2015, PZU Group made also advertising campaigns with a narrower range, including: • Pomoc od serca (Help from the heart) campaign – the aim of the campaign was to show that holding a „PZU pomoc od serca” insurance guarantees security in the case of tumor, heart illnesses, and other serious conditions. The campaign was conducted on TV and online; • EMPLOYER BRANDING campaign – the aim of the campaign was to promote the employer’s brand. It featured two editions in 2015: the spring edition targeted to students and graduates at the largest universities in Poland, and the fall edition was addressed to professionals.
support were addressed to branches and agents’ offices. A mobile stand was organized and PZU
equipped its agents in branding materials, which guaranteed that the company was present at local events realized by field agents.
In 2015, PZU marketing campaigns received a number of awards, i.a.: • KTR (Klub Twórców Reklamy [Commercial Creators Club]),
Drivers) social campaign; • KTR, Silver award – „Telewizor” (TV Set), a PZU housing campaign of 2014; • KTR, double Bronze award – „Ulubiona zabawka” (Favorite toy) project – (categories: Loyalty Program&Direct); • Innovation Award 2015 – distinction for „Ulubiona zabawka” (Favorite toy) project (category: Insight).
Social techniques are part of the art of influencing others, and consequently of achieving specific goals by manipulating people.
Net profit of PLN 2.3 billion and the return on equity of 18.0% place us among the most profitable financial institutions both in the country and in Europe.
Consolidated financial results 6.1 Key factors affecting the achieved financial results
With the exception of one-off events1, the net result declined by 20.2% compared to the previous year. The operating profit for 2015 amounted to PLN 2,939.4 million, down by
PLN 104.8 million, associated mainly with decrease of profitability in motor insurance resulting from the growth of dynamics of reported claims with maintenance of the average claim from the previous year and increase of insurance activity costs; • growth of PLN 94.5 million in profitability of the corporate insurance segment. Improvement mainly in TPL insurance resulting from declined provisions for claims for damage from previous years; • drop of PLN 187.1 million in profitability of the group and individually continued insurance segment associated mainly with increased claims ratio of protective products resulting from higher mortality ratio; • result of the pension insurance segment lower by
The following one-off events had an impact on PZU Group’s result in 2015: • gross result on sale of PZU Lithuania in the amount of
1 One-off events are: conversion effect of long-term insurance contracts into annual renewable contracts in type P group, result on the sale of PZU Lithuania, impact on the profit and loss account due to the consolidation of Alior Bank.
Within particular items of the operating result, PZU Group recorded: • an increase in the gross written premium to the level of
(increase of 8.7%) mainly due to the growth of its foreign operations and the premium collected by Link4. After accounting for the share of reinsurers and the change in provision for unearned premium, the net premium earned amounted to PLN 17,384.9 million, which was 5.8% higher than in 2014.
lower than in 2014; • higher amount of claims and benefits. These amounted to PLN 11,857.1 million, i.e. they were 2.7% higher than in 2014. Specifically, there were more claims reported in motor insurance and a higher mortality ratio in protection insurance; • higher acquisition expenses (by PLN 229.3 million) resulting mainly from the consolidation of the insurance companies acquired in 2014 and growth of direct acquisition costs in the mass client segment; • growth of administrative expenses to PLN 1,657.9 million from 1,527.7 million in 2014 associated mainly with the costs of foreign companies (mainly the newly acquired ones), which rose by PLN 59.2 million and, concerning insurance activity in Poland, growth of expenses in relation with the development of the Everest Platform (the target policy system for non-life insurance) and other strategic projects aimed to improve customer service by tied agents and develop distribution channels; • higher negative balance of other operating revenues and expenses in the amount of PLN 418.8 million (negative impact of the change on the gross year-on-year result of PLN 48.7 million) mainly due to the amortization of
Net profit (loss) attributable to owners of equity of parent company 2,342 2,968 3,293 3,255 2,345 3, 3.
N et in ve st m en t re su lt
O pe ra tin g re su lt intangible assets identified as a result of the acquisition of insurance companies.
PLN 18,359.0 million compared to PLN 16,884.6 million last year, which means an increase by 8.7%. Within particular segment, the following trends were recorded: • increase by PLN 652.0 million in written premium collected by foreign companies compared to 2014, including mainly due to premium gathered by entities purchased in 2014; • higher sales in mass-client segment by PLN 749.5 million
(excluding premium between segments) compared to 2014, mainly within motor insurance due to the sales volume of PZU and as a result of Link4 acquisition, as well as insurance of financial losses (commencement of long-term cooperation with new client on the basis of obligatory amount inward reinsurance agreement); • sales growth in group and individually continued insurance segment – regular premium higher by PLN 149.6 million, mainly due to development of protection insurance sector
(a rise in the average premium and higher number of insured) and collection of premium in medical insurance
PLN 42.3 million compared to 2014 (excluding premium between segments), including mainly in TPL insurance as a result in finalization of several large tender procedures in
The impact of the above factors was partially balanced by improved results on equity instruments.
The following one-off events had an impact on PZU Group’s net investment result in 2015: • gross result on the sale of PZU Lithuania in the amount of
Interest expense2 decreased in 2015 by 20.3% as compared to the previous year. 2 “Interest expense” is presented excluding foreign exchange differences, also on own debt securities, which are currently presented in net investment result as Others, but including change in valuation of investment contracts at amortized cost, which were beforehand presented under the line “Change in valuation of investment contracts”, which was deleted beginning from the current period.
Group and continued insurance - Poland 6,689 6,539 6,415 6,364 6,179
Total life insurance – Ukraine and Baltic states* 74 78 78 x x
Investing activities of PZU Group are conducted in compliance with the statutory requirements, ensuring an appropriate degree of safety, liquidity and profitability; therefore, treasury debt instruments accounted for more than 60% of the 3 The investment portfolio comprises financial assets (including investment products, excluding credit receivables from clients), investment property, negative measurement of derivative instruments, and liabilities from sell-buy-back transactions.
Increased volume of treasury instruments of the debt market resulted from consolidation of Alior Bank portfolio.
Money-market transactions were executed in order to boost effectiveness of investment activities and achieve additional margins.
PZU Group’s investment activities in 2015 concentrated on continuing the realization of the strategy aiming at optimization of investment operations’ profitability by greater diversification of investment portfolio.
In 2015, the balance of other net operating income and expenses was negative and amounted to PLN 418.8 million compared with the also negative balance for 2014 of
** Derivative instruments based on interest rates, currency exchange rates and prices of securities are presented in the category Debt market instruments – treasury, Money market instruments, and Quoted and non-quoted equity instruments.
PLN 370.1 million. The following factors had an impact on this result: • higher costs of intangible asset amortization identified as the result of the 2014 acquisition of insurance and medical companies with value of PLN 161.1 million (PLN 87.8 million in 2014).
(PLN 92.4 million in 2015 compared to PLN 68.2 million in the previous year); 6.3 Claims and technical provisions
higher mortality ratio confirmed by CSO data covering the entire population; • higher claims ratio in motor insurance resulting from higher number of reported claims.
(resulting mainly from changes to commission rates in the half of 2014) and indirect acquisition costs in the mass client segment, specifically employee costs; • commencement of consolidation of the insurance companies acquired in 2014.
Simultaneously, the declined acquisition costs resulted from the higher level of costs deferred in time.
Platform (policy system for non-life insurance) and other strategic projects aimed to improve customer service by tied agents and develop distribution channels, especially remote channels.
Simultaneously, there was a recorded positive effect from the previous year in the segment of pension insurance due to the higher costs in 2014 associated with the additional payment to the Guarantee Fund (statutory rise of required funds in 2014 from 0.1% to 0.3% of OPF net asset value (“NAV”).
Treasury debt securities Non-treasury debt securities Monetary market instruments Equity instruments – quoted Equity instruments – unquoted Investment properties
In ve st m en t pr op er tie s
N et in ve st m en t re su lt 20
(financial assets and investment property). In total, these assets amounted to PLN 90,477.6 million and were 53.4%
higher than at the end of the previous year. They represented 85.8% of the Group’s total assets compared with 87.3% at the end of 2014.
PLN 30,331.6 million. This effect has been slightly offset by the following: • lower valuation of interest-bearing financial assets; • payment of the second installment of the 2013 dividend in
The PZU Group’s receivables, including receivables from insurance contracts and current income tax, amounted to
PLN 3,338.1 million, i.e. represented 3.2% of the assets. By comparison, at the end of 2014 the receivables amounted to PLN 3,085.8 million (4.6% of the Group’s assets) and their increase concerned mainly receivables from insurance intermediaries.
The PLN 899.4 million change in the balance of assets held for sale resulted on the one hand from the finalization of the sale of PZU Lithuania and on the other from the transfer of a part of the investment property portfolio to this asset category.
Similar to asset structure, the structure of liabilities at the end of 2015 experienced considerable changes resulting from the commencement of consolidation of Alior Bank. The technical and insurance provisions do not compose the majority of the balance total – they composed 39.2% at the end of 2015 and 59.4% at the end of 2014.
At the end of 2015, the level of technical provisions rose by
the increase results from sales of contracts exceeding the level of benefits paid, which was partially limited with the negative investment activity result; • higher provisions in individually continued products –
PLN 4.411,5 million in 2014; • investment contracts in the amount of PLN 545.4 million compared to PLN 1,108.1 million at the end of 2014.
The value drop by PLN 562.7 million compared with 2014 resulted from payments of subsequent tranches in short-term endowment investment products, both in the bancassurance and own channel, and additional surrenders in unit-linked products.
EUR 10 million loan and issued bonds with nominal value of
The balance of other liabilities and provisions at the end of 2015 amounted to PLN 4,482.0 million compared with
PLN 4,835.0 million at the end of 2014. The drop mainly concerned liabilities towards the shareholders from the payment of the dividend resulting from the 2013 profit in the amount of PLN 1,468.0 million (dividend paid in January 2015)
PLN 2,091.0 million and increased by PLN 2,373.6 million compared with the previous year. This increase is related to the high balance of cash and cash equivalents on the accounts of Alior Bank.
Conditional assets of PZU Group as at the end of 2015 amounted to PLN 33.1 million, a considerable amount of which constituted guarantees issued by Bank Millennium SA
Millennium SA, the bank extended bank guarantees (bid bonds and contractual guarantees) to PZU organizational units that participate in tender procedures for insurance services.
The significant year-on-year growth resulted mainly from the consolidation of Alior Bank. The value of conditional liabilities provided to Alior Bank clients amounted to
PLN 379.8 million in 2015. This change resulted from a higher number of disputes and claim for damages resulting from disqualification from right to dividend, specified in point 53.1 of the Consolidated Financial Statements for 2015.
sector; • life insurance: group and individual continued - PZU Życie offers this insurance to groups of employees and other formal groups (e.g. trade unions). It includes the following types of insurance: • protection, investment (which, however, are not investment contracts) and health insurance; • individual life insurance – PZU Życie offers this insurance to individual clients. The insurance contract relates to a specific insured, subject to the assessment of the individual risk. This group comprises protection, investment
may enroll in the insurance; and individually continued insurance in which the policyholder acquired the right to individual continuation during the group phase.
comprises investment activity conducted with PZU Group’s own funds defined as the surplus of investments over technical provisions in the insurance companies within
Link4 and PZU Życie) increased by the surplus of income exceeding the risk-free rate from investments matching the value of technical provisions of PZU, Link4 and PZU Życie in insurance products, i.e. the surplus of investment income of PZU, Link4 and PZU Życie over the income allocated to insurance segments according to transfer prices.
• Ukraine segment - includes both non-life and life insurance; • Baltic states segment - non-life and life insurance products provided in Lithuania, Latvia, and Estonia; • investment contracts - including PZU Życie products, which do not transfer significant insurance risk and do not meet the definition of an insurance contract. They include some products with a guaranteed rate of return and some unit-linked products.
and Link4) earned the operating profit of PLN 311.6 million, which is 43.5% more than in corresponding period of the previous year.
• 9.8% decline in net claims and benefits in comparison with the corresponding period of 2014, which, considering a 0.9% increase of the net premium earned, means that the loss ratio decreased by 7.0 p.p., to the level of 58.9%.
The decline was recorded mainly in TPL insurance (lower level of provisions for previous years claims) and insurance for damage caused by forces of nature (lower claims rate). The effect is partially offset by the increased claims and benefits in motor insurance as a result of the higher average claim payment and higher number of reported claims.
PLN 127.4 million, i.e. 1.9 %, compared with the previous year. The level of expenses in 2015 was influenced by e.g.
The result was determined by the following factors: • 3.5% growth of the net earned premium y/y to
Moreover, the premium growth was caused also by including Link4 and companies in the Baltic states in the inward reinsurance program (eliminated at the consolidated level); • 1.8% higher amount of claims and benefits than in 2014.
Ad m in is tr at iv e ex pe ns es
(higher share of the multiagency and dealers channel); • 7.8% higher administrative expenses in comparison with 2014. This change was due to expansion and initial usage of the Everest Platform (policy system for non-life insurance) and other strategic projects aimed to improve client service by tied agents and develop distribution channels.
lower than in the previous year. This was a result of: • growth of the gross written premium by PLN 149.6 million
(new clients in ambulatory insurance and sales of medicine product versions); ◦ upselling of riders and higher sums insured in individually continued products.
The positive effects were partially offset by the decrease in premium in unit-linked insurance, which resulted from the transfer of EPP agreements of PZU’s employees to the EPP
operated by TFI PZU; • lower investment income. In 2015, it amounted to
Moreover, the slightly higher rate of conversion of longterm contracts into annual renewable contracts in type P
PLN 5.5 million more than in 2014; • acquisition costs similar to those of the previous year.
(a 11.4% drop). The main cause of the inferior result is the higher claims ratio of the protection portfolio resulting from higher mortality ratio.
The negative effect was offset by the following: ◦ record structured product subscriptions in own channel; ◦ high sales of protection products – resulting from the changes to the commission system and improvement of the offer through introduction of the new Pomoc od
Serca additional insurance; ◦ higher average deposits to IKE accounts; ◦ introduction of a new unit-linked product into the own channel offer: Cel na Przyszłość.
PLN 59.7 million was determined by strategic expenses in distribution and operating support. The improvements included client service quality by exclusive agents; • changes in the other revenues and expenses category
(expenses higher by PLN 4.3 million) resulting from the prevention fund charges in the current year (no such expense was recorded in the previous year which was eliminated at the consolidated level).
Additionally, the investments segment includes income earned on other excess funds in PZU Group.
The operating profit of the investments segment (external operations only) amounted to PLN 506.2 million and was 12.6% lower than in 2014, mainly due to lower yield of investment portfolio caused mainly by decrease in income on interest-bearing financial assets as a result of increased yield of Polish treasury bonds in the middle and at the end of the yield curve in 2015 compared to the decreases along the entire curve in 2014.
PLN 118.5 million, i.e. it dropped by 56.2% from the previous year. This change was the result of: ◦ the 2014 statutory withdrawal of funds from the additional part of the Guarantee Fund in the amount of
PLN 132.3 million; ◦ decrease of PLN 14.7 million in premium revenue resulting from the discontinuation of premium transfer of members who omitted to fill in the participation declaration during the transfer window to OPFs after 1 August 2014, the reduction of fees from 3.5% to 1.75% on 1 February 2014, and the lack of premiums for the people in the so-called “slider”; ◦ decrease of PLN 8.1 million in management fee resulting from the statutory transfer of a portion of OPF assets to the Social Insurance Institution (ZUS) on 3 February 2014 and the decline in OPF assets during the second half of 2015 as a result of the market situation; • the net investment revenue amounted to PLN 6.9 million and dropped by PLN 4.7 million due to the financial asset drop; • the acquisition costs amounted to PLN 2.9 million, i.e. they were 53.6% lower than in the previous year. This resulted from the informational activity conducted by OPF in 2014; • the administrative expenses amounted to PLN 39.9 million, i.e. were 45.3% lower than in the previous year.
In particular, the costs of maintaining pension fund registers declined by PLN 9.3 million due to lowering the fee for the management of the accounts of the members of OFE PZU (first in February 2014, then again in January 2015) and the resignation from the additional compensation for the transfer agent in connection with the fulfillment of assumptions regarding the improvement of the quality of provided services. Fees collected from premiums transferred by the Social Insurance Institution
(mainly as a result of the statutory change of the required level from 0.1% to 0.3% of the net assets of OPF at the end of the first quarter of 2014 and the additional payment of the previous year).
PLN 1,193.9 million, where the companies acquired in 2014 generated the premium of PLN 981.2 million and life insurance recorded a written premium growth of
PLN 5.9 million (i.e. 15.9%) from the previous year; • growth of the investment income. In 2015, the result amounted to PLN 21.8 million, up by 49.0% from the previous year; • increase in net claims and benefits. They amounted to
• increase in acquisition costs. The respective expenses of the segment amounted to PLN 252.8 million, including
PLN 202.5 million of acquisition costs incurred by the companies acquired in 2014. The acquisition cost ratio to the net earned premium dropped by 1.4 p.p. to 22.8%; • increase in administrative expenses. They amounted to
PLN 146.4 million, up by 82.5% from the previous year, while the expenses of the newly acquired companies amounted to PLN 111.7 million. At the same time, the administrative expenses ratio amounted to 13.2%, a drop of 3.6 p.p. from the previous year.
PLN 1.8 million and were PLN 1.1 million higher than in the prior year.
Ukrainian currency, the results are presented in the currency used by the companies for reporting purposes.
Taking into account the depreciation of the currency, the written premium showed a reverse trend (a drop of
PLN 5.4 million); • growth of the investment income. This segment earned
UAH 106.7 million. Meanwhile, the administrative cost ratio to the net earned premium remained at the level of 20.7%.
PLN 168.2 million and was lower by 3.1% compared with the previous year.
PZU Group earned PLN 1.1 million of operating profit compared with PLN 15.1 million in the previous year (drop of 92.5%) on investment contracts, i.e. PZU Życie’s products which do not transfer significant insurance risk and which do not meet the definition of an insurance contract (such as some products with a guaranteed rate of return and some unitlinked products).
The following had an impact on the results of the segment in 2015: • gross written premium from investment contracts dropped by PLN 233.4 million (-62.3%) from the corresponding period of 2014 to PLN 141.1 million. The main reasons for the changes to the gross written premium included: ◦ lower sales of short-term endowment products in own channels,
In both cases, the reason was the low profitability of such agreements for the clients following the drop of market interest rates to unprecedented lows and introduction of the tax on capital revenue for such policies. A positive factor is the year-on-year growth of contribution to accounts observed in IKZE.
The decline is less than proportional because some of the service processes must continue despite failure to generate revenue.
was 18.0%. ROE was 4.6 p.p. lower than in the previous year.
Consolidated financial results high profitability. In 2015, the ratio dropped, mainly because of the declined provisions for claims from damage in previous years in PZU’s third-party liability insurance group.
Return on Equity (ROE) - consolidated (annualized net profit / average equity) x 100%
* excluding Alior Bank 1. Claims ratio gross (Gross claims including change in technical provisions /gross written premium) x 100%
5. Administrative expenses ratio (Administrative expenses/premium earned net of reinsurance) x 100%
6. Combined ratio in non-life insurance (claims + costs of insurance activity)/ premium earned net of reinsurance x 100%
If you want to learn more, write to kontaktBBE@pzu.pl or go to PZU24/Security Department or obi.pzu.pl
We devote a lot of time to a continued development of advanced risk management procedures. We consider them to be fundamental, as, all in all, we want our clients to feel secure and calm and our results to remain predictable.
Contents: 1. Risk management objective 2. Risk management system 3. Risk appetite 4. Risk management process 5. Risk profile 6. Sensitivity to risk 7. Reinsurance activity 8. Capital management
Risk management aims to: • increase the value of PZU Group through active and conscious management of the amount of exposure at risk; • prevent taking risk at a level which could threaten the financial stability of PZU Group.
Risk management in PZU Group is based on risk analysis of all processes and entities, and it is an integral part of the management process.
Management Boards and Supervisory Boards of companies, as well as dedicated Committees, play the key roles.
Companies from other financial market sectors are obliged to follow the standards relevant to a given sector. In internal regulations adopted by them they specify among others the following: • processes, methods, and procedures that enable risk measurement and management; • segregation of duties in the risk management process; • scope, terms and conditions, and frequency of reporting on risk management.
PZU supervises the PZU Group risk management system under cooperation agreements with PZU Group entities and on the basis of information provided as per such agreements, as well as manages PZU Group aggregated risk.
Committee; • Management Board, which organizes the risk management system and ensures its functionality through approving the strategy and policies and defining the risk appetite, the risk profile and tolerance for individual kinds of risk; • Committees which make decisions on reducing the level of individual risks in order to keep the overall risk within the limit determined by the risk appetite. The Committees implement the procedures and methodologies for mitigating individual risks and accept their limits.
Fourth level of competence relates to operational actions and is divided between the three lines of defense: • first line of defense – ongoing risk management at the business unit and organizational unit level and decisionmaking as part of the risk management process; • second line of defense – risk management by specialized units responsible for risk identification, monitoring and reporting, as well as controlling limits; • third line of defense – comprises internal audit, which conducts independent audits of the elements of the risk management system, as well as control activities embedded in the business activities.
The risk appetite determines the maximum level of acceptable risk when setting individual partial risks limits and restrictions which, when exceeded, result in taking actions necessary to limit further risk growth.
On - going risk management 7.5 Risk profile of PZU Group
II GLOSSARY requirements and supervisory guidelines, in particular those of PFSA, were the key event from the point of view of PZU Group’s risk profile.
It is the risk of a loss or an adverse change in the value of liabilities as a result of improper assumptions regarding valuation and the establishment of technical provisions.
Management activities in the underwriting risk management process are carried out, in particular by: • specifying underwriting risk tolerance level and monitoring thereof; • business decisions and sales plans; • calculating and monitoring the adequacy of technical provisions; • pricing strategy, as well as monitoring existing estimates and assessing the premiums adequacy; • process of assessment, measurement and acceptance of underwriting risk; • use of underwriting risk mitigation techniques, including, in particular, reinsurance and prevention.
Risk of a loss or an adverse change in the financial standing, which directly or indirectly arises from fluctuations and changes in market prices of assets, credit spread, value of liabilities, and financial instruments.
The risk measurement is performed: • for the measures of exposure and sensitivity of instruments; • using a partial internal model.
Reporting consists of communicating the level of market risk and the effects of monitoring and control to the different decision-making levels. The frequency of individual reports and the scope of information are tailored to meet the information needs at different decision-making levels.
The setting of limits is the main management tool for maintaining risk positions within acceptable risk tolerance levels. The structure of limits for the individual market risk categories and the organizational units is defined by dedicated
Concentration risk is a risk arising from lack of diversification in the portfolio of assets or from high exposure to the risk of default by a single issuer of securities or a group of related issuers.
The total concentration risk is measured as the sum of concentration risks of individual entities. In the case of related entities, concentration risk is specified for all related entities cumulatively.
Monitoring is conducted for: • financial insurance exposures; • reinsurance exposures; • exposure limits and VaR limits.
Is a risk of loss resulting from incorrect or erroneous internal processes, human actions, operation of systems or external factors.
Identification of the operational risk is carried out, in particular, by means of: • collecting and analyzing information on operational risk incidents; • operational risk self-assessment; • scenario analysis.
Assessment and measurement of the operational risk is carried out by means of: • identifying the results of operational risk incidents; • estimating the results of potential operational risk incidents which may occur in the course of business activity.
Monitoring and controlling of the operational risk is carried out mainly by established operational risk indicators which make it possible to assess the change of operational risk level, and the factors that influence the risk level in business activities.
Reporting consists of communicating the level of operational risk and the effects of monitoring and control to the different decision-making levels. The frequency of individual reports and the scope of information are tailored to meet the information needs at different decision-making levels.
The business continuity plans were implemented in the key companies of PZU Group. The companies tested also the actions that secure correct operation of processes covered by the plans in the case of a breakdown.
Such units assess and measure compliance risk and take appropriate remedial actions which will prevent the materialization of such risk and will not adversely impact the
PZU Group companies deliver up-to-date information on compliance risk to the PZU and PZU Życie Compliance Bureau.
Compliance risk is assessed and measured by determining the effects of materialization of the following risks: • financial, resulting e.g. from administrative penalties, court verdicts, Office of Competition and Consumer Protection
Compliance risk is monitored mainly through: • analysis of reports received from the managers of the entities and organizational units; • monitoring of regulatory requirements and compliance of PZU Group companies’ operation to a changing legal environment; • participation in legislative work on amending the generally applicable regulations; • participation in the activities of professional organizations; • coordination of external control processes; • coordination of fulfilling the reporting requirements arising from the stock exchange regulations (PZU) and the statutory law; • popularizing knowledge on competition law in PZU Group and verification of employees’ knowledge on anti-trust law in selected fields; • monitoring of anti-trust rulings and proceedings conducted by the President of the Office of Competition and Consumer
Group companies; • participating in consultations with legislative and supervision bodies (PZU Group’s supervised companies)
upon drafting regulations (public consultation); • delegating representatives of PZU Group’s supervised companies to participate in committee works at supervision bodies; • conducting implementation projects for new regulations; • training employees of the Group’s companies in the field on new regulations, standards of conduct, and recommended remedial actions; • engaging independent external advisors in the process of adjusting new and drafted regulations; • issuing opinions on internal regulations of PZU Group companies and recommending potential changes with regards to compliance with legal provisions and accepted standards of conduct; • verification of procedures and processes with regards to compliance with legal provisions and accepted standards of conduct; • advance adjustment of documentation to upcoming changes of legal requirements; • monitoring claims handling procedures (with regards to their impact of future court proceedings); • improving and monitoring legal representation procedures in court proceedings; • systemic supervision of PZU SA over realization of compliance function in PZU Group companies.
Table on page 111 presents the results of the analysis of the net financial result and PZU Group’s equity sensitivity to changes in interest rate risk, currency risk, and equity risk.
Equity instruments risk *Assuming a 80% drop in the exchange rate of hryvnia vs. Polish zloty (with a 20% drop maintained for other currencies), the adverse impact on financial result and equity would amount to PLN 47 million and PLN 159 million respectively.
Change in assumptions for annuities in life insurance (in PLN million)
Table on page 112 shows a sensitivity analysis of the net result and equity to changes in the assumptions used to calculate the capitalized annuities. The analysis does not take into account the impact of changes in valuation of the deposits taken into consideration in calculation of the reserve on the net financial result and equity 7.7 Reinsurance activity
PZU uses concluded reinsurance contracts to mitigate its exposure to catastrophic losses (e.g. flood, hurricane)
PZU reinsurance partners are high, which is an evidence of reinsurer’s good financial standing and guarantees security to the Company.
In addition, PZU obtains a gross written premium from inward reinsurance from activity on the domestic and foreign market, mainly through facultative reinsurance.
By the end of 2015, Poland followed the so-called Solvency I
Until the end of 2015 the insurance companies were also obliged to maintain assets for covering technical reserves in excess of the required level. At the end of 2015, the assets to technical provisions ratio amounted to: 110.5% for PZU
and 114.6% for PZU Życie. The details are presented in the
From 1st of January 2016 the new capital requirements regime- Solvency II became effective in European Union.
PZU Życie's solvency margin coverage with own funds 206.2% 224.1% 235.5% 376.0% 332.5%
Contents: 1. Share and bond market 2. PZU’s share prices 3. Debt financing 4. Investor relations 5. Analysts’ recommendations 6. Dividend policy 7. Rating
In early 2015, there were two significant occurrences: the European Central Bank’s announcement regarding the purchase of treasury bonds of the Eurozone countries and the release of Swiss franc exchange rate. The latter triggered numerous doubts regarding the functioning of the bank system in Poland. The subsequent quarter of 2015 remained under a strong influence of ever-increasing problems of
The second half of the year brought a breakdown on the
High geopolitical risk on the European markets was reflected in a high volatility of main indexes on the Warsaw Stock
WIG20, remained at levels exceeding 2,500 bps; however, during the last session in the year, its value amounted to only 1,859 points, which was a drop of 19.7% compared to 2014.
By comparison, the same index ended the year 2014 with a decrease of more than 15.5%.
PLN 1 to PLN 0.1. The split did not result in any changes in the shareholding structure, the operation was purely technical
(i.e. without any influence on share capital). Following the split, the share price decreased 10 times and the number of shares increased 10 times. Split registration was preceded by an amendment to the By-laws made on 3 November 2015.
Min/max PZU share prices* following the session end in the years 2010-2015
PLN 2.6 billion, i.e. PLN 3.00 per share. The dividend rate
(calculated in relation to the share price at the end of 2015, i.e. PLN 34.0) amounted to 8.8%. Since its IPO, PZU has already paid out nearly PLN 15 billion in dividends, while the
PZU WIG MSCI Poland MSCI Central and East Europe MSCI Emerging Markets
PZU shares are characterized by a high level of liquidity. An average spread in 2015 reached only 7 bps. Only two other main market entities recorded such a low spread value. The average number of transactions involving PZU shares per session was 3,329 (a 33.4% increase year-on-year). The highest trading volume, i.e. 7,528,870 items, was recorded on 24 April 2015, which resulted from market speculations regarding a potential involvement of PZU Group in the capital increase at Nowa Kompania Węglowa. PZU denied this information. Similarly high trading volume took place on 3 December 2015 when the lower house of Parliament (Sejm)
received a draft of the tax on financial institutions. The market reacted negatively, which consequently led to a share price drop amounting to several percent (evidenced by high trading volume.)
PZU share price rate in 2015 continued to be strongly influenced by the decision to invest in consolidation of banking sector’s assets in Poland. On 30 May 2015, PZU concluded an agreement to purchase 25.19% Alior Bank shares at
However, by the end of 2015 the company did not manage
Average trading volume per session (item)* 1,872,704.5 1,635,531.0 1,882,186.2 2,119,549.9 2,658,833.2
As at the end of 2015, capitalization of WSE companies dropped by 9% and amounted to PLN 122 billion (including 26 new domestic entities that were first traded on WSE in 2015.)
On 16 October 2015, PZU Finance AB (a public company), subsidiary of PZU Group seated in Sweden, issued bonds of the total value of EUR 350 million. These bonds were
Market speculations regarding a potential involvement of PZU Group at Nowa Kompania Węglowa
Signing the agreement for purchase of Alior Bank First hospital in PZU portfolio Completion of the sale of PZU Lietuva
5 PFSA approval of purchase of shares of Alior Bank Issue of bonds (250 m Euro) Share split
W 3Annual General Meeting of Shareholders Announcement of the PZU 3.0 Strategy Signing the agreement for purchase of Alior Bank
Senior bonds issued in 2015 were purchased by approximately 60 investors (28% from Poland, 23% Holland, 18% Great
S&P rating at „A-”; yet, as a result of lowering PZU rating to
The issue of eurobonds constituted the implementation of PZU Group’s investment strategy in the scope of the management of the matching of assets and liabilities denominated in euro. PZU Group debt ratio as at 31 December 2015 amounted to 22.6%2 2 debt ratio calculated as the sum of liabilities from credits, loans and issuance of own debt securities to the sum of own capital and these liabilities.
Yield of PZU eurobonds vs. Polish treasury bonds maturing on 2019 (euro)
Board of PZU undertakes various investor relations activities aimed at improving transparency of the company. Therefore,
As at 31 December 2015, the shareholders of PZU with significant share packages were as follows: the State Treasury of the Republic of Poland
PZU shareholding structure in 2015 continued to undergo further geographical diversification. The foreign investors’
Poland, whose share amounted to 1.1% at the end of 2015.
January 2015 and devoted to the presentation of the PZU 3.0
change 2015 vs 2014 * State Treasury – 297.4 m shares (34.4% share in capital)
In 2015, representatives of PZU participated in: • 5 non-deal road shows in Boston, New York (3x), Frankfurt
In 2015, PZU participated in 234 meetings (a 25.8% increase year-on-year) with nearly 384 institutional investors and more than 130 meetings and teleconferences with analysts issuing recommendations concerning PZU shares.
In 2015, PZU continued also communication activities addressed to the large group of individual investors. With them in mind, we: • participated in 2 conferences for individual investors organized in Poland by Individual Investors’ Association: 19th Wall Street Conference in Karpacz – the largest meeting of individual investors in Central and Eastern
[Ten out of Ten: Effective Communication] program aimed at creating high communication standards for quoted companies to reach individual investors.
conferences for individual investors individual investors participating in chats with CFO
days spent on conferences and roadshows days spent by CEO/ CFO on meetings with investors
• The first place for the best annual report and the best online annual report for 2014, in the category of Banks and
Report organized by IRIP GLOSSARY. Management Report for 2014 was also awarded. In the past four years, PZU has twice received the first place in this contest, being also on the podium in the other two editions.
• Second place in the competition for best investor relations according to institutional investors – investor relation survey in WIG 30 companies held by Gazeta Giełdy
Board of PZU and investors; • ensuring understanding and approval for the PZU 3.0 strategy among the investors and analysts; • providing a broad market for PZU shares and bonds– by continuing pro-investors activities aiming to create a diversified (geographically, numerically and in terms of their profiles) group of investors who know the company and are well-informed; • wide coverage for PZU shares by analysts of investment banks and brokerages (sell-side) and ensuring the fair valuation of PZU shares by providing analysts with highquality information on the activities of PZU, industry trends, factors affecting the financial results and feedback on the analysis of the issued recommendations; • creating standards of investor relations for other quoted companies to follow; • Providing the Management Board of PZU with regular feedback on perception of PZU among capital market participants and wide knowledge on existing and potential shareholders of the company; • monitoring investors’ sentiment towards PZU shares and changes in shareholding structure in order to apply the most adequate IR actions and tools and asses effectiveness of IR plans.
from the recommendations valid in December 2015 amounted to PLN 43.00 and was lower by 13.5% compared with median as at the beginning of the year. Analogically, the maximum target price was PLN 49.803 and was 5.5% lower, compared to the maximum target price from January 2015.
The valuation of PZU shares by analysts was most significantly influenced by assumptions concerning growth and yield 3 prices calculated after a 1:10 stock split of insurance operations, achieved investment result and expectations towards dividend.
PLN 20.00(before stock split) per share, was recognized as part of the payment of the surplus capital.
GLOSSARY and is based on the following principles: • maintaining the own funds of PZU Group, excluding the subordinate debt, at the level not lower than 250% of the solvency margin (according to Solvency I GLOSSARY) of
PZU Group, including the subordinate debt, at the level of about 400% of the solvency margin (as at the end of the financial year) in order to maintain the financial security of the Group; • maintaining assets to cover the provisions of individual companies of PZU Group at a level not lower than 110%; • obtaining an optimal financing structure by replacing the capital surplus with subordinated debt up to an amount no higher than PLN 3 billion; • maintaining the equity level corresponding to Standard &
Poor’s AA rating; • providing funds for development and acquisitions in upcoming years; • no share issues by PZU in the upcoming years.
Dividend rate in the year (%) *** 8.8% 7.0% 11.1% 5.1% 8.4%
* dividend from surplus capitals paid in 2013 (PLN 2.00 per share), not included in dividend payout ratio ** historical data was calculated in 1:10 ratio as per stock split *** the rate calculated as dividend as at the ex-dividend date vs. share price as at the end of the given year
adopted the resolution on distribution of the net profit for the year ended 31 December 2014 in which it decided to allocate to the dividend payment the amount of PLN 2,590.6 million, i.e. PLN 30.00 per share (before split). 30 September 2015 was chosen as the date according to which the list of shareholders entitled to the payment was established.
On 1 December 2015, PFSA issued a recommendation on payment of dividend from profit generated in 2015. The supervisory body recommends that the insurance companies continue their prudent dividend policy using the generated profit to enhance their capital standing.
At the same time, the dividend payment should be limited to the maximum of 75% of the 2015 profit maintaining the capital requirement coverage ratio after dividend of at least 110%, in accordance with Solvency II. Simultaneously, the supervisory body allowed the payment of dividend from the entire profit generated in 2015, e.g. as long as the capital requirements cover as per Solvency II will stay at or above the level of 150% after the payment of planned dividends.
Group, the Management Board had not adopted a resolution concerning distribution of profit for 2015.
On 27 April 2015, Standard & Poor’s Rating Services confirmed the financial strength rating of PZU and PZU Życie at the
On 21 January 2016, Standard & Poor’s Rating Services lowered the financial strength rating of PZU and PZU Życie to the „A-” level with negative outlook for both companies.
to „A/A-2” respectively for long- and short-term liabilities in local currency. At the same time, the outlook was changed from positive to negative. Justifying its decision, the agency indicated that its analysts believe that legislative initiatives initiated by the new government in Poland will weaken sovereignty and effectiveness of key institutions in the country.
AB. In October 2015, PZU bonds valued at EUR 350 million were issued. These bonds were assimilated and together with eurobonds at value of PLN 500 million issued by PZU Finance
AB (a public company) on 3 July 2014, they constitute one series, a so-called „tap” issue. On 12 October 2015, S&P
Financial strength rating A- /Watch Neg/ 21 January 2016 A /stable/ 27 April 2015
Credit rating A- /Watch Neg/ 21 January 2016 A /stable/ 27 April 2015
Credit rating (long-term, in local currency) A- /negative/ 15 January 2016 A /positive/ 7 August 2015
Contents: 1. We address the needs 2. We value our people 3. We support the society 4. We care for the environment
As one of the largest financial institutions in Poland and CEE,
Group takes all efforts not only to provide its clients with the best Value Offer, but also build a better, safer future together with all interested parties.
Long-term, sustainable approach to doing business is reflected by PZU’s presence in RESPECT (index of socially responsible companies at Warsaw Stock Exchange) and CEERIUS
In its day-to-day operations, the Group follows the four rules: • We address the needs – PZU’s objective is to provide top quality products which are best fitted to client’s expectations; • We value our people – the Group is continuously developing skills and competences of its staff and creating good conditions for its employees to boost their personal interests; • We support the society – PZU makes efforts to establish stable, long-term relations with the local communities by supporting initiatives that have a positive impact on the environment; • We care for the environment – PZU takes responsibility for the environment where it operates.
is constantly analyzing data from all available communication channels and other information sources. The conclusions drawn from such analyses allow us to constantly improve our business processes and relations with our clients.
The tools used by PZU to analyze the clients’ needs and expectations are for example the following: • client satisfaction surveys – PZU and PZU Życie hold regular and advanced surveys concerning customer satisfaction and loyalty. PZU Group organizes satisfaction surveys during every process and in every sales channel. That helps us to gain even better understanding of the market. The surveys were carried out among over 50 thousand participants and their results allowed not only to better determine the clients’ needs, but also indicate organizational strengths and identify areas for improvement and change. The 2015 surveys showed that the satisfaction level among
University of Wrocław, became the basis for a number of initiatives and training programs (addressed to all employees of PZU) aimed at simplifying communication; • data mining models – advanced analytics supported by practical business know-how of experts allowed for development of models which effectively find information in data warehouses. Data mining models directly support all marketing and sales processes.
The service has been introduced to eight selected branches of the company. The solution implemented by PZU will allow for a better and more comfortable service of the deaf and hard of hearing.
PZU Group is among the leaders in the Central and Eastern
Europe market. The dynamically developing market environment forces continuous improvement of own products and processes and adaptation of development strategies.
PZU Group’s strategy, which concentrates on development and innovative solutions. The project is aimed to increase awareness of Polish companies in scope of risk management and promotion of „good practices” among clients. PZU wants to show that cooperation with the insurer does not have to be limited to products and can provide the entrepreneurs with long-term added value.
Corporate social responsibility permitting data processing only if approved by its owner. As a data administrator, the Group strictly controls the type of personal data that are introduced, time of their introduction, as well as persons responsible for introducing and processing them. The agents, partners, and other vendors must obey the same top standards as PZU and do everything in their power to protect the interests of their clients – especially in scope of processing their data in accordance with the law, gathering the data for specific purposes, and preventing further processing for other purposes.
PZU does everything in its power to create a working environment which assists in finding and strengthening the motivation of its employees, what raises the value of their work, and in reaching top effectiveness in the interest of the clients, stakeholders, and the entire environment of the
Consistent strengthening of intellectual and social capital by developing the talents of the Group’s employees is directly reflected in the main effectiveness indexes and is one of the key conditions to guarantee future growth of the company’s value.
PZU Group also does everything in its power to create a convenient environment for the handicapped. Everyone can take advantage of internal training courses and opportunities for career development. The recruitment process includes consideration of all applications which meet the expectations and requirements pertaining to knowledge, ability, and skills.
Enforcement of these rules allows for clear association of effectiveness with raises, the developmental offer, and promotions, and has also provided the managers with tools to manage employee motivation. What is equally important, all employees take active part in assessment, have the opportunity to share their opinions with their superiors, and take responsibility for their individual development.
Initiatives focused on personal development and increased job satisfaction strengthen employee motivation and establish a foundation for the Group’s market success. Many programs were launched over the course of 2015 in scope of personal and professional support for employees to assist the development of their skills in required areas. Examples of such initiatives include the PLUS program and the Manager 2.0, Leader 2.0, and SmartUp programs for managers. HUMAN
PZU Group encourages its employees to perform active volunteer work and support their local communities and organizations. Volunteering helps build permanent and long-lasting relations, which have positive effect on all of the
The most important volunteer projects included the following: • Wolontariat to radość działania [Volunteering is the joy of action] – a contest for PZU’s employees and agents. The main prize in the contest was a PLN 5 thousand grant for a chosen noble cause; • „Lekcja z Prezesem” − Koalicja Prezesi – Wolontariusze
leaders gathered 2537 individuals, who prepared assistance for 82 families at the approximate value of PLN 160,000.
Gather a group of 3 PZU employees – choose your star, i.e. the leader
Group’s employees follow in all of their actions. The Rules are: • wisdom; • simplicity; • imagination.
In scope of prevention, PZU undertakes numerous initiatives aimed to minimize the probability of events − or their potential consequences – entailing the need to handle various types of claims.
Fire Department and State Police Department for years by providing funding for firefighting and flood prevention equipment as well as professional training courses.
Pro-health prevention is aimed to minimize the negative effects of events by spreading knowledge about safety and health promotion through mass running events supported by
PZU Health Routes in Poland. Each one is equipped with exercise facilities and information boards, which include exercise plans tailored to the needs of users of different age groups and various levels of advancement.
PZU also supported numerous mass running events in 2015. The most important projects included ultramarathons
(Bieg Żołnierzy Wyklętych [Run of Cursed Soldiers]), or fun (The Color Run). 138 thousand people took part in last year’s running events supported by PZU. In total, they ran 1,780,775 kilometers – twice as much as in 2014.
PZU and during special events. The second stage of the campaign carried out in 2015 was focused on the initiative for active pedestrian crossings and attracting attention to the fact that responsibility on the road falls to both the driver and the pedestrian. The message is expressed in the following slogan: „If you love, watch out for the pedestrians. They can be your loved ones.” In 2015, PZU
Each crossing is equipped with a special light system, which turns on when the pedestrian approaches the crossing, anti-slip mats reducing breaking distance, and a system of
PZU Festiwal Biegowy - Krynica Zdrój 1,461km PLN 14,610.00 10. PZU Półmaraton Warszawski 37. PZU Maraton Warszawski
Pomagać” [We Help to Help], the PZU Foundation contributes financially to projects carried out by non-governmental organizations and institutions throughout Poland, the statutory objectives of which fall under the scope of the Foundation’s support. Its operations are focused on the following areas: education, social care and assistance, culture and arts, and health care.
The PZU Foundation is financing education initiatives in rural areas and small towns which are run by credible local partners. The top initiatives are chosen by means such as the successive editions of the „Z PZU po lekcjach” [With PZU After
[Fear-Nots in a Pack] campaign was launched in the second half of 2015. The campaign features 5 Fear-Nots – funny, yet smart characters with an educational mission, i.e. to teach children the rules of safety.
The Foundation is also a partner of Krajowy Fundusz na rzecz
Dzieci [National Fund for Children] – an organization providing support to gifted children by offering them educational aides and scholarships.
The social care and assistance activity of the Foundation is aimed mainly to prevent social marginalization and provide equal opportunities to the disabled. The projects realized in this scope in 2015 include the following: • Świetlica – moje miejsce [The Community Center is My
Disabled People Able with PZU] – the objective of this program is to raise the self-reliance, ability, and social activity of the disabled and provide support to their families by organizing care for the disabled in rural areas and small towns up to 30 thousand inhabitants.
In 2015, PZU acted as a sponsor and patron of various national and local cultural events and focused on initiatives associated with Polish national and cultural heritage. The
Museum, and the National Museum in Kraków. For many years, PZU has been contributing to the purchases of museum exhibits and providing promotional and conceptual support. As a Patron of Polish Culture, the Group also actively participated in the organization of Noc Muzeów [Night of the Museums], preparing special PZU zones promoting art and culture in unconventional ways. In 2015, the Group’s support was spread over the 19th-Century Arts Gallery at the National Museum in
Group was also the patron of the celebrations commemorating the anniversary of the Warsaw Uprising and, since 2015, also serves as the patron of the Warsaw Uprising Museum, thus contributing to preserving the memory of this special event in history of Poland.
The health care initiatives undertaken by the PZU Foundation are focused mainly on financial contribution to purchases of specialized medical equipment (such as insulin pumps and respirators for newborns) and rehabilitation equipment, and to the treatment costs of people in difficult financial situation. For years, the Foundation has been working together with organizations such as Stowarzyszenie Pomocy
Surgically Ill Children]. PZU is also the strategic sponsor of the „Misie Ratują Dzieci” [Bears Save Children] association, which offers comprehensive rehabilitation and psychological care for children at the Therapy Center in Dźwirzyn near
Magellan Award, and second place in the „Best 25” list organized by the League of American Communications
Professionals); • PZU took sixth place in the 2015 Employer of the Year ranking of AIESEC – the biggest students’ association in
Latvia − BALTA and Lietuvos Draudimas – received the title of „Best Employers” in Baltic states; • Link4 won the 2015 Responsible Employer – HR Leader
Contest, a national human resources (HR) program. The program aims to raise awareness of and promote positive models and operating strategies in scope of HR policy and the strategy of integrating HR and business affairs; • PZU took first place in the 2015 Institution of the Year ranking of MojeBankowanie.pl in categories of „Best Onsite
Managing environmental impact is one of the key elements of the Group’s CSR activity GLOSSARY. PZU’s initiatives in this area come in two forms: responsible internal resource management and environmental sensitivity and awareness building among stakeholders: employees, clients, business partners, suppliers and representatives of local communities.
European Union, and cars, with proper driving techniques, use only about 4 l/100 km in urban areas; • economic management of resources and raw materials.
Extensive use of electronic data carriers and limiting the use of paper in business is an important aspect of this activity. In recent years, equipment such as new printers, which automatically print on two sides, and application of irrelevant office materials for office printing allowed us to reduce paper consumption by about 3% or 3,3 million sheets annually. In order to reduce power consumption, we install energy-saving lighting and heating systems. We also focus on responsible waste management and strive to achieve full recycling; • choice of the new back office headquarters with attention to ecological aspects. The Konstruktorska Business Center
Building, which houses the PZU back office, is powered entirely by renewable source energy and offers over 30 locations for charging electric cars. The building was designed with special attention devoted to environment protection – it has the BREEAM certificate. Categories assessed in the certificate include: air quality, energy and
We care of the environment: We introduced replacement bikes to our offer
We fulfill this role not only by complying with a wide range of codes, but also by working on their continuous improvement. We believe that we can offer these wise changes to the world that surrounds us.
The new rules are in force as at 1 January 2016.
Code of Good Practices. The document is available on the website: On 22 July 2014, Polish Financial Supervision Authority issued
The rules and information on how to use them can be found on the PZU website: zasady-ladu-korporacyjnego 10.2 Application of Good Practices of Companies quoted on WSE
Meeting, and therefore the appropriate application of the above rule. Moreover, in our view, the company’s principles concerning participation in Shareholders’ Meetings applicable in PZU allow for exercising rights from shares and protect interests of all shareholders. The communication regarding non-compliance with the principle included in Section VI pt.10 was submitted by the Issuer on 29 January 2013.
Ordinance on current and periodic information, the Issuer discloses information regarding remuneration, awards or profits for each member of the managing and supervisory bodies in PZU in the annual report; • as for the recommendation specified in Section I pt.9 concerning gender parity principle to be followed in the
Company’s bodies. The composition of the Management and Supervisory Board is determined based on a decision of the Supervisory Board or a General Shareholders’ Meeting, respectively, and other factors, such as gender, are not taken into account; • with regard to the recommendation referred to in Section
declared their readiness to apply the Principles to the furthest objectively possible extent, taking into account the principle of proportionality and the „comply or explain” rule, arising from their content. These statements of the Management Board and the Supervisory Board of PZU were confirmed by their appropriate resolutions.
announced the decision on implementing the Principles during the General Shareholders’ Meeting that took place on 30 June 2015. The General Shareholders’ Meeting of PZU
Supervision Authority of 22 July 2014 with the exception of the rules that the General Shareholders’ Meeting of PZU
Shareholders’ Meeting, e.g. by ensuring the active electronic participation in meetings; it should be emphasized that the current shareholders of PZU can follow the broadcast of the meeting, but the Company decided not to introduce the so-called e-GSM; in the assessment of
Corporate governance made based on the experience and team leadership skills, taking into account the criterion of independence; it must be emphasized that, in accordance with the Code of Commercial Companies GLOSSARY and the By-laws of PZU, there is a separate function of a chairperson in the Supervisory Board of PZU; the composition of the
PZU adopted a solution according to which the decision about appointment and dismissal of the person heading the internal audit unit is made, taking into account the opinion of the Audit Committee of the Supervisory Board; the same applies to the appointment and dismissal of the person heading the compliance unit; the Management Board consults the Audit Committee about such decisions.
The General Shareholders’ Meeting of PZU decided against implementing the following principles: • rule specified in § 10.2 in the following wording: „Introduction of personal entitlements or other special entitlements for shareholders of a supervised institution should be justified and serve realization of the objectives of this supervised institution. Having such entitlements by a shareholders should be reflected in a basic act regulating operation of the institution.”
State Treasury; • principle specified in § 28.4 in the following wording: „A decision-making authority shall assess whether the agreed remuneration policy is beneficial to the development and safety of the supervised institution.”
- waiver from applying the principle is justified by the scope of application of the remuneration policy assessed by the decision-making authority being too broad. The remuneration policy for persons performing key functions and not being the members of the supervisory body or governing body should be assessed by their employer or principal, which is the Company represented by the
– there is both an internal audit unit and a compliance unit at PZU; • the rules specified in Chapter 9 – Execution of Rights
odpowiedzialnością sp. k. with the registered office in Warsaw, ul. Inflancka 4A, 00-189 Warsaw, entered on the list of entities authorized to audit financial statements under No.
3546 by the National Chamber of Statutory Auditors as the entity authorized to audit financial statements, with whom an agreement on audit and review of financial statements will be concluded.
PZU adopted the resolution on splitting all stocks of PZU by decreasing the nominal value of each PZU share from
PLN 1 to PLN 0.1 and increasing the number of PZU shares which constitute the stocks capital from 86,352,300 to 863,523,000. The split of shares was performed through the exchange of all shares in 1:10 ratio. The split of stocks had no influence on the share capital of PZU.
Extraordinary General Shareholders’ Meeting of PZU on 7 January 2016 the shareholders of PZU with significant share packages were as follows: the State Treasury holding 297,420,578 shares, i.e. 34.44% of the share capital of
Aviva BZ WBK holding 49,156,660 shares, i.e. 5.69% of the share capital of PZU and the right to 49,156,660 votes at the
There were no significant changes in the ownership structure of blocks of PZU shares in 2015.
Other attestation services including review of separate/consolidated financial statements 248 248
at the date of the General Shareholders’ Meeting, with the reservation that for the purpose of determining obligations of parties acquiring material blocks of shares provided for in the
Act on Public Offering and the Act on Insurance Activity, such voting restrictions are considered non-existent. The restrictions do not apply to: • shareholders who held shares entitling to more than 10%
In case of any interpretation doubts with respect to the voting restrictions, Article 65.2 of the Civil Code will apply. GLOSSARY
Shareholders’ Meeting introducing the restriction, held shares entitling him to more than 10% in the total number of votes in the Company, drops below 5% of the share capital.
Shareholders’ Meeting in the form of a resolution passed by a majority of three fourths of votes. In cases specified in the
Register. The Supervisory Board can approve the unified amended text of the By-laws.
Number of shares / rights to shares as of the date of
Management Board 1. Michał Krupiński - na na 3. Roger Hodgkiss - na na 4. Beata Kozłowska-Chyła - na na 6. Robert Pietryszyn - na na 7. Paweł Surówka - na na 8. Andrzej Klesyk na - na 9. Tomasz Tarkowski na 800 na 10. Ryszard Trepczyński na - na
Supervisory Board 1. Paweł Kaczmarek - na na 2. Marcin Gargas - na na 3. Maciej Zaborowski - na na 4. Marcin Chludziński - na na 5. Eligiusz Krześniak - na na 7. Jerzy Paluchniak - na na 8. Piotr Paszko - na na 9. Radosław Potrzeszcz - na na 10. Aleksandra Magaczewska nd - na
Shares or rights to shares held by management and PZU supervisory personnel 10.8 General Shareholders’ Meeting, Supervisory Board, and Management Board
Supervisory Board; • acquisition or disposal by the issuer of real property, perpetual usufruct or share in real property or in perpetual usufruct with a value exceeding the equivalent of a gross amount of EUR 30.0 million (thirty million euro).
The General Shareholders’ Meetings are held in Warsaw and convened by placing an appropriate announcement on PZU’s website in accordance with the method for providing current information specified in the Act on Public
Instruments to Organized Trading, and Public Companies of 19 July 2005, i.e. in the form of current reports. Such announcement should be made no later than 26 days before the date of the General Shareholders’ Meeting. From the date of convening the General Shareholders’ Meeting the announcement with materials presented to shareholders at the General Shareholders’ Meeting are available on
PZU’s corporate website (www.pzu.pl) in section „Investors relations”, tab „General Shareholders’ Meeting”. A duly called
Companies GLOSSARY and the By-laws. Only persons who were shareholders of the issuer 16 days before the date of the
Member has to present a written statement that all independence criteria provided for in the By-laws have been met and inform the Company when the criteria are no longer met. In addition, the By-laws 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
On 30 June 2015, with effect on 1 July 2015, the General
Board to Paweł Kaczmarek, and the function of the Secretary of the Board to Dariusz Filar.
Board of PZU was as follows: • Zbigniew Ćwiąkalski – Chairman of the Board; • Paweł Kaczmarek – Deputy Chairman of the Board; • Dariusz Filar – Secretary of the Board; • Zbigniew Derdziuk – Member of the Board; • Aleksandra Magaczewska – Member of the Board; • Dariusz Kacprzyk – Member of the Board; • Jakub Karnowski – Member of the Board; • Alojzy Nowak – Member of the Board; • Maciej Piotrowski – Member of the Board.
The terms of office of the members of the Supervisory Board
Zbigniew Ćwiąkalski Chairman of the Board from 8 July 2015 to 6 January 2016 In the Board from 10 June 2010 to 6 January 2016
Dariusz Filar Secretary of the Board from 8 July 2015 to 6 January 2016
In the Board from 10 June 2010 to 6 January 2016
Zbigniew Derdziuk Member of the Board from 30 June 2011 to 6 January 2016
Aleksandra Magaczewska In the Board from 18 June 2014 to 6 January 2016 Chairman of the Board from
Jakub Karnowski Member of the Board from 18 June 2014 to 6 January 2016
Maciej Piotrowski Member of the Board from 30 May 2012 to 6 January 2016
started on 1 July 2015 and will end after the lapse of three financial years. The mandates of members of the Supervisory
Board expire not later than on the date of the General
Supervisory Board of PZU was as follows: • Paweł Kaczmarek – Chairman of the Board; • Marcin Gargas – Deputy Chairman of the Board; • Maciej Zaborowski – Secretary of the Board; • Marcin Chludziński – Member of the Board; • Eligiusz Krześniak – Member of the Board; • Alojzy Nowak – Member of the Board; • Jerzy Paluchniak – Member of the Board; • Piotr Paszko – Member of the Board; • Radosław Potrzeszcz – Member of the Board.
He gained significant experience in the development, acquisition and transformation of commercial companies and their restructuring and ongoing corporate support. In the course of his professional activity he carried out many legal audits and advised on complex transactions involving the purchase and sale of real estate. He coordinated the legal aspects of major real estate projects and investment processes including commercial buildings (shopping malls, gas stations, supermarkets network). He has considerable experience in conducting litigation as well as in the conduct of proceedings before the authorities and administrative courts.
Maciej Zaborowski – Secretary of the Supervisory Board, in the Supervisory Board since 7 January 2016
December 2005 to September 2007 he performed activities commissioned by the Ministry of
Rogalskiego legal office. Since January 2013 he has been working as a mediator for the
Mediation Center at the Polish Bar Council. Since May 2013 he has been keeping his own law office as an advocate. Since 2014 he has been a Member of the Young Advocates Initiatives
Chairman of the Founders’ Board of the Fundacja Odpowiedzialność Obywatelska (Social
Graduate from the Center for European Regional and Local Studies and Faculty of Journalism and Political Science of the University of Warsaw. Since 2004 he has been associated with
He has nine years of experience in managing commercial law companies. The main domain of the companies’ activity was financing the investment projects, advising in strategic planning, restructuring processes, and audit and internal controlling. He is a licensed coach and advisor specializing in strategic and organizational planning and project management. He is also experienced in defining and managing advisory projects in public administration and business.
Wspólne”, „W sieci”, „Wprost”. He developed his personal accomplishments through pro publico bono activities by leading a think tank of the Republican Foundation as a co-author and expert, concerning especially the context of the role the State Treasury companies play in realizing the objectives of the state, managing public sector in the context of focusing on development goals and supporting national economic expansion through cooperation carried out within public sector. His main professional competencies are: ability to manage a commercial law company concerning the organizational, legal and financial aspects, experience in corporate supervision, skill in conducting processes of reorganization, restructuring, cost optimization and internal control, capacity of guiding horizontal controlling and auditing processes, qualification to define and supervise projects – especially the ones financed with EU funds, possession of the expertise in the field of energy and heat industry, and knowledge about the models of realizing the objectives of the state by the state-owned companies.
Eligiusz Krześniak – Member of the Supervisory Board since 7 January 2016
He is a graduate of the Faculty of Law and Administration, University of Wroclaw, where he also obtained a degree of Ph.D. Moreover, he studied at the Law Faculty of the Philipps-Universität
Marburg and Rheinische - Wilhelms - Universität Bonn as well as at the State University of
Chambers Europe and Legal 500; according to the annual ranking of the Rzeczpospolita he won twice, in 2013 and 2014 (in 2014. ex aequo with two other persons) as the best TMT lawyer.
Bank Polski SA. He entered the list of recommended arbitrators of the two largest arbitration tribunals in Poland - the Arbitration Court at the Polish Chamber of Commerce and the
In 1984, he graduated from the present Warsaw School of Economics and in 1992 from University of Illinois at Urbana – Champaign, USA, M.A. in economics. In 1993 he completed studies in banking, finance and capital markets at Exeter, UK, and in 1996 economic studies at Free
„Integracja europejska. Szansa dla Polski?” („European Integration. Opportunity for Poland?”) and a book titled „Banki a gospodarstwa domowe – dynamika rozwoju” („Banks and households – the dynamics of development”). He has been a member of scientific organizations and professional editing boards of periodicals, among others Foundations of Management (Member), Journal of Interdisciplinary Economics (Editor in Chief), Yearbook on Polish European Studies, Mazovia
Regional Studies, Gazeta Bankowa and a reviewer in PWE S.A. Warszawa editing company. He is a long-term Committee Member of Teraz Polska Award and Scientific Council Member. He gained his professional experience working as the Head of International Business Relations
University of Warsaw, the Deputy Dean in charge of foreign cooperation at Management Faculty of the University of Warsaw, the Dean at Management Faculty of the University of Warsaw and the Deputy Rector in charge of scientific research and cooperation at the University of Warsaw. He is a lecturer at the University of Warsaw, and also in France, UK, U.S., Russia, China and Korea.
Further, he worked as: advisor to the Prime Minister, to the Minister of Agriculture, the President of University Sports Association at the University of Warsaw, a Member of the Advisory Committee
NewConnect at Management Board of Warsaw Stock Exchange, a Member of the Foundation
S.A., PKO BP S.A., JSW S.A., the Chairman and the Deputy Chairman of the Supervisory Board in
Management. Since 2003, he works as a Certified Internal Auditor (CIA). In 2005, he achieved the title of Statutory Auditor (No. 10649) and successfully passed all ACCA exams. In 1999–2000, he gained his professional experience as an assistant of a Brand Manager in Zielona Budka
(promoted in 2005). Since 2007, he worked in audit department of KPMG located in Wrocław, where in 2008 he was promoted to a Senior Manager. He specialized in the study of financial statements prepared in accordance with Accounting Act and International Financial Reporting
Piotr Paszko – Member of the Supervisory Board since 7 January 2016
Wrocław University of Economics. He was a scholarship holder of Deutscher Akademischer
Austauschdienst – Universität Mainz; faculty name: Volkswirtschaftslehre. Manager, entrepreneur and counselor with nearly twenty years of professional experience in the business counseling sector. Manager of tens of consulting projects connected with organization of investment and development activities, business restructuration and public-private partnerships. Provided counseling support concerning designing new development directions, privatization, preparation of investments, improving management, implementation of financial control systems and mergers and acquisitions processes to a number of energy and industrial companies. He is a member of the boards of capital companies. He has been combining counseling activity with research for several decades. Authored a number of research papers and expert opinions. as awarded the Medal for Long Service by the President of Poland.
Radosław Potrzeszcz – Member of the Supervisory Board since 7 January 2016
Furthermore, he was a court and advocate trainee. Member of the Bar Council in Wrocław. He co-designed post-graduate studies in a form of the Company Academy at the Warsaw School of
Economics, where he is a lecturer. In addition, he runs classes at other post-graduate studies, i.a.
for bank analysts, courses concerning business insurances and trainings for advocate trainees.
Since the Autumn of 2006 he has been an expert in the Committee of Inquiry investigating the solutions concerning ownership and capital changes in banking sector and the activities of banking supervisory bodies in the period of 4 June 1989 – 19 March 2006 (the so-called
Board in TVP S.A. and in Polskie Radio S.A. He authored a monograph titled: „Kapitały własne spółek handlowych” („Equity of Commercial Companies”), published by the Association of
RThe Supervisory Board exercises constant supervision over the Company’s activities in all aspects of its business. In accordance with the By-laws, the powers of the Supervisory
Board include: • review of the Management Board’s report on the activities of the Company and financial statements for the previous financial year in terms of their compliance with the accounting records, documents and facts; • review of the motions of the Management Board concerning profit distribution or loss coverage; • presenting the General Shareholders’ Meeting with a written report on the results of the review described above and submitting a brief annual assessment of the situation of the Company, including internal controls and key risk management and an annual report on the work of the
PZU Życie; • selection of the entity authorized to audit the financial statements which will audit the annual financial statements of the company; • wording of the consolidated amended By-laws; • approval of the long-term plans for the development of the company and annual financial plans drafted by the
Moreover, the Supervisory Board grants consent to: • acquisition or disposal of a real property, perpetual usufruct or share in the real property or in perpetual usufruct exceeding the equivalent of EUR 3.0 million; • conclusion of a material agreement by the Company and its related party, as understood by the Ordinance on current and periodic information, excluding standard agreements concluded by the Company on an arm’s length basis as part of its operating activities; • conclusion of the agreement by the Issuer with the underwriter referred to in Article 433.3 of the Code of
Commercial Companies; • advance payment against expected dividend; • creation and closing of regional and foreign branches.
Supervisory Board specifying its organization and the manner of performing activities.
Resolution of 9th October 2012 and specify its composition and the way in which its members are appointed, the tasks and the scope of its activities and the manner of calling the
Additionally, the By-laws stipulate that a vote may be cast in writing through another member of the Supervisory Board.
Supervisory Board are adopted in an open ballot, except for resolutions concerning appointment of the Chairman,
Board, delegation of members of the Supervisory Board to temporarily fill in for members of the Management Board and for resolutions with respect to appointing, suspending and dismissing the CEO, members of the Management Board or the entire Management Board as well and taking decision to stop such suspension which are adopted in a secret ballot.
Company competent for the discussed issue selected by the Management Board and other persons invited by the
Board for commissioning specific controls in the Company to be exercised by an internal or external entity.
The Supervisory Board appointed the Audit Committee on 3 June 2008. Composition of the Audit Committee as at 1
January 2015: • Dariusz Filar – Chairman of the Committee; • Dariusz Daniluk – Member of the Committee; • Tomasz Zganiacz – Member of the Committee.
Audit Committee: • Dariusz Filar – Chairman of the Committee; • Dariusz Kacprzyk – Member of the Committee; • Paweł Kaczmarek – Member of the Committee.
As at 31 December 2015, the composition of the Committee had not changed.
Composition of the Promotion and Compensation Committee as at 1 January 2015: • Zbigniew Ćwiąkalski – Chairman of the Committee; • Zbigniew Derdziuk – Member of the Committee; • Dariusz Filar – Member of the Committee; • Maciej Piotrowski – Member of the Committee; • Tomasz Zganiacz – Member of the Committee.
Meeting of PZU, at the session of 8 July 2015 the Supervisory
Promotion and Compensation Committee: • Zbigniew Ćwiąkalski – Chairman of the Committee; • Zbigniew Derdziuk – Member of the Committee; • Dariusz Filar – Member of the Committee; • Maciej Piotrowski – Member of the Committee; • Paweł Kaczmarek – Member of the Committee.
According to the regulations of the Strategy Committee adopted by a resolution of the Supervisory Board of 4 April 2013, it is an advisory and consultative body to the Supervisory Board and is to improve efficiency of the
In relation to the appointment of the Supervisory Board of PZU
As at 31 December 2015 the composition of the Committee did not changed.
Members of the Management Board, including the CEO, are appointed and dismissed by the Supervisory Board. The CEO
of the new term appointed before the end of the current term may apply to the Supervisory Board for appointing other members of the Management Board of the new term before the end of the current term.
December 2015, and the Supervisory Board of PZU entrusted temporary performance of duties of CEO to Dariusz Krzewina.
Acted as Chairman of the Management Board of PZU between 9 December 2015 and 18 January 2016 Chairman of the Management Board of PZU Życie since 10 August 2007 Member of the Management Board of PZU since 15 March 2013 Joined the Group in September 1993
Member of the Management Board of PZU since 21 December 2010 Member of the Management Board of PZU Życie since 29 January 2010 Joined PZU Group in 2000
Member of the Management Board of PZU between 21 April 2011 and 19 January 2016 Member of the Management Board of PZU Życie between 1 July 2011 and 29 January 2016 Joined PZU Group in 1996
Mass client insurance, governing the network of PZU branches and channels of distribution, contact center and post-sale support
Member of the Management Board of PZU Życie between 3 February 2012 and 29 January 2016 Director of PZU Group between 7 February 2012 and 29 January 2016
The regulations of the Management Board were adopted by the Management Board on 2 October 2012, amended with a
Management Board: • Michał Krupiński – Chairman of the Management Board; • Roger Hodgkiss – Member of the Management Board; • Beata Kozłowska-Chyła – Member of the Management
Board; • Robert Pietryszyn – Member of the Management Board; • Paweł Surówka – Member of the Management Board, appointed on 20 January 2016.
Dariusz Krzewina graduated from the Faculty of Economy and Sociology of the University of Łódź
and post-graduate studies in insurance at Warsaw School of Economics. He has worked in the insurance industry for many years. From September 1993 to August 1998 he was employed in
PZU Życie as Head of Sales Department, Deputy Director and Director of the Insurance Office.
Życie. In the period from September 1998 to March 2000, he was the General Sales Director and, from April 2000 to August 2001, a Member of the Management Board of STUnŻycie ERGO
Director of the Group Insurance Office in PZU Życie and in January 2006 he started his work as the Coordinating Director in charge of Corporate Clients. He has been in the Management Board of PZU Życie since March 2007. From August 2007 to September 2015 and, again, since 29
Michał Krupiński graduated from Warsaw School of Economics. He was awarded a diploma with distinction after the completion of expert studies in Economics at Catholic University in Louvain.
Przemysław Dąbrowski – Member of the Management Board in PZU since 21 December 2010 / PZU Życie since 29 January 2010
Technology and a Post-Graduate Management Course. He graduated from MBA studies at the University of Illinois and from the Warsaw-Illinois Executive MBA program. He has vast experience in financial management services for the insurance sector, in managing financial investments and large financial transactions. He has knowledge and experience in accounting, tax and actuarial issues. He started his professional career in 1993. From 1993 to 1998 he worked at Whirlpool Polska sp. z o.o. as an analyst and financial controller. In 1998–2000 he was the Treasurer at AIG Poland. In the years 2000–2001, he was the Financial Director and a Member of the Management Board of Creative Team S.A. (the Elektrim Group). From 2001 to 2006, he was the Planning and Controlling Director at PZU. In 2006–2008, he worked at at
Intouch Insurance Group, a holding company part of RSA Group. Since 2009, he has been in the
Beata Kozłowska-Chyła – Member of the Management Board in PZU since 19 January 2016 / PZU Życie since 29 January 2016
Central Committee for Degrees and Titles took action in order to award Beata Kozłowska-Chyła with habilitation in Legal Sciences. She was performing the functions of the Director of State
Ostrołęka. She was an advisor to the Minister of Finance. She was a Member of the Supervisory
Member of the Supervisory Board of Telewizja Polska S.A. Until January 2016, she provided legal advice in a legal advisory office. What is more, since 2010, she has been a recommended arbitrator of the Arbitration Court of the Polish Chamber of Commerce in Warsaw. Authored a number of scientific publications concerning company law, securities law and issues of ownership transformation and privatization of state companies. She is also the author of legal expert opinions prepared on the order of the Parliament, covering i.a. the draft of the Act on
Robert Pietryszyn – Member of the Management Board in PZU since 19 January 2016
„Company Management” at the Oscar Lange University of Economics in Wrocław. He started his professional career as a Management Board proxy for Kronn sp. z o.o., where, between 2001 and 2004, he worked on financial risk management, receivables purchasing and representation concerns (i.a. acquisition of several major entities). Between 2004 and 2006, he worked as a
Project Consultant/Project Manager at PROFES Capital sp. z o.o. and focused on the area of investment banking: company restructuring, mergers transactions, financing (Polcolorit S.A.) and crisis management. In 2006, he was employed as an Expert for PKO BP S.A., where he worked on optimization of bank’s operations and cost restructuring. At the same time, he was also a
(Municipal Stadium, Wrocław). His activities focused on supervising investment process (the biggest investment in the history of post-war Wrocław: PLN 900 million), strategy and business operations. At present, he is also a Member of the Supervisory Board of LOTOS Group S.A. In the past, he used to perform the role of a Member of the Supervisory Board of the following companies: DOLMED SA, Polcolorit SA (company quoted on WSE), Wrocław 2012 sp. z o.o.,
Dystrybucja Rzeszów sp. z o.o. (Chairman of the Supervisory Board), Ruch S.A. (Chairman of the Supervisory Board, company quoted on WSE), Pri Bazalt S.A. (Deputy Chairman of the Supervisory Board). In PZU Group, he is responsible for foreign operations (international activity), health business, marketing, client relation management, bancassurance and property management.
Sławomir Niemierka – Member of the Management Board of PZU Życie and Director in PZU Group since 19 March 2012
Harvard Business School. He has the qualifications of legal advisor. Co-authored a number of publications on financial law and bank supervision. He was an academic teacher at post-graduate courses at Polish Academy of Sciences, the University of Warsaw and the Academy of Insurance and Finance. For many years, he worked in the National Bank of Poland, where he headed the Inspection Office responsible for inspections carried out in banks. Member of a Steering
Lynch. He represented the Bank in the CEE region by building relationships with investors. His activities covered counseling on portfolio management, asset allocation and their diversification, alternative financial instruments and market analysis. From 2013 to 2015, he was a Member of the Management Board of Boryszew S.A., the Office Director in charge of automotive sector development, and the CEO of the subsidiaries from the automotive sector. During his time spent in Boryszew Group, he was responsible for strategic and operational management and supervision over budget policy of the motor sector. His activities covered preparation and implementation of a business strategy for automotive area. Moreover, he was responsible for mergers and acquisitions performed as a part of expansion policy and disinvestment of Boryszew
– specialization company management. Is also a Certified Internal Auditor and qualified to sit on supervisory boards of the State Treasury companies. He gained his experience and vast practical knowledge on functioning of large economic entities during his work in the area of supervision, institutional control and internal audit. As a member of supervisory boards of commercial law companies, he participated in decision-making processes which were strategically vital to current operations of these entities, concerning i.a. such areas as: investments, planning, IT strategy, acquisition, or finance operations. Between 2003 and 2005, he was employed by the Municipal
Office of Szczecin. He worked in the Internal Control Division, and afterwards he was an internal auditor. From 2006 to 2008, he worked in Ciech Group. He was a Member of the Supervisory
Management Board and Corporate Issues, then – as the Director of the Audit and Internal
Control Office. Moreover, he sat in management boards of many companies, i.a. Enea S.A., IKS
Solino S.A. and Zakłady Azotowe w Tarnowie – Mościcach S.A. At the present he is a Member of Supervisory Board of Azoty S.A. Group. Since January 2016 again employed in PZU. He is a
Graduate from Economy at Warsaw School of Economics. He earned the title of Master of
Business Administration (MBA) at London Business School along with the dean’s award for the best graduates. He has many years of experience in financial services in Poland and abroad.
Consulting Group, where he has held the position of a Junior Partner and was responsible for insurance and banking consulting e.g. in the following fields: motor claims handling, organizational changes, business strategy creation, and intensification of sales operations. He took part in several bank mergers where he acted as an expert. In PZU Group, he is in charge of
In accordance with the regulations of the Management Board, resolutions of the Management Board are especially required for: • adoption of a long-term plan for development and operations of the company; • adoption of an action and development plan for PZU Group; • adoption of an annual financial plan and a report on its implementation; • approval of the financial statements for the previous financial year and the Management Report on the activities of the company; • approval of a motion concerning profit distribution or loss coverage; • determination of premiums in the compulsory and voluntary insurance and general voluntary insurance terms and conditions; • determination of the scope and size of outward reinsurance and the tasks for inward reinsurance; • adoption of an annual audit and control plan and a report on its implementation with conclusions; • determination of the terms and conditions of investments, prevention and sponsoring; • giving sureties and guarantees (excluding insurance operations) and taking out and giving credit facilities or loans by the Company (excluding credit facilities and loans given from the Company’s Social Benefits Fund); • appointment of a commercial representation.
The By-laws of PZU do not provide for any special rights of the
Separate non-competition agreements regulate among others refraining from post-employment competition with PZU in exchange for damages. In 2014–2015, PZU Group companies included in consolidation did not grant any loans or similar benefits to members of their management boards, higher level managers or members of their supervisory boards.
including bonuses and special prizes: including bonuses and special prizes: Contracts concluded with high level managers – High level management (Directors of PZU Group), including: Total estimated valued of benefits in kind allocated by PZU and its subsidiaries (PLN thousands)
Management Board; however, the areas that affect business results have much greater impact on remuneration than the support areas.
On 1 July 2015, the Supervisory Board of PZU appointed Rafał
As at 31 December 2015, PZU Group Directors were the following: • Tobiasz Bury; • Przemysław Henschke; • Sławomir Niemierka
As at the date of preparation of this Report on the activities, the following people have been performing the role of a Director of PZU Group: • Sławomir Niemierka; • Tomasz Karusewicz; • Roman Pałac.
Jakub Karnowski 1 1 Ryszard Trepczyński has not been appointed to the Management Board of PZU new term of office, which run began on 1 July 2015.
2 The indicated amounts include remuneration for non-competition PLN 185 thousand (PZU) and PLN 100 thousand (PZU Życie) and the remuneration for the notice period. 3 Rafał Grodzicki was dismissed from the position of Director of the PZU Group on 30 June 2015 and appointed to the Management Board of PZU new term of office, which run began on 1 July 2015. 4 Witold Jaworski was appointed to the Management Board of PZU on 1 September 2015. 5 Barbara Smalska submitted a statement of resignation on 6 October 2014 into effect on 31 December 2014, in 2015 she received the remuneration for the notice period and for the non-competition in the amount of PLN 974 thousand (PZU) and PLN 525 thousand (PZU Życie) and PLN 71 thousand for non-cash benefits. 6 WThe indicated amount is the premium for 2013 years for performing other functions in PZU and PZU Życie.
The Management Board of PZU represents that the entity authorized to audit financial statements - KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp. k. - which audited the annual consolidated financial statements was selected in accordance with the provisions of law and that the entity and certified auditors who audited the financial statements met the requirements to express an unbiased and independent opinion on the audited annual consolidated financial statements, in accordance with the applicable provisions of law and professional standards
Information about significant agreements for the operations of PZU Group, including those concluded between shareholders
is irrevocable and unconditional and will expire on the expiry of the bondholders’ claims against PZU Finance AB. PZU is not entitled to receive any remuneration for the issuance of the guarantee.
On 19 October 2015, the Issuer took a loan from PZU Finance
AB (publ) with a total value of EUR 350 million and the interest rate of 1.425% per year. The loan is to be paid back on 28 June 2019.
Protection (OCCP) is included in the consolidated financial statements of PZU Group for 2015.
As at 31 December 2015, the total value of all 121,918 cases heard by courts, bodies competent to hear arbitration proceedings or public authority bodies involving PZU Group entities was PLN 4,898.3 million. The amount includes
Basic amounts of the consolidated profit and loss account (PLN thousand)
Share in net profit (loss) of entities measured using the equity method 4,348 (1,525) 1,404 - -
Non-current assets held for sale and disposal groups 1,506,048 606,610 178,897 46,962 -
Actuarial profits and losses related to provisions for employee benefits (4,404) (6,179) 902 - -
B. Assets to cover technical provisions, total 20,535,296 110.5% 1. Debt issued or guaranteed by the State Treasury and international organizations to which the Republic of Poland belongs without limitations 2. Bonds issued or guaranteed by local authorities or associations of local authorities 26,251 0.1%
without limitations 11. Receivables from the State Budget 63,641 0.3% without limitations 12. Tangible assets, other than property, if amortized using the prudence principle 118,398 0.6% 5%
C. Surplus (shortage) of assets covering technical provisions 1,957,966 10.5% -
B. Assets to cover technical provisions, total 20,569,115 119.0% 1. Debt issued or guaranteed by the State Treasury and international organizations to which the Republic of Poland belongs without limitations 2. Bonds issued or guaranteed by local authorities or associations of local authorities 26,251 0.2%
without limitations 5. Other variable revenue instruments 3,352 0.1% without limitations without limitations 7. Receivables due to financial market transactions 18,888 0.4% without limitations 8. Liabilities due to financial market transactions (96,254) (1.9%) without limitations
Total assets to cover technical provisions in PZU Życie (PLN thousand)
Result of the sale of PZU Lithuania 165.5 - - - -
Change in the rates for annuity provision - - - (234.2) -
2. Claims ratio net of reinsurance (net claims paid/net premium earned) × 100% 68.2% 70.3% 68.7% 76.3% 68.6%
Reinsurance commission and share in profits (3,058) (26,506) 66,967 (15,929) (29,617)
Data from the profit and loss account – group and individually continued insurance (PLN thousand)
Change in the balance of other technical provisions net of reinsurance 31,624 (70,328) (270,964) (848,700) (109,119)
Change in the balance of other technical provisions net of reinsurance (240,832) (611,119) (712,390) (594,055) 133,908 * ratios calculated with gross premium written ** as of 2013, presentation of figures resulting from supplementary benefits (kickback) was changed upon the request of PFSA
Change in the balance of other technical provisions net of reinsurance 558,454 1,015,526 172,272 1,171,526 72,829 * ratios calculated with gross premium written ** as of 2013, presentation of figures resulting from supplementary benefits (kickback) was changed upon the request of PFSA
Act on statutory auditors – Act on statutory auditors and their self-governing body, auditing firms and on public oversight of 7 May 2009 (Journal of Laws of 2009, No. 77, item 649, as amended).
Institute is to improve the professional qualifications of financial, accounting, and management personnel, setting the standards of financial reporting, creating changes in tax and accounting law, disseminating good practices in business, and thus better preparing Polish companies and institutions to operate under the highly competitive environment of the
insurance policy of the injured party, not the perpetrator. It has been operating in Poland since 1 April 2015. Once the claims handling process is finished, the insurance companies settle the amount as a lump-sum via the Polish Chamber of
CEERIUS (CEE Responsible Investment Universe) – is an index of Wiener Börse for Central and Eastern European
Code of Commercial Companies – Act of 15 September 2000 – Code of Commercial Companies (Journal of Laws of 2000, No. 94, item 1037, as amended).
COR – Combined Ratio – combined ratio calculated for the non-life sector (class II). It is the ratio of all the insurance expenses related to insurance administration and payment of claims (i.e. the costs of claims, acquisition and administration)
CSR – Corporate Social Responsibility – a concept according to which, upon drafting its strategy, a company voluntarily includes in its social interests and environment protection issues, as well as relations with various interest groups.
earned premium – a written premium in a given period giving consideration to the settlement of revenues (premiums)
free float – a public company’s shares that are not lockedin. It is the ratio of the number of shares not held by large investors to the total number of outstanding shares. In other words, all the publicly-traded shares that are freely available.
Payout ratio – a dividend payout ratio, i.e. the quotient of the dividend paid and the company’s net result stated as a percentage.
PIU (Polish Chamber of Insurance) – insurance economic local authority which gathers all insurance companies operating in Poland.
Solvency II – capital requirements for European insurance companies based on the risk undertaken. The requirements have been effective as of 1 January 2016.
Finance Minister’s Ordinance of 28 December 2009 on the special accounting standards for insurance and reinsurance undertakings, the technical rates used by an insurance undertaking may not be higher than 80% of the weightedaverage rate of return on investments covering technical provisions during the most recent three financial years. PFSA
unit-fund – fund related to life insurance where the investment risk is borne by the policyholders.
Such forward-looking statements are exposed to both known and unknown types of risks, involve uncertainties and are subject to other significant factors which may cause that the actual results, operations, or achievements of PZU Group considerably differ from future results, operations, or achievements expressed or implied in the forwards-looking statements. The statements are based on a number of assumptions concerning the current and future business strategy of PZU Group and the external environment in which the Group will operate in the future. PZU expressly waives any and all obligations or commitments concerning distribution of any updates or adjustments to any of the assumptions contained in these Financial Statements of
PZU Group, which shall aim to reflect the changes in PZU expectations or changes in events, conditions, or circumstances on which a given assumption has been made, unless provisions of the law provided otherwise. PZU stipulates that the forwardlooking statements do not constitute a guarantee as to the future results, and the company’s actual financial standing, business strategy, management plans and objectives concerning the future operations may considerably differ from those presented or implied in such statements contained in these Financial Statements of PZU Group. Moreover, even if the PZU Group’s financial standing, business strategy, management plans and objectives concerning the future operations comply with the forward-looking statements contained in these Financial Statements of PZU Group, such results or events may not be treated as a guideline as to the results or events in the subsequent periods. PZU does not undertake to publish any updates, changes, or adjustments to information, data or statements contained in these Financial Statements of PZU Group if the strategic operations or plans of