Although the PZU Group’s 2020 financial results were burdened by the effects of the COVID-19 pandemic, the companies did however jointly retain their leadership position on the financial services market. Net of the banking business, the result attributable to the equity holders of the parent company was 11.7% versus 2019. Gross written premium totaled PLN 23,866 million. This result is of special importance to us because it confirms that we do enjoy the trust of clients who entrust their assets and savings as well as their health and lives to us. There is no doubt that the determination shown by all of the PZU Group employees in their actions and their conscientiousness in performing their daily duties in the demanding reality of the pandemic bore fruit in the form of good relations with clients.
Health Health care – offering health insurance and medical care services, prophylactics, prevention, promoting a healthy lifestyle
PZU Zdrowie: Golden OTIS Trust Award 2020 for its Virtual Clinic
The decline in Poland’s GDP in 2020 by Increase in the rate of registered unemployment in Poland in December 2020 to from 5.2% in December 2019
The Polish banking sector operates in accordance with the classic model of financial intermediation in which banks mainly provide loans to the non-financial sector using their customers’ deposits in the process. This is reflected in the high share of loans in the banking sector’s assets, which at the end of 2019 accounted for 68% of such assets and was higher than the average for the banking sectors of the European Union (66%)16.
13 As at the date of the report, the most up-to-date data for Europe’s banking market are available for 2019 14 European Central Bank, 15 National Bank of Poland, „Development of the financial system in Poland in 2019
Regulations adopted as a result of the COVID-19 pandemic The economic life and regulations adopted in 2020 were shaped by the challenges caused by the COVID-19 pandemic. Legislative solutions aimed at reducing the economic consequences of the pandemic on the Polish economy were adopted as part of “Anti-Crisis Shields”, in particular: • Act of 2 March 2020 on Special Solutions Associated with
The coming into life of the economic recovery scenario and a reduction in the level of uncertainty across the financial markets should result in a certain degree of appreciation of the Polish zloty in a situation of a large surplus of the balance of payments generated in 2020. This would help reduce expenses related to the prices of spare parts in motor insurance. However, a risk factor in this context is the policy pursued by the National Bank of Poland, which intervened at the turn of the year to weaken the Polish zloty. Accordingly, if the negative pandemic scenario prevails, there will be a high risk of the Polish zloty remaining above 4.50 against the euro.
In the longer term, the business and financial performance of the PZU Group will also be increasingly affected by factors related to climate change, resulting in the intensification of chance events, namely the occurrence or absence of catastrophic events, such as floods, droughts, heat waves, torrential rains, hail, cyclones or whirlwinds. Demographic trends, such as mortality and fertility levels, will also play an important role.
Source: KNF (www.knf.gov.pl), Quarterly Bulletin. Rynek ubezpieczeń [Insurance market] 3/2020, Rynek ubezpieczeń 3/2019, Rynek ubezpieczeń 3/2018, Rynek ubezpieczeń 3/2017, Rynek ubezpieczeń 3/2016 3.2 Non-life insurance (PZU, LINK4 and TUW PZUW)
PZU Ukraine Life’s share of the life insurance market in Ukraine in the first three quarters of 2020 roku market share at the end of 2020
Most of the changes in the corporate insurance segment increased the effectiveness of collaboration with intermediaries and the appeal of the dedicated offering for fleet clients and leasing companies. Major new products included: • deployment of a new offering in the property insurance in international transport, aimed at increasing PZU’s competitiveness and standardizing the offering, in particular for clients in the business of both domestic and international transport; Non-life insurance market – gross written premium vs. technical result (in PLN million)
In 2020, LINK4 focused on expanding further its product offering, adapting it to the changing expectations of its clients and business partners. Its key activities included: • extending the offer to clients holding a TPL motor policy by adding the Assistance after an Accident product. It guarantees fast handling of a loss if the event has occurred in the territory of Poland at the fault of another driver holding a TPL insurance with an insurer other than LINK4. In such a situation, LINK4 will pay indemnification to the client and will have recourse to the perpetrator’s insurer. This is very convenient for clients, who do not have to pursue a claim with a company with which they have signed no contract; • introducing the All Risks MOD insurance, which extends the insurance cover by replacing the existing named events; • extending the LINK4 Child offering with the disbursement of a benefit for sickness and hospitalization related to COVID-19; • extending the cover in motor ADD insurance to include less severe, rather than just permanent dismemberment. Such injury will be classified in a new dismemberment table, which describes both the diagnosis and the consequences of an accident. LINK4 does not wait until the end of treatment with the disbursement of the benefit. Rather, it pays out the benefit on the basis of medical documentation; • supplementing the LINK4 Travel offering to include treatment costs and assistance services related to COVID-19; • editing the GTCI of other motor insurance products to ensure that the wording is as accessible and understandable for clients and meet the standards of a simple language.
58 59MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
The changes in the offering take into account the new requirements of the regulatory authority and the growing extent of statutory consumer protection. The changes are made not only to the product itself but also entail the modernization and simplification of the way in which insurance is offered and sold. They also enable the client to take advantage of various contact channels to reach the insurance undertaking (e.g. in a branch, by phone, e-mail, Internet client account, person providing technical insurance services in the workplace or through an insurance intermediary, whether tied or external).
In individual pension insurance, the PZU IRSA (Individual Retirement Security Account) insurance has been modified to adapt it to the new regulations effective as of 1 January 2021. From this date, the IRA and IRSA Act introduced a new amount limit for persons who conduct non-farming business activity.
The Bank offers competitive products and services on the Polish market, high-level customer service and a developed distribution network. A broad product offering, innovative solutions and individual approach provide clients with comprehensive financial service. An integrated service model, in turn, guarantees the highest quality of products and services, as well as their alignment with the changing needs. The Bank systematically strengthens its market position in the strategic areas of business.
In H1 2020, Pekao implemented a Smart City solution – a modern contactless technology for acceptance of payment cards in public transport in Białystok. Thanks to this solution you can buy tickets without cash and the payment card authorizes the holder to ride on city busses. At the beginning of October, Białystok Public Transport started a new stage of the development of the Smart City. An alternative method of charging the fee for multiple trips during the day, the so-called Smart BKM Tariff, was introduced. The tariff offers measurable savings to passengers who travel by bus a few times a day. The bank plans to roll out this solution also in other cities.
As at 31 December 2020, the net asset value of Pekao TFI funds (including ECS) totaled PLN 19.3 billion, down PLN 2.2 billion, i.e. 10.4% in comparison to the end of December 2019. The drop in the value of assets was driven down by the pandemic. Meanwhile, a lion’s share of cash obtained from the redemption of participation units in mutual funds was accumulated in bank accounts. SECTION 3.5 MUTUAL FUNDS AND EMPLOYEE CAPITAL SCHEMES(TFI PZU
66 67MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
However the percentage of international clients in the overall number of the bank’s clients is negligible.
At the end of Q3 2020, Alior Bank was the 8th largest bank in Poland (in terms of the value of its assets).
Factors, including threats and risks, which may affect the banks’ operations in 2021 The situation of the banking sector in 2021 will primarily be affected by the following factors: • impact of the COVID-19 pandemic on the economic conditions and macroeconomic factors which will drive the demand for banking products, changes of the risk costs and the quality of the credit portfolio; • scale of demand for banking services and the ability of banks’ clients to timely pay their financial liabilities, which largely depends on the clients’ financial standing. Apart from the country’s macroeconomic standing, the economic situation of a number of client groups also depends on the national economic policy being pursued. Both a lower growth rate of the Polish economy and changes in the legal framework for the operation of enterprises may have an adverse impact on the financial standing of selected clients of banks; • possibility of a temporary increase in risk aversion due to the uncertainty caused by the impact of the COVID-19 pandemic on the level of global economic activity, which may translate into reduced investment activity of banks’ clients; • continuing low interest rates exerting strong unfavorable impact on the results of the banking sector (through impact on the net interest income); • interest rate policy of the Monetary Policy Council; • banking sector consolidation and restructuring processes; • development of banking services offered by non-regulated entities, including global technological companies; • the fiscal and regulatory environment, including, in particular, the tax on certain financial institutions, the strict capital requirements, the BFG charges, the costs of further adjustments to a plethora of regulatory solutions (including MIFID II, GDPR, PSD II, MREL).
The following funds recorded the largest decreases in net assets at yearend 2020: PZU Obligacji Krótkoterminowych, inPZU Obligacje Polskie, inPZU Akcje Rynków Rozwiniętych, inPZU Akcje Polskie and PZU FIZ FORTE.
This was attributable mainly to motor insurance that has a dominant market share (59.7%). Reduced traffic on the roads as a result of the restrictions introduced in connection with the COVID-19 pandemic and the increasing competition between insurers brought down TPL premium rates by 7.3% and MOD rates by 1.9%.
Lietuvos Draudimas continues to be the largest insurance company in terms of total gross written premium in non-life insurance – the company’s market share at the end of 2020 stood at 29.6%. The shares of top four players in the non-life insurance market totaled 69.6%.
Promotion of health also included: • continuation of PZU Zdrowie’s partnership with the “Large
Market situation At the end of 2020, the net asset value of open-end pension funds was nearly PLN 149 billion, down 4% versus the end of 2019. The decline of assets was significantly affected by the environment of the COVID-19 pandemic. For the most part of 2020, high volatility of prices on stock markets was observed. Growth was restored only in the last two months of 2020, which allowed open-end pension funds to offset most of their first quarter losses.
Client interactions were shifted towards the establishment of longterm partnership based on trust and understanding, adding great value through the high quality of solutions offered to clients. The purpose of these actions was to improve the return on equity (ROE) and other indicators.
PZU’s ROE* substantially above the average generated by European insurers * adjusted by goodwill and intangibles impairment related to acquisition of the banks (PLN 1 343 m)
Active collaboration with banks – CASH platform launch to offer employee financial benefits
“traditional” offering to include unique riders; • activate the sales network and tap into the full potential rooted in the PZU Group’s client base; Percentage of generalist salespersons in our proprietary networks
Purpose: • gather client information in a single place; • provide clients with a functional platform facilitating the use of PZU services, including the offering of insurance products, healthcare services (including the booking of doctor’s appointments) and investment management; • 5 million accounts opened by clients on the mojePZU platform.
In 2020, the deployment of the Group’s “Green PZU” standard was completed. The standard covers environmentally friendly initiatives in the following two areas: real estate: • curtailing the consumption of utilities; • conducting rational waste management; • installing air conditioning with an ecological refrigerants; • taking into consideration environmental and social aspects when choosing space for rent; administration: • reduced consumption of office supplies, including by cutting down on the volume of documentation printed out on paper; • collaboration in the area of waste disposal with companies that have adopted the highest environmental protection standards; • environmentally friendly actions in the car fleet management policy; • educational campaigns for employees aimed at encouraging environmentally friendly behaviors.
In the Baltic States the PZU Group conducts insurance activity under the brand of Lietuvos Draudimas in Lithuania, under the Balta brand in Latvia and under the PZU brand in Estonia. In the Ukrainian market insurance is sold under the PZU brand. SECTION 3.6 INTERNATIONAL OPERATIONS.
The tied agent network undergoes constant transformation in order to improve the professionalism and constantly improve the quality of client service. Most agents running offices offer advice regarding the clients’ property, life and health insurance. They provide clients with comprehensive service as part of the product offering of the entire PZU Group. The support constantly provided to agents by PZU (attractive equipment and marketing signage of the offices, agent onboarding and training on service quality standards, substantive support for the sales teams, financial support) increases their physical recognition in the field. Many of the efforts focus on locations where there are not many agent offices or their presence is not very strongly marked.
In first half of 2020, PZU implemented the ADD video assessment, in which medical examinations are carried out using a video call. The organization of the process if based fully mailto:kontakt%40pzu.pl?subject=
Since 2014, the Assistance Organization Team (PZU Client Relationship Managers) has been operating in PZU, a solution that is unique on the insurance market. These are mobile experts who visit injured persons in their homes. The relationship managers determine the actual standard of living of the victim and in consultation with the victim assess his/her needs arising from the accident for which PZU is liable under TPL insurance. For severely injured accident victims, PZU Client Relationship Managers arrange a broad array of medical and social rehabilitation and psychological support. Injured parties have the option of obtaining treatment and rehabilitation in modern medical centers cooperating with PZU. Persons who have become disabled as a result of an accident are given advice on how to adapt the closest environment to their needs and select properly devices that compensate for dysfunctions and disability. Injured children are covered by a program of comprehensive, long-term psychological support featuring, as one of its elements, therapeutic/leisure camps run by counselors experienced in treating post-accident trauma. In 2019, this PZU program was extended to also cover the children who experience trauma after a parent dies as a result of oncological disease. This way PZU addresses the social effects of this increasingly common civilization disease.
We also allow our patients to get treatment from doctors from outside our network: through the reimbursement option clients may use medical services included in the subscription or insurance outside of our network purchase additional services which are not included in the health product or purchase a prophylactic package, carry out a medical interview for patients suspecting a COVID-19 infection,
Both segmentations are based on multiple dimensions of the data in the bank’s possession, associated with the clients’ products, lifecycle, banking method, level of wealth and modernity. Additionally, based on an analysis of the transaction rates and purchase baskets, the segmentation was supplemented by the clients’ interests and the socalled „life style” criteria. The segmentations provide information about the clients’ values, expectations, attitudes and service and product needs.
costs of funding through mitigation of the interest rate risk, • transactions hedging commodity price fluctuations, • liquidity management – through sale of products for investing surplus cash and through hedged repo and BSB (buy/sell/back) transactions,
Business model only in workshops but also at the stages associated with building partnerships in the corporation, i.e. tests with clients, preparation of the business plan or security analysis. The program is prepared in such a way as to not only support startups at the early stage of development but also develop new ideas of existing companies and support foreign entities which are just starting operations in the Polish market.
By the end of May 2020, a new edition of the RBL_ START program “More than a banking app” was launched to support the implementation of Alior Bank’s business strategy. In the form of a challenge, new solutions and added services were sought to be offered to Alior Bank’s retail clients via the Alior Mobile app.
Strategic partnerships The PZU Group strives to create an ecosystem in which the overriding objective is to manage client relations skillfully by offering clients solutions in all venues accessible to clients. This will contribute to intensifying activities in strategic partnerships with companies operating on the Polish market, among others, telecommunication operators, power utilities, retail chains and airlines, regarding joint offering of non-life and life insurance to the clients of such institutions.
In 2020, PZU continued to develop and strengthen cooperation with strategic partners: PLL LOT and Allegro.pl, while working on expanding and diversifying the product offering for clients.
In addition, within the framework of its strategic partnerships, PZU offers a number of insurance agreements to the business partners’ clients: • protection of Apple equipment, such as iPhone, iPad, Apple
The decrease related to in investment income in the banking business. It was triggered by the higher costs of risk due to the establishment of additional loan provisions for the anticipated deterioration in the quality of Pekao and Alior Bank’s loan portfolios, the decrease in interest rates that led to the decline in net interest income, and the increase of Bank Pekao’s provisions for legal risk related to the portfolio of foreign currency mortgage loans in Swiss francs. Alior Bank’s net interest income was driven down by the ruling of the Court of Justice of the European Union (CJEU) on the refund of part of the commission in the event of an early repayment of consumer loans. Investment income, excluding banking activity3, increased primarily thanks to a higher result earned on listed equities, in particular the higher valuation of the logistics company. The positive effect was partially offset by the poorer performance of the variable coupon debt portfolios (as a result of the lower interest rates), as well as the lower net investment results on the portfolio of assets held to cover the investment products. The investment result in the portfolio of assets to cover the investment products does not affect the PZU Group’s overall net result because it is balanced by the movement in net insurance claims and benefits; • the lower level of claims and benefits paid, which amounted to PLN 15,580 million, i.e. 0.7% less than in 2019. The decrease – in spite of the higher average payout – was observed primarily in motor insurance. It was the effect of the lower frequency of claims resulting from restrictions on domestic and international traffic imposed in connection with the COVID-19 pandemic. The increase in claims and benefits was reported in the group and individually continued insurance segment in connection with the rise in insureds’ and co-insureds’ death benefits in Q4 2020; • acquisition expenses lower by 1.4% as they dropped from PLN 3,363 million in 2019 to PLN 3,317 million. This decline was the outcome of lower commission costs on motor insurance (driven by lower sales due to the slowdown on the lease market, price pressure and limitations on accessibility to agents and branches caused by the pandemic), as well as the decrease of indirect costs; 3 PZU Group net of the data for Bank Pekao and Alior Bank.
In the case of continued and group insurance, the technical rate applied for the calculation of provisions in life insurance was reduced to 1.5% in June 2020. Previously, it was between 1.5% and 3%, depending on the date of execution or modification of the policy.
39.5% of assets (versus 33.9% at the end of 2019) were investments: investment financial assets, investment properties and FDIs. They totaled PLN 149,754 million and were up PLN 33,250 million versus the end of last year. The increase in the value of investments was associated particularly with Bank Pekao and was related to the higher value of the portfolio of government debt securities. Net of the banking business, the growth in the value of the investment portfolio resulted from the inflow of premiums due to business growth and investment performance.
The growth in death-related benefit disbursements in Q4 2020, which was negative for the result, was offset by the increasing portfolio of profitable health contracts.
Operational efficiency ratios To facilitate the analysis of PZU Group’s performance, such indicators were selected that best describe performance in the case of insurance companies and those pursuing banking activity in the opinion of the Management Board. Some indicators refer the costs of pursuit of insurance activity to premiums, hence reflect which portion of the premium was allocated to costs and which portion – to margin. For the banking activity, the Cost/Income (C/I) ratio was selected as the relation which best reflects the performance of this area of the activity in the opinion of the Management Board. All indicators are widely applied by other companies from the corresponding sectors and by investors and serve an analysis of efficiency and profitability of these companies. Detailed information to better understand the functionality and value in use of the applied Alternative Performance Measures can be found in the ATTACHMENT: GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES
As regards the individual net result items, PZU recorded: • decrease in gross written premium down to PLN 12,537 million, i.e. by 3.9% relative to the previous year. It was a result of lower sales of motor insurance (due to the much lower new vehicle sales and a slowdown in the leasing market), as well as of the increased premiums on accident, sickness and various financial losses insurance. After the reinsurers’ share and movement in the provision for unearned premiums, net earned premium was PLN 12,061 million and was 2.0% lower than in 2019; • lower level of claims and benefits - amounting to PLN 7,523 million, which means a fall by 3.1% compared to 2019. The major change, i.e. the drop in the motor insurance and assistance, was partly set off by a higher loss ratio in insurance against fire and other damage to property and general third party liability insurance; • a fall of the net investment result5 down to PLN 1,103 million (by 50.4% in comparison to 2019), as a result of lower results of subsidiaries; • lower acquisition expenses, including the reinsurance commission, by PLN 19 million, i.e. 0.8%, in comparison to 2019, resulting from lower premiums on motor third party liability insurance, which are characterized by lower commission rates and a high share of the multiagency channel with higher commissions; • increase of administrative expenses by 3% - from PLN 704 million in 2019 up to PLN 725 million in 2020. It resulted primarily from the introduction in sales of an COVID-19 5 Investing activities include investment income, unrealized gains from investments, costs of investment activities, unrealized losses on investments, and share in net profits (losses) of subordinated entities valuated through equity method pandemic aid package and increase of personnel costs due to payroll pressure.
The balance of other technical income and expenses in 2020 was negative and stood at PLN 251 million. The improvement by 1.4% in comparison to 2019 is an outcome of a higher allowance to prevention fund and an impairment charge on receivables, as well as higher interest income for untimely premium payments.
Non-current assets, in the form of intangible assets, goodwill and property, plant and equipment, were disclosed in the balance sheet at PLN 424 million (PLN -18 million y/y). They accounted for 0.9% of assets.
Effectiveness of the risk management at the Group level is ensured by an additional recommendation issued by PZU (as the parent company) regarding the organization of the risk management system in the subsidiaries from the insurance and banking sector. Additionally, guidelines regulating precisely the various risk management processes in Group companies are in place.
Two levels are distinguished in the risk management process: • I - GROUP LEVEL – monitoring the limits and risks specific to the Group Risk management at this level is supposed to ensure that the PZU Group attains its business objectives in a safe manner appropriate to fit the scale of the risk incurred. The PZU Group provides its subsidiaries with support in the implementation of a risk management system.
• II - ENTITY LEVEL – monitoring of limits and risks specific to the entity Risk management at this level is supposed to ensure that individual PZU Group entities attains their business objectives in a safe manner appropriate to fit the scale of the risk incurred. This is supported by: monitoring of the limits and unique risk categories existing in the given entity, implementation of effective mechanisms and standards organization of an efficient internal control system (with particular emphasis on the compliance function), the risk management system (especially in the reinsurance area) and the security management system in the PZU Group.
Reporting aims to ensure effective communication regarding actuarial risk and supports management of actuarial risk at various decision-making levels – from an employee to the supervisory board. The frequency of each report and the scope of information provided therein are tailored to the needs at each decision-making level.
Moreover, mitigation of the actuarial risk inherent in current operations is supported by: • defining the scopes of liability in the general / specific terms and conditions of insurance or other model agreements; • co-insurance and reinsurance; • application of an adequate tariff policy; • application of the appropriate methodology for calculating technical provisions; • application of an appropriate procedure to assess underwriting risk; • application of a correct claims or benefits handling procedure; • sales decisions and plans; • prevention.
Market risk, including liquidity risk Market risk is understood as the risk of a loss or an adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the volatility of market prices of assets, credit spread, as well as value of liabilities and financial instruments.
Credit risk and concentration risk are identified at the stage of making a decision on an investment in a new type of financial instrument or on accepting credit exposure. It involves an analysis of whether the contemplated investment entails credit risk or concentration risk, what its level depends on and what its volatility over time is. Actual and potential sources of credit risk and concentration risk are identified.
Reporting involves communicating to the various decisionmaking levels information concerning the level of operational risk and the results of monitoring and controlling it. The frequency of each report and the scope of information provided therein are tailored to the information needs at each decision-making level.
Business Continuity Plans in the PZU Group are regularly tested and, consequently, updated.
Despite the crisis situation, there were no major disruptions in any PZU Group companies associated with continuity of operation or client service.
Financial assets exposed to exchange risk include the PZU Group’s investment financial assets and financial derivatives denominated in foreign currencies.
Interest rate risk The risk of capital instruments pricesCurrency risk decrease by 100 bp increase by 100 bp increase by 20%
Main reinsurers in 2020: Munich Re, Hannover Re, Gen Re Swiss Re, VIG Re
The capital management policy rests, in particular, on the following principles: • the PZU Group’s capital management (including excess capital) is conducted at the level of PZU as the parent company; • sustain target solvency ratios at the level of 200% for the PZU Group, PZU and PZU Życie (according to Solvency II),
Source: www.infostrefa.com, www.msci.com 35,000 pts 40,000 pts 45,000 pts 50,000 pts 55,000 pts 60,000 pts 65,000 pts 70,000 pts
206 207MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
(a) Movement in the share price y/y (2.4)% 26.9% 4.1% (8.8)% (19.2)%
In 2020, Pekao Bank Hipoteczny held 6 bond issues under the bond issue program of up to PLN 1 billion for a total amount of PLN 710 million with maturities from 4 months to 2 years.
Regularly renewed securities with maturities of up to 1 year are the most prevalent among the issues conducted by Pekao Leasing (issue program of PLN 3 billion) and Pekao Faktoring (issue program of PLN 5 billion). The total liabilities under these two entities’ issues as at 31 December 2020 were PLN 6.24 billion.
DPSN2016 except for the recommendation pertaining to holding an e-shareholder meeting
224 225MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
Consolidation packages forwarded by subsidiaries are subjected to: • verification procedures by a statutory auditor scrutinizing the PZU Group’s consolidated financial statements, • analytical reviews by specialists.
In the event of doubt, the provisions regarding the restriction on voting rights are subject to interpretation according to Article 65 § 2 of the Civil Code.
PZU’s Articles of Association may be amended by the Shareholder Meeting provided that a resolution is adopted by a majority of three fourths of the votes, the Polish Financial Supervision Authority’s approval is issued in the cases referred to in the Insurance and Reinsurance Activity Act and the amendments are entered in the National Court Register. The Supervisory Board has the powers to approve the consolidated amended text.
The powers of the Shareholder Meeting, in addition to those specified in the Commercial Company Code or the Articles of Association, include the adoption of resolutions concerning the following: • examination and approval of the Management Board’s report on the Company’s activity and the Management Board’s report on the activity of the PZU Group and the Company’s financial statements and consolidated financial statements of the PZU Group for the previous financial year and granting a discharge to individual members of the Company’s corporate bodies on the performance of their duties; • review of the Management Board’s report on representation expenditures and expenditures for legal, marketing, public relations and public communication services and management consulting services; • issuing an opinion on the report on compensation for Management Board Members and Supervisory Board Members, pursuant to the Act on Public Offerings and the Conditions for Offering Financial Instruments in an Organized Trading System and on Public Companies of 29 July 2005; • distribution of profits or coverage of losses; • decisions on claims to remedy damages incurred during the incorporation of the Company or in its administration or oversight; • transfer or lease of a business or an organized part thereof or establishing a limited right in rem thereon; • redemption of shares or issue of bonds; • establishing reserve capital accounts and making decisions on their allocation or manner of allocation; • split of the Company, merger of the Company with another company, winding up or dissolving the Company; • appointment and dismissal of Supervisory Board Members, subject to the personal right granted to the State Treasury to appoint and dismiss one Supervisory Board Member; • establishing the rules for remunerating Supervisory Board Members; • acquisition or disposal by the Issuer of real property, perpetual usufruct or share in a real property or perpetual usufruct with a value exceeding the equivalent of the gross amount of EUR 30,000,000.
By adopting the “Compensation policy for PZU SA Management Board and Supervisory Board Members”, PZU fulfilled the obligation arising from Article 36 of the Act of 16 October 2019 Amending the Act on Public Offerings and the Conditions for Offering Financial Instruments in an Organized Trading System and on Public Companies and Certain Other Acts.
Composition of the Supervisory Board The Supervisory Board is composed of seven to eleven members. The number of Supervisory Board Members is specified by the Shareholder Meeting.
Founder and long-term editor-in-chief of the journal Ekonomia. Rynek, gospodarka, społeczeństwo. Head of the Ph.D.
and Centrum Giełdowe S.A. In 2009-2010 he managed the team of strategic advisors to the President of the National
The Audit Committee adopted resolutions on the acceptance of the permitted services to be provided by PZU’s auditor, KPMG Audyt sp. z o.o. sp. k., to PZU, PZU Życie and PZU Group companies. Based on an analysis of representations submitted by representatives of the entity performing the audit - KPMG Audit, the Committee made a positive assessment of the independence of the statutory auditor and the audit firm and confirmed that the auditor and the Company comply with the regulatory requirements concerning the rotation of the key statutory auditor and the audit firm performing audits of the standalone and consolidated financial statements and standalone and consolidated annual consolidated solvency and financial condition reports of PZU and the PZU Group.
Moreover, the scope of the Committee’s activities may include other matters entrusted to it by the Supervisory Board.
Changes in the composition of the Nomination and Compensation Committee in 2020 As at 1 January 2020, the composition of the Nomination and Compensation Committee was as follows: • Robert Jastrzębski – Committee Chairperson; • Paweł Górecki – Committee Member; • Agata Górnicka – Committee Member; • Tomasz Kuczur – Committee Member; • Maciej Łopiński – Committee Member; • Elżbieta Mączyńska-Ziemacka – Committee Member; • Alojzy Nowak – Committee Member.
Board on granting an additional benefits for a Member of the PZU Management Board; • submitting a recommendation to the PZU Supervisory Board on giving consent to pay Members of the PZU Management Boards the first tranche of deferred variable compensation following from the management services provision agreement for 2018; • assessing the attainment of Management Objectives for 2019 and variable compensation for Members of the PZU Management Board for 2019 ; Robert Jastrzębski
The Supervisory Board determines the number of Committee Members and appoints them from among its own members.
The Strategy Committee is an advisory and consultative body to the Supervisory Board. It is appointed to increase the efficiency of the Supervisory Board’s supervisory activities as regards issuing opinions on strategic documents submitted by the Management Board (in particular development strategy). Its role is to present recommendations on the planned investments of material influence on the Company’s assets to the Supervisory Board.
248 249MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
Management Board Members, including the President of the Management Board, are appointed and dismissed by the Supervisory Board. Such appointment takes place following a recruitment procedure designed to verify and evaluate qualifications of the candidates and, consequently, to select the best candidate. The President of the Management Board of the new term of office appointed before the current term elapses has the right to submit a motion to the Supervisory Board requesting appointment of the remaining Management Board Members of the new term of office before the current term elapses.
250 251MANAGEMENT BOARD’S REPORT ON THE ACTIVITY OF THE PZU GROUP AND PZU SA 2020
Management Board resolutions are especially required for: • adoption of a long-term plan for the Company’s development and operations; • adopting an action and development plan for the PZU
Dorota Macieja Member of the PZU Życie Management Board since / PZU Group Director in PZU since 15 March 2017 CSR, customer communication, real estate
Tasks • issuing recommendations and making decisions pertaining to sale of properties to the extent defined in the “Property sales procedure” adopted by a Management Board resolution; • making other decisions associated with the property sales process.
Committee Member: Innovations Committee, Asset and Liability Management Committee, Initiatives Management Committee
Beata Kozłowska-Chyła President of the PZU Management Board from 2 October 2020 (from 12 March 2020 to 1 October 2020 – acting President of the PZU Management Board). Graduate of the Department of Law and Administration at the University of Warsaw. She received her doctoral degree in juridical science, and subsequently the scientific degree of habilitation. She is a lecturer in the Department of Law and Administration at the University of Warsaw in the Commercial Law Faculty. She practices as an attorney-at-law. She is a recommended arbitrator in the Court of Arbitration in the National Chamber of Commerce in Warsaw. In the past she served as a Supervisory Board member in PZU SA, TFI PZU SA and PTE PZU SA. She has been a member of the PZU SA Management Board twice. She also sat on the Management Board of PZU Życie SA. She worked as the Deputy Director of the Legal and Licensing Department in the Pension Fund Regulatory Authority and she served as the President of the Management Board of Polskie Wydawnictwo Ekonomiczne SA. Presently, she serves as the Chairwoman of the Supervisory Board of Bank Pekao S.A., the Chairwoman of the Supervisory Board of Grupa Lotos S.A., the Chairwoman of the Supervisory Board of PZU Życie SA and a Supervisory Board Member of Anwil S.A. She is a member of the Legislative Council of the Prime Minister and of the Business Council of the President of the Republic of Poland. She is also a member of the Audit Committee in the Polish Insurance Association and a member of the Supervisory Board of the Insurance Guarantee Fund. Author of tens of scientific publications on company law, securities law and insurance law published in reputable Polish and foreign magazines. She has also authored articles for the purpose of popularization.
P/E (Price to Earnings) – indicator specifying the ratio of the company’s market price (per share) to earnings per share
ABC model after deducting CIT at a rate of 19%) and PTE PZU’s net result. An increase in this result is usually due to a greater value of assets of external clients that are managed by the companies and/or an increase in the fee rates for asset management or/and a decrease in management expenses, and is considered a favorable occurrence