Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — Powszechny Zakład Ubezpieczeń SA (PZU Group) — H1 2013 Earnings Presentation
37 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Aug 27, 2013
Slide 1: PZU Group's Financial Results in H1 2013
PZU Group’s Financial Results in H1 2013 Warsaw, 27 August 2013
Slide 2: Agenda
Agenda 11. Insurance Market in Poland in Q1 2013 2. Operating Performance in H1 2013 3. New Capital Management Policy 4. Financial Results Overview in H1 2013 5. Questions and Answers 2
Slide 3: Non-Life Insurance Market in Poland
Non-Life Insurance Market in Poland YTD, m PLN Gross Written Premium Technical Result Non-life Insurance Non-life Insurance 5.3% 7 046 6 953 6 377 5 655 5 719 532 208 211 134 (342) Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 1.1% 11.5% 10.5% (1.3)% 57.8% 151.5% • Entire mar
Slide 4: Life Insurance Market in Poland
Life Insurance Market in Poland YTD, m PLN Regular Gross Written Premium Technical Result Life Insurance* Life Insurance 3.6% 1 283 3 970 3 991 3 645 3 774 1 055 3 460 817 844 661 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 Q1 '09 Q1 '10 Q1 '11 Q1 '12 Q1 '13 5.3% 3.5% 5.2% 0.5% (17.7)% (22.6)% 3.4% (21.7)% •
Slide 5: PZU Is the Leader in the Insurance Sector in Poland
PZU Is the Leader in the Insurance Sector in Poland YTD PZU Life Market Share PZU’s Market Share Life Insurance (Regular Premium) Non-life Insurance ∆ Q1 2012 – Q1 2013 ∆ Q1 2012 – Q1 2013 19.0% 18.3% Other (0.7) p.p. 17.2% 17.8% Other 0.6 p.p. 4.5% 0.2 p.p. 4.9% (0.2) p.p. 4.3% 4.7% 3.9% 4.6% 0.7 p
Slide 6: Agenda
Agenda 1. Insurance Market in Poland in Q1 2013 22. Operating Performance in H1 2013 3. New Capital Management Policy 4. Financial Results Overview in H1 2013 5. Questions and Answers 6
Slide 7: Strategy Implemented Produces Results
Strategy Implemented Produces Results Primary focus on profitability • Enhanced profitability in mass and corporate client segments driven by: o lower claims frequency in motor insurance (good weather conditions) o significantly lower level of claims ratio caused by natural forces in agricultural in
Slide 8: Overview of the PZU Group's H1 2013 Financial Results
Overview of the PZU Group’s H1 2013 Financial Results YTD Gross Written Premium (m PLN) Net Profit (m PLN) (2.4)% 3.0% 8 246 8 495 1 716 1 676 H1 '12 H1 '13 H1 '12 H1 '13 Equity (bn PLN) ROE (%)* 4.3% (2.5) p.p. 26.8% 24.3% 12.7 13.3 H1 '12 H1 '13 H1 '12 H1 '13 * Ratio computed using equity at begin
Slide 9: Group Life Insurance and Continued Business Grow Steadily and Profitably
Group Life Insurance and Continued Business Grow Steadily and Profitably YTD, m PLN Gross Written Premium Operating Profit Group and Continued Segment Group and Continued Segment* 0.9% 7.9% 3 169 714 3 199 662 20.9% 22.3% 42 1 149 158 5.0% 4.7% 2.3% 3 127 3 198 565 504 15.9% 17.7% H1 '12 H1 '13 H1 '
Slide 10: Individual Insurance Is Growing Rapidly
Individual Insurance Is Growing Rapidly YTD, m PLN Gross Written Premium Individual Life Segment APE in Individual Life Segment* 56.0% 43.3% 745 81 56 478 46 502 35 249 6.3% 34 229 243 21 H1 '12 H1 '13 H1 '12 H1 '13 Bancassurance Own sales High sales of individual products in the bancassurance chann
Slide 11: Stable Profitability on Tough Corporate Client Market
Stable Profitability on Tough Corporate Client Market YTD, m PLN Gross Written Premium Operating Profit in Corporate Client Segment in Corporate Client Segment (8.2)% 1 041 956 162.0% 236 506 410 65 90 74 535 546 49 97 51 (10) H1 '12 H1 '13 H1 '12 H1 '13 • Higher profitability of non-motor business
Slide 12: Profitability Up In Mass Client Segment
Profitability Up In Mass Client Segment YTD, m PLN Gross Written Premium Operating Profit in Mass Client Segment in Mass Client Segment (0.4)% 47.4% 754 3 395 3 381 164 511 2 124 2 053 133 319 250 1 272 1 328 271 128 H1 '12 H1 '13 H1 '12 H1 '13 • Lower GWP in motor own damage - lower sums insured an
Slide 13: Maintaining Cost Discipline
Maintaining Cost Discipline YTD, m PLN Administrative Expenses • Lower administrative expenses as payroll expenses fall, (6.6)% driven by the following: • centralizing operations 687 Other (including 641 • downsizing in recent years project expenses) 53 69 • Implementing projects to optimize and aut
Slide 14: Agenda
Agenda 1. Insurance Market in Poland in Q1 2013 2. Operating Performance in H1 2013 33. New Capital Management Policy 4. Financial Results Overview in H1 2013 5. Questions and Answers 14
Slide 15: PZU Shapes TSR through Share Price Growth and Dividend Disbursement
PZU Shapes TSR through Share Price Growth and Dividend Disbursement PZU share price development adjusted for disbursed dividends from the first day of being listed compared to selected indices 12 May 2010=100* 23 August 2013 Return from 29.70 PLN dividend Index 28 April 2010 to 170.0 per share for 2
Slide 16: PZU Has a Very Robust Capital Position
PZU Has a Very Robust Capital Position Capital structure and financial leverage Based on 2012 data 406 423 2012 mean: (w/o PZU) 227% 276 278 277 250 261 233 (Solvency I ratio %) 250 242 224 228 229 215 214 197 183 170 173 150 138 na na na PZU ZIG Baloise Mapfre Vienna SwissLife Axa Helvetica Uniqa A
Slide 17: PZU's Capital Position Does Not Employ Financial Leverage
PZU’s Capital Position Does Not Employ Financial Leverage Capital structure and financial leverage Based on 2012 data 100% 60% 50% 80% Capital structure 40% 60% 30% 40% 20% 20% 10% 0% 0% PZU Helvetia Mapfre Zurich Allianz Swiss Life Uniqa VIG AXA Generali Aviva Core capital * Tier 1 Tier 2 Financial
Slide 18: Current Policy Should Be Altered
Current Policy Should Be Altered In 2011, one year after the IPO, the PZU SA Management Board promised it would present a solution concerning the balance sheet structure and capital management within 3 years. Many factors have changed since then: ● market interest rates have plummeted to historicall
Slide 19: Management Board Adopted a New Capital Management Policy in 2013-2015
PZU’s Management Board Adopted a New Capital Management Policy in 2013 - 2015 ● The new policy’s objective is to focus on TSR (Total Shareholder Return) by optimizing capital while maintaining the level of safety and retaining resources for strategic acquisition-based growth. ● Main assumptions: ● u
Slide 20: Management Board Intends to Retain Shareholder Funds at Roughly 400%
The PZU Management Board Intends to Retain Shareholder Funds at Current Level (Roughly 400%) bn PLN Roughly 5 bn PLN for acquisitions and development ~400% Shareholder funds financed with debt - 3 bn PLN Max. 25% of ~250% 3.0 PZU SA’s shareholder funds 200% ~9.5 Shareholder funds financed with equit
Slide 21: Planned Schedule for Implementing New Capital Policy
Planned Schedule for Implementing New Capital Policy The planned schedule calls for the following: ● Disbursement of a part of surplus capital in the form of an interim dividend toward 2013 of 1,727 m PLN, i.e. 20.00 PLN per share (ex-dividend date of 12 November 2013 and dividend payout date of 19
Slide 22: Assumed Level of Dividends To Be Paid for the Financial Years
Assumed Level of Dividends To Be Paid for the Financial Years bn PLN Proposed dividends in 2013 - 2015 Surplus capital dividend 1.7 Total up to 0.4 – 0.9 0.4 – 0.9 3 bn PLN 50% - 100% of the PZU Group’s consolidated result 2013 2014 2015 22
Slide 23: Subordinated Debt Issue – Why Now?
Subordinated Debt Issue – Why Now? ● Optimal market conditions – historically low risk-free rates and spreads. ● The Management Board assumes that capital will not be raised through an equity offering. ● PZU’s insurance results are very robust, also driven by market context. ● Necessity to maintain
Slide 24: Agenda
Agenda 1. Insurance Market in Poland in Q1 2013 2. Operating Performance in H1 2013 3. New Capital Management Policy 44. Financial Results Overview in H1 2013 5. Questions and Answers 24
Slide 25: Overview of PZU Group's Financial Highlights
Overview of PZU Group’s Financial Highlights Change Q2 2013 m PLN, IFRS H1 2012 H1 2013 Change YoY Q2 2013 Q1 2013 over Q1 2013 Profit and Loss Statement Gross Written Premium 8 246 8 495 3.0% 4 069 4 426 (8.1)% Premium Earned 7 867 8 177 3.9% 4 070 4 108 (0.9)% Investment Result 1 524 969 (36.4)% 5
Slide 26: High Profitability of Mass Segment Accompanied by Lower Investment Result
High Profitability of Mass Segment Accompanied by Lower Investment Result YTD, m PLN 3 395 3 381 3 169 3 199 GWP (Local GAAP) 1 545 1 041 956 745 858 478 65 91 99 125 INTERNATIONAL POLAND – NON-LIFE POLAND – LIFE NON-LIFE POLAND - OTHER SEGMENTS Corporate Mass Group and Individual Investment Ukraine
Slide 27: Profitability by Insurance Business Segment
Profitability by Insurance Business Segment Insurance Business Gross Written Premium Operating Profit Combined Ratio / Segments Operating profit ratio* m PLN, local GAAP H1 2012 H1 2013 Change YoY H1 2012 H1 2013 Change YoY H1 2012 H1 2013 Total Non-Life - Poland 4 437 4 337 (2.2)% 602 990 64.6% 90.
Slide 28: Extraordinary Items Affecting the Results
Extraordinary Items Affecting the Results YTD, m PLN 1 Impact of converting long-term contracts into yearly- m PLN, IFRS H1 2012 H1 2013 renewable term contracts under MSSF. Operating Profit (according to financial 1 034.7 1 066.5 Income from the green card-related reinsurer’s agreement statements)
Slide 29: Group and Continued Life Insurance Segment
Group and Continued Life Insurance Segment Primary Operating Profit Components in Group and Continued Life Insurance (m PLN) Remarks • GWP growth +0.9% y/y mainly due to larger group insurance Y/Y portfolio (including riders to continued insurance) and higher Gross Operating Profit H1 2012 802 avera
Slide 30: Individual Life Insurance Segment
Individual Life Insurance Segment Primary Operating Profit Components in Individual Life Insurance (m PLN) Remarks Y/Y • GWP up 56.0% y/y mainly driven by high sales of investment Gross Operating Profit H1 2012 88 products via the bancassurance channel. • Lower investment result mainly in investment
Slide 31: Profitability of Corporate Non-life Insurance Segment
Profitability of Corporate Non-life Insurance Segment Profitability of Corporate Non-life Insurance (COR %) Remarks • Change loss ratio: COR H1 2012 96.2% o Improvement in motor insurance following portfolio verification by adjusting underwriting policy in recent years (reducing the number of unprof
Slide 32: Profitability of Mass Non-life Insurance Segment
Profitability of Mass Non-life Insurance Segment Profitability of Mass Non-life Insurance (COR %) Remarks • Lower claims ratio mainly in agricultural insurance due to lower COR H1 2012 88.4% level of claims caused by natural forces in particular connected with negative effects of overwintering and g
Slide 33: Decline of Debt Instrument Valuation Poor Conditions on Capital market
Decline of Debt Instrument Valuation Poor Conditions on Capital market Investment composition H1 2012 * Investment Composition H1 2013 * 1.1% 2.9% 2.0% Debt securities 2.7% 10.0% 10.9% Reverse repos and deposits 13.7% Loans 14.1% Equity instruments 73.3% and derivatives 69.4% Investment properties T
Slide 34: Low Profitability in Main Portfolio and at Policyholders' Risk
Low Profitability in Main Portfolio and at Policyholders’ Risk Net quarterly data Investment Revenues on PZU Group’s Investment Revenues (Total m PLN) Main Portfolio (m PLN) 558 429 540 436 Q1 '13 Q2 '13 Q1 '13 Q2 '13 Investment Revenues at Policyholders’ Risk* (m PLN) No impact on H1 2013 the PZU F
Slide 35: Robust Capitalization and Strong Solvency Ratios
Robust Capitalization and Strong Solvency Ratios PZU Own Funds and Solvency Margin PZU Życie Own Funds and Solvency Margin Coverage Ratio (m PLN, Polish GAAP) Coverage Ratio (m PLN, Polish GAAP) 679% 720% 323% 194% 9 151 9 858 5 643 3 404 H1 '12 H1 '13 H1 '12 H1 '13 Solvency Margin Coverage Ratio So
Slide 36: Agenda
Agenda 1. Insurance Market in Poland in Q1 2013 2. Operating Performance in H1 2013 3. New Capital Management Policy 4. Financial Results Overview in H1 2013 55. Questions and Answers 36
Slide 37: Questions and Answers
Questions and Answers Contact Details: PZU Al. Jana Pawła II 24 00-133 Warsaw, Poland Investor Relations: Piotr Wisniewski – IRO Tel.: (+48 22) 582 26 23 ir@pzu.pl www.pzu.pl/ir Spokesman Michał Witkowski, tel.: (+48 22) 582 59 44 rzecznik@pzu.pl 37
Powszechny Zakład Ubezpieczeń SA (PZU Group) — H1 2013 Earnings Presentation on 6ix