Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — Powszechny Zakład Ubezpieczeń SA (PZU) — FY2010 Earnings Presentation
35 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Mar 16, 2011
Slide 1: Presentation of the 4Q and full year 2010 financial results
Presentation of the 4Q and full year 2010 financial results Warsaw, 16 March 2011
Slide 2: PZU's Management Team
PZU’s Management Team Andrzej Klesyk Witold Jaworski Przemysław Dąbrowski President. Management Board Management Board Management Board Group CFO CEO of the PZU Group Responsible for Retail Business. Responsible for Finance. Responsible for Administration. Group Network and Marketing Accounting and
Slide 3: Agenda
Agenda Market Context Business Overview Financial Results Questions and Answers 2 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 4: Poland with strong economy
Poland with strong economy Macroeconomic outlook The only country with significant positive GDP growth … with stabilizing country risk (Credit Default Swaps) in the last two years… Countries with positive 1 200 GDP in 2009 and 2010 1 000 Countries with negative GDP in 2009 and positive in 2010 800 6
Slide 5: Slower market growth within life segment, but relatively stable profitability
Slower market growth within life segment, but relatively stable profitability Life insurance Profitability of the life insurance market gross written premium (b PLN) technical result (m PLN) Increase due to deposit contracts (bancassurance) and 3,502 single premium unit-linked 2,805 insurance 29.5 2
Slide 6: Growing non-life segment, but profitability under extreme pressure
Growing non-life segment, but profitability under extreme pressure Non - life insurance Non - life gross written premium index and gross written premium (b PLN) claims paid index 169% 7.1% 148% 16.0 16.9 15.4 12.4 13.6 11.4 11.8 10.5 120% 108% 136% 129% 100% 124% 110% 100% Q1-3 ’03 Q1-3 ’04 Q1-3 ‘05
Slide 7: Agenda
Agenda Market Context Business Overview Financial Results Questions and Answers 6 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 8: In 2010 we experienced many unpredictable events...
In 2010 we experienced many unpredictable events... Difficult market environment We processed almost 104 ths flood claims (normally around 25 ths)... ...and almost 47 ths snow claims (normally around 4 ths) 2 flood waves: Large snow damages in May and June 2010 Price war in motor insurance cau
Slide 9: ...despite of which we achieved satisfactory results
...despite of which we achieved satisfactory results m PLN Q3 2010 Q4 2009 Q4 2010 Change QoQ Q1-4 2009 Q1-4 2010 Change YoY GWP 3,552.8 3,301.0 3,598.0 14,362.7 9.0% 14,544.5 1.3% Investment Result 925.2 890.1 591.6 (33.5)% 3,469.0 2,781.8 (19.8%) Operating Profit 878.0 650.6 710.0 9.1% 4,601.8 3,0
Slide 10: Very successful IPO
Very successful IPO • Largest IPO in Poland and CEE to date, and largest in Europe since 2007 – Offer size 8.1 b PLN (2.7 b US$) – Strong demand achieved in a challenging market environment • over 251 ths individual investors attracted – Broad diversification between institution/retail and domestic/
Slide 11: Decrease in market shares vs. 2009 as a result of restructuring
Decrease in market shares vs. 2009 as a result of restructuring of non-life corporate business and limited presence in lower margin bancassurance PZU’s life market share (regular premium) PZU’s non - life market share Others Others Others Others ING ING Warta Aviva Warta Aviva Ergo Hestia Ergo Hesti
Slide 12: PZU profitability higher than competitors'
PZU profitability higher than competitors’ Technical result – PZU Życie SA Technical result – PZU SA compared with the market (m PLN) compared with the market (m PLN) 1 681 1 081 PZU Market net of PZU Data for 1-3Q of 2009 & 2010 Source: KNF, PZU 11 PZU Group: Presentation of the 4Q and full year 20
Slide 13: We keep delivering on our IPO promises
We keep delivering on our IPO promises Life segment: stable growth and profitability in group insurance coupled with fast growth in individual business Non-life segment: mass market sales growth with a significant slow down in market share erosion. Turnaround in corporate segment showing positive re
Slide 14: Within life segment, further growth of group and continued business
Within life segment, further growth of group and continued business… PZU’s gross written premium in group & continued business (m PLN) 2.4% Growth in group and continued business with stable 5,829 5,968 operating profit and profit margin: • Growing group insurance portfolio and average premiums • Su
Slide 15: ... and fast build-up of individual business
… and fast build-up of individual business PZU’s gross written premium in individual life business (m PLN) 6.2% Introduction of new product called „Plan na Życie” – 545 513 with flexible protection / investment option Number of new polices sold: 10.0 ths Annual Premium Equivalent: 18.6 m PLN Q1-
Slide 16: Stabilizing PZU's market position in individual non-life business
Stabilizing PZU’s market position in individual non-life business and continued restructuring of institutional clients portfolio PZU SA market share - individual client PZU SA market share - institutional client 55.8% 67.0% 50.9% 50.0% 61.9% 55.5% 65.2% 62.7% 57.0% 37.3% 34.0% 35.2% 36.6% 30.3% 26.1
Slide 17: Technical result of PZU SA – individual motor business
Technical result of PZU SA – individual motor business (m PLN) First signs of improvement after significant drop in results 16 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 18: Restructuring of corporate portfolio already bringing significant improvement
Restructuring of corporate portfolio already bringing significant improvement in profitability PZU’s GWP in the corporate segment PZU’s technical result in the corporate segment motor business (m PLN) motor business (m PLN) (13.6%) 1 224 1 058 -267 -448 Q1-4 2009 Q1-4 2010 * 40.3% Q1-4 2009 Q1-4 201
Slide 19: In 2010 PZU's administrative expenses reduced
In 2010 PZU’s administrative expenses reduced by over PLN 140 mln comparing to previous year Total administrative costs Recurring administrative costs (m PLN) (m PLN) Centralizing functions and (8.1%) (11.1%) optimizing headcount 1 809 1 727 1 663 Strict control over fixed expenses 1 535 Drop
Slide 20: The Group's 2010 headcount restructuring program implemented according to plan
The Group’s 2010 headcount restructuring program implemented according to plan Headcount in the PZU Group (FTEs) 16.7 (1.2) 15.5 (2.3)* 13.2* 2007 2009 2010 Note: * ~340 of the employees are in the termination period 19 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 21: We were able to deliver more than we promised during the IPO
We were able to deliver more than we promised during the IPO Centralization of back-office operations – creation of 6 back-office centers and reduction of 110 points of services Unification of front-office within the Group – common management, unification of branches continued (already 70% of br
Slide 22: Agenda
Agenda Market Context Business Overview Financial Results Questions and Answers 21 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 23: Overview of PZU's financials in 2010
Overview of PZU’s financials in 2010 Gross Written Premium (m PLN) Net result (m PLN) 1.3% (35.2%) Equity (b PLN) ROE (%) * 13.6% (3.7 pp) * Computed using average equity over the period 22 PZU Group: Presentation of the 4Q and full year 2010 financial results
Slide 24: Overview of PZU's financial highlights
Overview of PZU’s financial highlights m PLN. IFRS Q4 2009 Q3 2010 Q4 2010 Change Q4oQ4 Q1-4 2009 Q1-4 2010 Change YoY Profit and Loss Account Gross Written Premium 3,301.0 3,552.8 3,598.0 9.0% 14,362.7 14,544.5 1.3% Non-life Insurance 1,664.2 1,935.0 1,931.2 16.0% 8,021.9 8,031.9 0.1% Life Insuranc
Slide 25: Profitability by major product lines
Profitability by major product lines Gross written premiums Operating profit PLN m, IFRS (m PLN) (m PLN) 2009 2010 Change 2010o2009 2009 2010 Change 2010o2009 Total 8,024 8,033 0.1% 1,300 493 (62.1%) Motor retail 3,572 3,756 5,2% 235 -73 x MTPL 2,176 2,174 (0.1%) 2 -15 x MOD 1,396 1,582 13.3% 233 -5
Slide 26: A number of extraordinary items contributed to the results
A number of extraordinary items contributed to the results • Gradually subsiding impact of conversion of long term Q1-4 Q1-4 mln PLN. MSSF policies into yearly renewable term insurance (long term 2009 2010 policy portfolio is shrinking) Operating Profit (according to 4,601.8 3,088.1 the financial st
Slide 27: Financial results by segment
Financial results by segment Gross written premium11 (m PLN) 14 363 14 544 310 8 022 8 032 247 6 341 6 513 Revenues on commissions Non-life Insurance Life Insurance Consolidated Result and fees * Q1-4 2009 Q1-4 2010 Result on operating activity (m PLN) 3 282 4 602 2 582 3 088 1 300 493 144 122 -125
Slide 28: Profitability of life insurance is under control
Profitability of life insurance is under control Major components of operating profit in life insurance Comments (m PLN) (YoY) • Increase in NEP mainly due to group & continued Net Earned Premium 6 514 +2.7% business +2,4% YoY; additionally high growth in individual products +6,2% Investment Result
Slide 29: Profitability of non-life insurance is still a challenge
Profitability of non-life insurance is still a challenge Profitability of Non - life Insurance (COR %) Comments Q1-4 2009 99.0% • Increase of acquisition costs due to changes in distribution channel mix (increase of share of higher commission channels) and effect of introduction of Acquisition Cost
Slide 30: Profitability of pensions
Profitability of pensions Assets under management (b PLN) +29.5% Significant increase of asset under management due to premiums received from ZUS and the net investment profits. From January to September 2010 ZUS transferred to OFE PZU 2,316.1 m PLN premiums, nearly 9.5% more than the same period
Slide 31: Income on investing activity is lower because of dividend payout
Income on investing activity is lower because of dividend payout Including income on behalf of insureds: Income on investing activity (m PLN) 115 m PLN in 2009 109 m PLN in 2010 3 469 2 782 2 363 1 829 844 754 261 199 Net Investment Income Realized Gains and Losses Net Movement of Assets and Investm
Slide 32: Strong capitalization and ongoing control of solvency
Strong capitalization and ongoing control of solvency are generating satisfactory performance PZU SA’s own funds and solvency margin coverage ratio PZU Życie SA’s own funds and solvency margin coverage ratio (m PLN PAS) (m PLN PAS) 1 241% 617% 717 % 323% 441% 367% 16 619 8 262 9 536 5 594 7 224 6 23
Slide 33: Development of Group EEV driven by capital transfers
Development of Group EEV driven by capital transfers Group EEV Comments PLN m Only PLN 942 mln • Development of Group EEV and its structure are highly dividend paid in 2010 by driven by internal and external capital transfers PZU SA – Dividends paid by PZU SA: 12.5bn in 2009 and 0.9 in 2010 • PZU’s
Slide 34: Life and pension business contributes substantial value
Life and pension business contributes substantial value PLN m, 2010 845 163 995 95 20,351 19,329 (3 120) 2,127 Mainly driven by: 2,603 Conversion of whole life group business to YRT 2,037 Positive development of group and continued business and respective assumptions changes Impact of downward shift
Slide 35: Questions and answers
Questions and answers PZU contact details: Piotr Wisniewski Investor Relations Manager ph. (+48 22) 582 26 23 ir@pzu.pl www.pzu.pl/ir Press Office ph. (+48 22) 582 59 44 rzecznik@pzu.pl PZU SA Al. Jana Pawła II. 24 00-133 Warsaw, Poland PZU Życie SA Al. Jana Pawła II. 24 00-133 Warsaw, Poland PTE PZ
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