Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — Powszechny Zakład Ubezpieczeń SA (PZU Group) — Q1 2014 Earnings Presentation
43 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, May 14, 2014
Slide 1: PZU Group's Financial Results in Q1 2014
PZU Group’s Financial Results in Q1 2014 Warsaw, 14 May 2014
Slide 2: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 2
Slide 3: PZU Group's growing scale of operations
PZU Group’s growing scale of operations… … and high operating earnings 16 million clients in Poland Capitalization 37 bn PLN Normalized net profit 736.8 m PLN 14.1 thousand employees (+18.9% Q1 2014 / Q1 2013) 16.5 bn PLN premiums in 2013 3
Slide 4: What Distinguishes Us – Our KPIs
What Distinguishes Us – Our KPIs Market share in Poland • Non-life insurance 31.1% 2013 • Life insurance – regular premium 43.3% Non-life insurance margin (COR) 81.8% Profitability Group insurance profit margin 21.8% PZU Group’s solvency coverage margin 380.5% ROE Q1 2014 22.5% 4
Slide 5: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 5
Slide 6: PZU's Expansion in the Baltic States
PZU’s Expansion in the Baltic States On 17 April 2014 PZU signed 2 separate contracts with RSA contemplating the acquisition of the following: A in the Baltic States: ● Lithuanian market leader – Lietuvos Draudimas AB (31% market share) ● Latvian market leader – AAS Balta (21% market share) ● and Es
Slide 7: Poland – Dual Brand Strategy
Poland – Dual Brand Strategy B and the direct market leader in Poland – Link4 to complement PZU’s strategy. This will enable the PZU Group to do the following: ● reach a totally different group of clients who prefer the direct service model; ● take part in the growth of the direct sales segment base
Slide 8: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 8
Slide 9: Non-life Insurance Market – Deceleration of the Rate of Growth
Non-life Insurance Market – Deceleration of the Rate of Growth m PLN Gross written premium Technical result Non-life insurance Non-life insurance 6.0% 26 250 26 599 25 291 22 739 1 330 21 059 665 299 (255) (1 276) 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 8.0% 11.2% 3.8% 1.3% 122.6% 100.1% x
Slide 10: Regular GWP in Life Business Is Growing
Regular GWP in Life Business Is Growing m PLN Regular gross written premium Technical result Life insurance* Life insurance 4.2% 15 806 16 037 4 316 14 759 15 040 13 621 3 601 3 342 3 140 3 001 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 8.3% 1.9% 5.1% 1.5% (16.6)% (7.2)% (6.0)% (4.4)% x% - CA
Slide 11: Polish Insurance Market - Summary
Polish Insurance Market - Summary Non-life Insurance Life Insurance Gross written premium: Gross written premium: • Sales of insurance for financial risks up by 296 m PLN • 2013 life insurance sales down by 5,113 m PLN (i.e. by 14.1% y/y), (40.9% y/y), for damages caused by natural calamities up by
Slide 12: PZU Retains Leading Position in Poland
PZU Retains Leading Position in Poland PZU Life’s market share PZU’s market share Life Insurance (regular premium) Non-life insurance ∆ 2012 – 2013 ∆ 2012 – 2013 18.7% 18.8% Other 0.1 p.p. 18.1% 18.5% Other 0.4 p.p. 0.1 p.p. (0.2) p.p. 4.3% 4.4% 4.4% 4.2% 3.9% 4.8% 0.9 p.p. 7.8% 7.8% 0.0 p.p. 6.7% 5
Slide 13: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 13
Slide 14: Pursuit of Strategic Projects Coupled with Constant Care for Major Operating Areas
Pursuit of Strategic Projects Coupled with Constant Care for Major Operating Areas • This strategy has produced robust financial performance: Growth and ● Acquisition of leaders in the Baltic States (Lietuvos Draudimas AB, AAS Balta) and an Estonian company (Codan Forsinkring A/S); M&A ● Dual brand
Slide 15: Robust Results Despite Tough Market Context
Robust Results Despite Tough Market Context. No One-off Effects in Q1 2014 Gross written premium (m PLN) Net profit (m PLN) (1.6)% (9.2)% 4 426 4 354 837 760 Q1 '13 Q1 '14 Q1 '13 Q1 '14 Equity (bn PLN) Return on equity (%)* (7.1)% (0.4) p.p. 15.0 13.9 22.9% 22.5% Q1 '13 Q1 '14 Q1 '13 Q1 '14 x% - cha
Slide 16: High Profitability of Group and Individually-Continued Insurance
High Profitability of Group and Individually- Continued Insurance m PLN Gross written premium Operating profit Group and continued segment Group and continued segment* 2.0% 17.5% 19.0% 21.8% 4.9% 3.8 % 14.1% 18.0% 1 631 356 1 598 303 62 77 Regular 226 294 premium Q1 '13 Q1 '14 Q1 '13 Q1 '14 *Operati
Slide 17: Focus on Selling Regular Protection Business
Focus on Selling Regular Protection Business m PLN Gross written premium Annual premium equivalent (APE) in individual life segment in individual life segment* (20.5)% 410 326 288 212 (26.8)% 42 31 21 121 (5.9)% 114 18 21 13 Q1 '13 Q1 '14 Q1 '13 Q1 '14 Bancassurance Own sales channel x% - change y/y
Slide 18: Profitability Growth in the Corporate Client Segment
Profitability Growth on Demanding Market in the Corporate Client Segment m PLN Gross written premium Operating profit in the Corporate Client Segment in the Corporate Client Segment 0.1% 486 486 216 190 3.1% 98 101 296 31 27 270 4 23 63 52 Q1 '13 Q1 '14 Q1 '13 Q1 '14 x% - change y/y Impact of alloca
Slide 19: High Profitability in the Mass Client Segment
High Profitability in the Mass Client Segment Coupled with One-off Effect of Settlement with Reinsurer in 2013 m PLN Gross written premium Operating profit in the Mass Client Segment in the Mass Client Segment (2.1)% 1 835 1 796 (23.6)% * Normalized profit 1 037 985 dynamics without one-off effect o
Slide 20: Summary – Life Insurance in Poland
Summary – Life Insurance in Poland Group and continued Factors contributing to higher gross written premium: • Group protection insurance portfolio expansion and higher average premiums; • Upselling riders and higher sums insured in individually-continued products; • Development of group health insu
Slide 21: Summary – Non-life Insurance in Poland
Summary – Non-life Insurance in Poland Corporate segment Gross written premium: at a similar level y/y: • Higher sales of property insurance as a consequence of entering into long-term contracts with the power and mining industries; • Higher sales of contract insurance following improvement in the c
Slide 22: Lower Fixed Expenses Driven by Process Optimization
Lower Fixed Expenses Driven by Process Optimization m PLN Administrative expenses Remarks • Lower level of recurring administrative expenses as a result of lower payroll expenses ensuing from: 2.4% o Centralizing processes in operations and claims handling; 326 334 o Restructuring conducted in previ
Slide 23: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 23
Slide 24: PZU Offers a Revolutionary Service
PZU Offers a Revolutionary Service Greater simplicity and greater convenience… As of 4 April 2014 all MTPL policyholders at PZU have access to this revolutionary service, namely direct claims handling. How does it work? In the event of a collision causing damage to a car insured with PZU, its owner
Slide 25: PZU Offers a Revolutionary Service – Direct Claims Handling
PZU Offers a Revolutionary Service Direct Claims Handling Direct claims handling poses an opportunity to transform the MTPL market entirely: Relationship becomes Price becomes more important in less important in MTPL insurance selecting insurer Direct Better price models Lower churn rate claims hand
Slide 26: Direct Claims Handling – Benefits for Clients
PZU Offers a Revolutionary Service Direct Claims Handling Benefits for injured parties – PZU’s clients: ● Ability to decide which insurer will handle any possible future claim ● No need to be in contact with „someone else’s” insurer, shortest path to notifying a claim – contact referencing the MTPL
Slide 27: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 27
Slide 28: Highest Dividend since PZU's IPO
Highest Dividend since PZU’s IPO – 54 PLN Per Share to Be Paid from PZU SA’s 2013 Net Profit ● On 19 November 2013 PZU paid 20 PLN per share, i.e. 1,727 m PLN as an interim dividend. ● On 13 May 2014 the PZU Management Board accepted the motion to distribute PZU’s 2013 net profit and the Supervisory
Slide 29: PZU Shapes TSR through Share Price Growth and Dividend Payments
PZU Shapes TSR through Share Price Growth and Dividend Payments PZU share price development adjusted for dividends paid from the first day of listing compared to selected indices 12 May 2010=100* 9 May 2014 20.00 PLN dividend per share for 2013 534.89 PLN 190,0 29.70 dividend per 425.85 PLN share fo
Slide 30: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 30
Slide 31: PZU Group's Financial Highlights
PZU Group’s Financial Highlights Change Q1 2013 m PLN, IFRS Q1 2013 Q1 2014 Change YoY Q4 2013 over Q4 2012 Profit and Loss Statement Gross Written Premium 4 426 4 354 (1.6)% 4 077 6.8% Premium Earned 4 108 3 990 (2.9)% 4 009 (0.5)% Investment Result 429 535 24.8% 630 (15.1)% Operating Profit 1 066
Slide 32: High Underwriting Profitability in the Corporate and Mass Segments
High Underwriting Profitability in the Corporate and Mass Segments on Low Investment Income YTD, m PLN 1 835 1 796 1 598 1 631 GWP (local GAAP) 730 486 486 410 326 167 43 39 56 77 INTERNATIONAL – LIFE POLAND – NON-LIFE POLAND – LIFE POLAND - OTHER AND NONO-LIFE SEGMENTS Corporate Clients Mass Client
Slide 33: Profitability by Insurance Segment
Profitability by Insurance Segment Insurance Business Gross Written Premium Operating Profit Combined Ratio / Segments Operating profit ratio* m PLN, local GAAP Q1 2013 Q1 2014 Change YoY Q1 2013 Q1 2014 Change YoY Q1 2013 Q1 2014 Total Non-Life - Poland 2 320 2 282 (1.7)% 581 470 (19.1)% 76.0% 80.9
Slide 34: Normalized Operating Profit Up 23.1%
Normalized Operating Profit Up 23.1% YTD, m PLN m PLN, IFRS Q1 2012 Q1 2013 Q1 2014 1 Impact exerted by converting long-term contracts into Operating Profit (according to financial yearly-renewable term business under IFRS. 1 034.7 1 066.3 1 011.7 statements) 2 Income on the settlement with the Gree
Slide 35: Group and Continued Insurance Segment (Life Insurance)
Group and Continued Insurance Segment (Life Insurance) Primary operating profit components in Group and Continued Life Insurance (m PLN) Remarks Change • GWP up by 2.0% y/y mainly on expanding portfolio of risks Gross Operating Profit Q1 2013 351 Year to year in protection and health insurance (incl
Slide 36: Individual Insurance Segment (Life Insurance)
Individual Insurance Segment (Life Insurance) Primary operating profit components in the Individual Insurance Segment (m PLN) Remarks • GWP down by 20.5% y/y mostly caused by lower sales of investment products in the bancassurance channel. Change Gross Operating Profit Q1 2013 36 • Higher investment
Slide 37: Profitability of Corporate Insurance Segment (Non-life Insurance)
Profitability of Corporate Insurance Segment (Non-life Insurance) Profitability of Corporate Segment Combined Ratio (COR - %) Remarks • Loss ratio down driven by: o Lower frequency of motor insurance claims (favorable road conditions) and the restrictive underwriting policy pursued for several COR Q
Slide 38: Profitability of Mass Insurance Segment (Non-life Insurance)
Profitability of Mass Insurance Segment (Non-life Insurance) Profitability of Mass Segment Combined Ratio (COR - %) Remarks Normalized profit • Loss ratio up driven by: o higher level of annuity provisions in the agricultural insurance group; COR Q1 2013 74.5% /77.8% o decrease in earned premium (do
Slide 39: Debt Instrument Valuation Down, Better Conditions on the Capital Markets
Debt Instrument Valuation Down Better Conditions on the Capital Markets Investment Composition 2013* Investment Composition Q1 2014* 0.0% 2.8% 2.9% Treasury debt securities, repo, 5.1% reverse repo and deposits 5.2% • 5-year T-bond yield in Q1 2014 7.2% 8.2% up 12 basis points on an annual Non-Treas
Slide 40: Better Profitability of the Main Portfolio and at the Policyholder's Risk
Better Profitability of the Main Portfolio and at the Policyholder’s Risk Net quarterly data Investment revenues Investment revenues on PZU Group’s (total, m PLN) Main portfolio (m PLN) Incl. one-off effect of funds’ consolidation +167.5 m PLN 480 429 535 436 Q1 '13 Q1 '14 Q1 '13 Q1 '14 Investment r
Slide 41: Robust Capitalization and High Solvency Margins
Robust Capitalization and High Solvency Margins YTD 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) 864.7% 766.2% 390.4% 258.1% 11 662 10 356 6 841 4 557 Q1 '13 Q1 '14 Q1 '13 Q1 '14 Solvency margin cove
Slide 42: Agenda
Agenda 1. About the PZU Group 2. PZU Is Building Its Position in the CEE Region 3. Polish Insurance Market after Q4 2013 4. Operating Results in Q1 2014 5. Implementation of Strategy 2.0 6. Shareholder Value 7. Overview of Financial Results in Q1 2014 8. Questions and Answers 42
Slide 43: Questions and Answers
Questions and Answers Contact Details: PZU Al. Jana Pawła II 24 00-133 Warsaw, Poland Planning and Controlling Department Piotr Wiśniewski – Manager of the Investor Relations Section Tel.: (+48 22) 582 26 23 ir@pzu.pl www.pzu.pl/ir Spokesman Michał Witkowski, Tel.: (+48 22) 582 58 07 rzecznik@pzu.pl
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