Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — PZU — FY2014 Earnings Presentation
39 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Mar 17, 2015
Slide 1: PZU Group's financial results for 2014
Warsaw Riga Vilnius Kiev PZU Group’s financial results for 2014 Warsaw, 17 March 2015
Slide 2: Agenda
Agenda 1. Insurance market in Poland in the first three quarters of 2014 2. Operating results for 2014 3. Shareholder value 4. Summary of PZU’s strategy 5. Detailed financials 1
Slide 3: Non-life insurance market in Poland
Non-life insurance market in Poland Gross written premium, non-life insurance (m PLN) 4.1% ● Sales down following growth trend (2.5)% lasting until 2013 19 758 20 084 19 582 18 956 16 045 16 783 ● Clear upward trend in PZU’s share in the non-life insurance market in the first three quarters of 2014
Slide 4: Life insurance market in Poland
Life insurance market in Poland Gross written premium on regular business (m PLN) ● Reversion to growth trend after 4.2% slight deceleration in 2013. 3.2% 10 958 11 114 11 827 11 901 12 279 ● PZU Życie’s regular premium 9 974 market share stable at 42.9% at the end of Q3 2014. ● Adverse impact exert
Slide 5: PZU maintains its leadership position in insurance in Poland
PZU maintains its leadership position in insurance in Poland Non-life insurance Life insurance (regular premium) market share market share ∆ Q3 2014 – Q3 2013 ∆ Q3 2014 – Q3 2013 (0.1) p.p. 4.4% 0.1 p.p. 4.2% 4.7% (0.1) p.p. 8.0% 0.2 p.p. 5.7% 0.1 p.p. 9.2% 0.2 p.p. 5.7% (0.1) p.p. 13.0% (0.7) p.p.
Slide 6: Agenda
Agenda 1. Insurance market in Poland in the first three quarters of 2014 2. Operating results for 2014 3. Shareholder value 4. Summary of PZU’s strategy 5. Detailed financials 5
Slide 7: High profitability and cost discipline ensue from executing the strategy
High profitability and cost discipline ensue from executing the strategy ● Persisting high profitability despite the growth in claims provisions for events in previous years: - the claims frequency decline in motor insurance has decelerated (slight growth in mass insurance); Non-life - lower level o
Slide 8: Review of the Group's 2014 financial results
Review of the Group’s 2014 financial results Gross written premium (m PLN) Net profit (m PLN) 2.5% (9.9)% 16 480 16 885 3 295 2 968 2013 2014 2013 2014 Equity (m PLN) Return on Equity (ROE) (%)* 0.3% (1.5) p.p. 13,1 13,2 24,1% 22,6% 2013 2014 2013 2014 7 x% - change year on year * Annualized ratio c
Slide 9: Non-life insurance
Non-life insurance Lower profitability of motor insurance mass segment corporate segment Gross written premium (m PLN) Gross written premium (m PLN) 6 534 0.5% 6 569 5.2% including Link4 - 110 1 740 1 831 4 003 3 960 including 853 823 Link4 - 8 including including 2 531 2 610 887 1 008 Link4 - 16 Li
Slide 10: Summary - non-life insurance
Summary - non-life insurance mass segment corporate segment Gross written premium y/y: Gross written premium y/y: • sales growth in other TPL (+65.6 m PLN) as a result of acquiring • motor insurance premium down caused by fierce price pressure several strategic clients and executing contracts for a
Slide 11: Life insurance
Life insurance Higher profitability Group and continued insurance segment Individual insurance segment Regular gross written premium (m PLN) Gross written premium (m PLN) 2.0% 1.9% (4.6)% 1 330 1 269 6 414 6 539 484 477 846 791 2013 2014 2013 2014 Single Premium Regular Premium Margin (%)(a) 25.9% M
Slide 12: Summary – life insurance
Summary – life insurance Group and continued Individual Drivers of higher gross written premium: Decline in gross written premium resulting from the following: • expansion of the group protection insurance portfolio and increase of • structured product sales in co-operation with Bank Handlowy are av
Slide 13: International business
International business Non-life insurance Life insurance Non-life insurance Life insurance Gross written premium (m PLN) Gross written premium (m PLN) 63.1% 632 Estonia (Codan) (0.7)% 22 121 Latvia (AAS Balta) 388 83 Lithuania (LD) 230 273 Lithuania (PZU Lithuania 78 78 and branches) Lithuania 32 37
Slide 14: Summary – international business
Summary – international business Gross written premium Operating results Non-life insurance Non-life insurance • Combined ratio growth: • Gross written premium has grown including the contribution made by • loss ratio (61.1%) - up 6.4 p.p. due to higher provisions in PZU the newly-acquired companies
Slide 15: Higher administrative expenses
Higher administrative expenses Outcome of executing projects in previous years m PLN PZU Group’s administrative expenses The following factors contributed to the increase in administrative Others 8.6% 1 528 expenses year on year: 1 406 (including 176 Newly-acquired • business expansion by acquiring
Slide 16: Agenda
Agenda 1. Insurance market in Poland in the first three quarters of 2014 2. Operating results for 2014 3. Shareholder value 4. Summary of PZU’s strategy 5. Detailed financials 15
Slide 17: Managing TSR - high return on equity
Managing TSR - high return on equity Growth rate of PZU’s share price adjusted for dividends paid out from its first listing compared to selected indices 12 May 2010 = 100* 34.00 PLN / share for 2013 (on top Return from of the interim dividend paid in Index 12.05.2010 - 2013) 31 December 2014 31.12.
Slide 18: Agenda
Agenda 1. Insurance market in Poland in the first three quarters of 2014 2. Operating results for 2014 3. Shareholder value 4. Summary of PZU’s strategy 5. Detailed financials 17
Slide 19: Execution of Strategy 2.0 in numbers
Execution of Strategy 2.0 in numbers Summary #1 33.0% Business size 42.9% Non-life market share in Poland Life insurance market share in Poland #1 in Poland, Lithuania and Latvia (regular premium in the first three (gross written premium in the first three following acquisitions in 2014 quarters of
Slide 20: Strategy 3.0 (2015 – 2020) – starting point
Strategy 3.0 (2015 – 2020) – starting point Profitability 1 Return on equity (ROE) 22.6% 20.0% • The PZU Group will maintain a competitive rate of return on invested capital (ROE) in a low interest rate environment no lower than 20%. 2014 2020 Insurance activity 2 PZU Group’s share of the insurance
Slide 21: Strategy 3.0 (2015 – 2020)
Strategy 3.0 (2015 – 2020) PZU Investments 3 TFI PZU’s percentage of assets in the mutual fund market In 2020 with regards to asset management the Group plans to (net of privately-held assets) achieve the following: • rapid growth in clients’ asset value along with the leading position in third part
Slide 22: Agenda
Agenda 1. Insurance market in Poland in the first three quarters of 2014 2. Operating results for 2014 3. Shareholder value 4. Summary of PZU’s strategy 5. Detailed financials 21
Slide 23: Detailed financials
Slide 24: PZU Group's key financial highlights
PZU Group’s key financial highlights Change Q4 2014 Change Q4 2014 m PLN, IFRS 2013 2014 Change YoY Q4 2013 Q4 2014 Q3 2014 over Q4 2013 over Q3 2014 Profit and Loss Statement Gross Written Premium 16 480 16 885 2.5% 4 077 4 476 9.8% 3 971 12.7% Premium Earned 16 249 16 429 1.1% 4 009 4 286 6.9% 4 1
Slide 25: Segment results
Segment results m PLN 6 534 6 569 6 539 6 415 Gross written premium (according to local GAAP) 1 740 1 831 1 330 1 269 1 098 374 204 174 262 536 INTERNATIONAL – LIFE POLAND – NON-LIFE POLAND – LIFE INSURANCE POLAND - OTHER AND NON-LIFE SEGMENTS Corporate client Mass client Group and continued Individ
Slide 26: Profitability by insurance segment
Profitability by insurance segment Combined Ratio / Insurance Business Segments Gross Written Premium Operating Profit Operating profit ratio* m PLN, local GAAP 2013 2014 Change YoY 2013 2014 Change YoY 2013 2014 Total Non-Life - Poland 8 274 8 401 1.5% 1 459 974 (33.3)% 87.3% 95.0% Mass Insurance -
Slide 27: Normalized operating profit
Normalized operating profit YTD, m PLN m PLN, IFRS 2013 2014 Operating Profit (according to financial 4 180.8 3 913.1 1 Impact exerted by conversion of long-term contracts into statements) renewable yearly term contracts according to IFRS. including: Income under the Greed Card product settlement wi
Slide 28: Profitability of the mass insurance segment (non-life insurance)
Profitability of the mass insurance segment (non-life insurance) Profitability of the mass insurance segment Combined ratio (COR - %) • Loss ratio growth due to the following: • level of claims and benefits up in motor insurance largely caused by higher claims provisions for bodily injury claims, in
Slide 29: Profitability of the corporate insurance segment (non-life insurance)
Profitability of the corporate insurance segment (non-life insurance) Profitability of the corporate insurance segment Combined ratio (COR - %) • Loss ratio growth due to the following: • lower earned premium (decline of 6.0%) - effect of contracts with a term of coverage exceeding 12 months - coupl
Slide 30: Group and continued insurance segment (life insurance)
Group and continued insurance segment (life insurance) Main components of operating profit in the group and continued insurance segment (m PLN) • Gross written premium up by 1.9% y/y mostly due to incremental growth in Change Gross Operating Profit 2013 1 603 year on year the portfolio of risks in p
Slide 31: Individual life insurance segment (life insurance)
Individual life insurance segment (life insurance) Main components of operating profit in the individual insurance segment (m PLN) • Gross written premium fell by 4.6% y/y primarily as the effect of suppressed Gross Operating Profit 2013 140 Change sales of investment products in the bacassurance ch
Slide 32: Profitability of international companies (non-life insurance)
Profitability of international companies (non-life insurance) Profitability of international companies Combined ratio (COR - %) • Increase in the loss ratio due to the higher level of claims provisions in Lithuania. • Rising administrative expense ratio mostly ensuing from higher expenses in the new
Slide 33: Investments
Investments Positive results of debt portfolios offset by lower results in equity portfolios m PLN Net investment result Equity instruments and derivatives* Interest-bearing financial assets* 12.2014 investment composition** 8.7% 4.1% 29.6% Total: 5.8% 54.0 bn PLN 6.2% 2 515 2 734 (102.6)% 2 555 1 9
Slide 34: Investments
Investments Positive results of debt portfolios offset by lower results in equity portfolios m PLN Net investment result Net investment result on the PZU Group’s main portfolio 2 515 2 734 2 506 2 275 2013 2014 2013 2014 Net investment result 12.2014 Investment products*: on investment products* 6.2
Slide 35: Robust capitalization and high solvency ratios
Robust capitalization and high solvency ratios YTD m PLN PZU’s own funds and solvency margin PZU Życie’s own funds and solvency margin coverage ratio (in m PLN, Polish GAAP) coverage ratio (in m PLN, Polish GAAP) 697.7% 585.9% 235.5% 224.1% 9 505.6 7 981.5 4 184.6 3 996.5 2013 2014 2013 2014 Solvenc
Slide 36: PZU Group's EEV decline caused by dividend payout
PZU Group’s EEV decline caused by dividend payout m PLN Analysis of PZU Group’s EEV evolution • EEV growth for the PZU Życie segment of 1 644 m PLN 1 206 (2 936) consisting of the following: - value of new business 157 m PLN; 25 734 1 644 25 648 - change of assumptions 147 m PLN; - other operating i
Slide 37: PZU Group's EEV decline caused by dividend payout
PZU Group’s EEV decline caused by dividend payout m PLN Net effect of dividend paid by PZU Życie and received from • higher investment income in 2014 by191 m PLN; PTE PZU • effect of change in the assumed rates of return by 96 m PLN. (1 949) 147 288 16 718 609 444 157 16 413 • growth of the group in
Slide 38: Questions and answers
Questions and answers Contact data: PZU Al. Jana Pawła II 24 00-133 Warsaw, Poland Planning and Controlling Department Piotr Wiśniewski – Manager of the Investor Relations Team 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 37
Slide 39: Disclaimer
Disclaimer This Presentation has been prepared by PZU SA (“PZU”) and is of purely informational character. It purports to depict selected data concerning PZU Capital Group (“PZU Group“) including its growth prospects. This Presentation contains forward-looking statements regarding Strategy 3.0, whic