Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — PZU Group — Q3 2012 Earnings Presentation
30 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Nov 14, 2012
Slide 1: PZU Group's Q1-Q3 2012 Financial Results
PZU Group’s Q1-Q3 2012 Financial Results Warsaw, 14 November 2012
Slide 2: Agenda
Agenda 1. 1 Insurance market in Poland after H1 2012 2. Operating Performance in Q1 - Q3 2012 3. Financial Results Overview in Q1 - Q3 2012 4. Questions and Answers 2
Slide 3: Insurance market in Poland
Insurance market in Poland YTD, m PLN Gross Written Premium Technical Result Non-life Insurance Non-life Insurance 7.7% 13 596 12 757 10 876 11 218 Decelerating pace 6 550 of market growth 6 380 2.7% Q2 5 220 5 498 37.5% in Q2 6 377 10.5% 7 046 547 Q1 5 655 5 719 210 261 (785) 09 10 11 12 3.1% 13.7%
Slide 4: Insurance market in Poland
Insurance market in Poland YTD, m PLN Regular Gross Written Premium Technical Result Life Insurance* Life Insurance 4.4% (11.7)% 7 956 7 251 7 825 6 987 2 488 1 810 1 715 1 757 H1 '09 H1 '10 H1 '11 H1 '12 H1 '09 H1 '10 H1 '11 H1 '12 3.8% 7.9% 1.7% (27.3)% (2.9)% (2.4)% • PZU Life’s share of the mark
Slide 5: Market Share Decreasing at Lower Pace
Market Share Decreasing at Lower Pace Effect of Restructuring Corporate Insurance & Changes in Price Positioning YTD PZU Life Market Share PZU’s Market Share Life Insurance (Regular Premium) Non-life Insurance ∆H1 ‘11 – H1 ’12 ∆H1 ‘11 – H1 ’12 20.4% 22.3% 30.4% 27.2% Others (3.2) p.p. Others 1.9 p.p
Slide 6: Non-life Insurance Market
Non-life Insurance Market PZU’s Market Share by Business Segment YTD 70,0% H1 `12 Corporate Clients H1 ‘12/H1 ’11 60,0% Motor TPL (2.9) p.p. 50,0% 49.2% 40,0% 43.6% Motor Own Damage (4.3) p.p. 30,0% 21.5% Other products 3.5 p.p. 20,0% 10,0% 0,0% Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '1
Slide 7: Agenda
Agenda 1. Insurance market in Poland after H1 2012 2. 2 Operating Performance in Q1 - Q3 2012 3. Financial Results Overview in Q1 - Q3 2012 4. Questions and Answers 7
Slide 8: Key Issues Describing PZU's Performance in Q1-Q3 2012
Key Issues Describing PZU’s Performance in Q1 - Q3 2012 • GWP growth despite worsening market conditions • Stable GWP growth in group and continued life segment • GWP growth in corporate non-life (new products) • Profitability as main focus • One of the best quarterly results in PZU Group’s history
Slide 9: Overview of the PZU Group's Q1-Q3 2012 Financial Results
Overview of the PZU Group’s Q1 - Q3 2012 Financial Results YTD Gross Written Premium (m PLN) Net Profit (m PLN) 6.4% 52.9% 12 159 2 840 11 426 1 857 Q3 '11 Q3 '12 Q3 '11 Q3 '12 Equity (bn PLN) ROE (%)* 11.1% 8.8 p.p. 13.8 28.4% 12.4 19.6% Q3 '11 Q3 '12 Q3 '11 Q3 '12 * Annualized ratio computed using
Slide 10: 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* 12.8% 1 095 23.0% 3.5% 21.1% 971 239 16.1% 231 18.0% 5.0% 5.0% 4 608 4 771 856 740 Q3 '11 Q3 '12 Q3 '11 Q3 '12 Drivers o
Slide 11: Individual Insurance Is Expanding Rapidly on Sales in Bancassurance Channel
Individual Insurance Is Expanding Rapidly on Sales in Bancassurance Channel YTD, m PLN Gross Written Premium Individual Life Segment APE in Individual Life Segment* 71.5% 89 91.0% 52 52 772 51 404 37 1 Q3 '11 Q3 '12 Q3 '11 Q3 '12 Bancassurance Own sale High sales of individual products in the bancas
Slide 12: Mass Client Segment Profitability Up in Motor Insurance
Mass Client Segment Profitability Up in Motor Insurance YTD, m PLN Gross Written Premium Operating profit in Mass Client Segment in Mass Client Segment 2.3% 4 970 52.4% 4 859 764 200 501 3 067 3 131 228 383 114 1 792 1 839 159 181 Q3 '11 Q3 '12 Q3 '11 Q3 '12 • Price hikes in 2011 in motor TPL busine
Slide 13: Corporate Client Segment Profitability Down on Contractual Guarantees
Corporate Client Segment Profitability Down on Contractual Guarantees in Construction Contracts YTD, m PLN Gross Written Premium Operating Profit in Corporate Client Segment in Corporate Client Segment 3.4% 1 358 1 405 708 (15.1)% 775 164 139 697 107 73 583 5 86 52 Q3 '11 Q3 '12 Q3 '11 Q3 '12 (20) •
Slide 14: Higher Administrative Expenses on Project Activities
Higher Administrative Expenses on Project Activities YTD, m PLN Administrative Expenses 6.3% • Decelerating pace of administrative expenses growth y/y (costs of restructuring project launched in 2011). 999 • Recurring expenses stable despite business growth. 940 Other (including 100 project expenses
Slide 15: Good results and volatile financial situation - proper time for investments
Good results and volatile financial situation - proper time for investments ENVIRONMENT PZU Group INSURANCE One of the PZU Group’s best quarterly results in its history and.. ● Robust results in Q1-Q2 ● Low claims frequency in Motor Business … prime time to make investments to ● No catastrophic even
Slide 16: Implementing Everest to Achieve PZU 2.0 Strategy
Implementing Everest to Achieve PZU 2.0 Strategy Business transformation (Implementing the of Target Operating ... entailing the implementation and Model) ... integration of a insurance system New insurance IT system… I Enhancing flexibility and shortening ’time-to-market’ • ability to adjust produc
Slide 17: Agenda
Agenda 1. Insurance market in Poland after H1 2012 2. Operating Performance in Q1 - Q3 2012 3. 3 Financial Results Overview in Q1 - Q3 2012 4. Questions and Answers 17
Slide 18: Overview of PZU Group's Financial Highlights
Overview of PZU Group’s Financial Highlights Change Q3 m PLN, IFRS Q1-Q3 2011 Q1-Q3 2012 Change YoY Q3 2011 Q3 2012 Change YoY Q2 2012 over Q2 Profit and Loss Statement Gross Written Premium 11 426 12 159 6.4% 3 753 3 913 4.3% 3 924 (0.3)% Premium Earned 11 054 11 949 8.1% 3 785 4 083 7.9% 3 998 2.1
Slide 19: Higher PZU Group Operating Profit due to Better Investment Result
Higher PZU Group Operating Profit due to Better Investment Result and Higher Profitability in Mass Client Segment YTD, m PLN 4 859 4 970 4 608 4 771 2 906 GWP (Local GAAP) 1 358 1 405 1 661 772 404 85 100 115 144 POLAND – NON-LIFE POLAND – LIFE ABROAD – NON-LIFE POLAND - OTHER SEGMENTS Corporate Mas
Slide 20: Profitability by Insurance Business Segment
Profitability by Insurance Business Segment Insurance Business Gross Written Premium Operating Profit Combined Ratio / Segments Operating profit ratio* Q1-Q3 Q1-Q3 m PLN, local GAAP Q1-Q3 2011 Q1-Q3 2012 Change YoY Change YoY Q1-Q3 2011 Q1-Q3 2012 2011 2012 Total Non-Life 6 418 6 618 3.1% 664 915 37
Slide 21: Extraordinary Items Affecting the Results
Extraordinary Items Affecting the Results YTD, m PLN 1 Impact of converting long-term contracts into yearly- renewable term contracts comparable Y/Y. m PLN, IFRS Q1-Q3 2011 Q1-Q3 2012 2 The difference between the value of the Armatura Group carried in the balance sheet as at 31 December Operating Pr
Slide 22: 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 +3.5% Y/Y mainly due to higher group Gross Operating Profit Q1 - Q3 2011 1 346 Y/Y insurance portfolio (including riders to continued insurance) and highe
Slide 23: Individual Life Insurance Segment
Individual Life Insurance Segment Primary Operating Profit Components in Individual Life Insurance (m PLN) Remarks Gross Operating Profit Y/Y • GWP up by 91.0% Y/Y primarily driven by high sales Q1 - Q3 2011 148 of investment products via the bancassurance channel. Gross Written Premium 148 368 91.0
Slide 24: Profitability of Corporate Non-life Insurance Segment
Profitability of Corporate Non-life Insurance Segment Profitability of Corporate Non-life Insurance (COR %) Remarks • Lower loss ratio (down 13.3 p.p. to 68.0%) in motor business Q1 - Q3 2011 95.7% stemming from the decrease in loss frequency. • Lower loss ratio in motor business partly compensated
Slide 25: Profitability in Mass Non-life Insurance Segment
Profitability in Mass Non-life Insurance Segment Profitability of Mass Non-life Insurance (COR %) Remarks • Decrease in loss ratio in: Q1 - Q3 2011 94.0% o motor business (down 6.1 p.p. to 69.9%) as a result of lower loss frequency; o other non-life business due to low number of single high Loss rat
Slide 26: High Profitability of Debt and Equity Instruments
High Profitability of Debt and Equity Instruments Q3 `11 Investment Composition* Q3 `12 Investment Composition* 0.9% 1.1% 0.1% Debt securities 2.1% 10.4% 11.6% Reverse repo and deposits 15.1% Loans 8.8% Equity instruments and derivatives Investment property 73.5% 76.4% Other investments Investment R
Slide 27: High Profitability of Main Portfolio in Q3 2012
High Profitability of Main Portfolio in Q3 2012 Net quarterly data, m PLN Investment Revenues on main portfolio Investment Revenues (Total m PLN) of PZU Group (m PLN) 48.4% 895 699 1 045 603 873 651 Q1 '12 Q2 '12 Q3 '12 Investment Revenues on Policyholders’ Q1 '12 Q2 '12 Q3 '12 Risk* (m PLN) No impa
Slide 28: Robust Capitalization, Strong Solvency Ratios and Stable Dividends
Robust Capitalization, Strong Solvency Ratios and Stable Dividends 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) 666.1% 763.8% 313.4% 361.8% 8 909 10 216 5 323 6 258 Q3 '11 Q3 '12 Q3 '11 Q3 '12 Solven
Slide 29: Agenda
Agenda 1. Insurance market in Poland after H1 2012 2. Operating Performance in Q1 - Q3 2012 3. Financial Results Overview in Q1 - Q3 2012 4. 4 Questions and Answers 29
Slide 30: Questions and Answers
Questions and Answers Contact data: PZU Al. Jana Pawła II. 24 00-133 Warsaw, Poland Management Board Office Marcin Góral – Director 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 30