Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — Powszechny Zakład Ubezpieczeń SA (PZU Group) — FY2012 Earnings Presentation
38 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Mar 13, 2013
Slide 1: PZU Group's 2012 Financial Results
PZU Group’s 2012 Financial Results Warsaw, 13 March 2013
Slide 2: Agenda
Agenda 1. 1 PZU Management Board Composition 2. Insurance Market in Poland after Q3 2012 3. Operating Performance in 2012 4. Financial Results Overview in 2012 5. Questions and Answers 2
Slide 3: PZU Management Board Composition
PZU Management Board Composition 3
Slide 4: Agenda
Agenda 1. PZU Management Board Composition 2 Insurance Market in Poland after Q3 2012 2. 3. Operating Performance in 2012 4. Financial Results Overview in 2012 5. Questions and Answers 4
Slide 5: 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 7.2% 19 758 18 956 16 783 16 045 112.0% 721 76 282 (1 122) Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '09 Q3 '10 Q3 '11 Q3 '12 4.6% 12.9% 4.2% 156.1% • Entire market enjoys improved profit
Slide 6: Life Insurance Market in Poland
Life Insurance Market in Poland YTD, m PLN Regular Gross Written Premium Technical Result Life Insurance* Life Insurance 5.8% (8.2)% 11 827 10 958 11 114 9 974 3 510 2 768 2 717 2 591 Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '09 Q3 '10 Q3 '11 Q3 '12 9.9% 1.4% 6.4% (21.1)% (6.4)% 4.8% • Regular premium unit-li
Slide 7: 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 ∆Q3 11 – Q3 12 ∆Q3 11 – Q3 12 19.1% 18.8% Other (1.0) p.p. 20.5% 22.2% Other 1.7 p.p. (0.2) p.p. 3,9% 4.0% 3.6% 4.3% 0.7 p.p. 8.5% 7.9% (0.6) p.p. 6.3%
Slide 8: PZU Market Share Stabilization
PZU Market Share Stabilization YTD Non-life Insurance Market 70,0% PZU’s Market Share in Gross Written Premium by Business Segment Q3 12 Corporate Clients Q3 12/Q3 11 60,0% 50,0% 49.3% Motor TPL (3.0) p.p. 40,0% 43.3% Motor Own Damage (4.7) p.p. 30,0% 20,0% 20.3% Other products 2.2 p.p. 10,0% 0,0% Q
Slide 9: Agenda
Agenda 1. PZU Management Board Composition 2. Insurance Market in Poland after Q3 2012 3 Operating Performance in 2012 3. 4. Financial Results Overview in 2012 5. Questions and Answers 9
Slide 10: Key Messages Describing PZU's Performance in 2012
Key Messages Describing PZU’s Performance in 2012 Higher GWP despite market downturn • Stable GWP growth in group and continued life segment • GWP growth in corporate non-life Primary focus on profitability • High profitability in group and continued life segment distorted by one-off effect of cutti
Slide 11: Overview of the PZU Group's 2012 Financial Results
Overview of the PZU Group’s 2012 Financial Results YTD Gross Written Premium (m PLN) Net Profit (m PLN) 6.3% 38.8% 15 279 16 243 3 254 2 344 2011 2012 2011 2012 Equity (bn PLN) ROE (%)* 10.9% 5.7 p.p. 14.3 12.9 24.0% 18.3% 2011 2012 2011 2012 * Ratio computed using equity at beginning and end of rep
Slide 12: 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* 15.7% 1 561 24.5% 3.0% 21.8% 1349 313 4.9% 4.9% 306 6 179 6 364 16.9% 1043 1241 19.6% Effect of changing technical rates
Slide 13: 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* 75.9% 125 90.3% 72 71 1 090 68 573 53 3 2011 2012 2011 2012 Bancassurance Own sales High sales of individual products in the bancassura
Slide 14: Profitability Up in Motor Insurance in Mass Client Segment
Profitability Up in Motor Insurance in Mass Client Segment YTD, m PLN Gross Written Premium Operating Profit in Mass Client Segment in Mass Client Segment 3.0% 58.1% 6 614 800 6 423 573 276 4 126 4 164 299 276 61 2 297 2 450 213 247 2011 2012 2011 2012 • Price hikes in motor TPL business in 2011 con
Slide 15: In Corporate Client Segment Profitability Down on Contractual Guarantees
In Corporate Client Segment Profitability Down on Contractual Guarantees for Construction YTD, m PLN Gross Written Premium Operating Profit in Corporate Client Segment in Corporate Client Segment 0.9% 1 824 1 840 939 11.9% 1 050 218 194 101 774 901 136 21 129 37 2011 2012 2011 2012 (13) • Success in
Slide 16: PZU Group Restructuring Program in 2007-2013 – Headcount Optimization
PZU Group Restructuring Program in 2007-2013 – Ongoing Headcount Optimization PZU Group’s Headcount in 000s of FTEs* (1.2) Restructuring phase in 2013. (2.0) 5.3 (0.9) (0.6) (0.6) 16.7 15.5 13.5 12.6 12.0** 11.4 2007 2009 2010 2011 2012 Restructuring plan 2013 Ongoing headcount restructuring launche
Slide 17: Stable Recurring Administrative Expenses, Increased Project Activity
Stable Recurring Administrative Expenses Inreased Project Activity YTD, m PLN Administrative Expenses 4.1% • Recurring expenses stable despite business growth. 1 440 Other (including 1 384 • Higher administrative expenses on projects to optimize project expenses) 140 service processes and enhance th
Slide 18: We Are Changing for the Better…
We Are Changing for the Better… BRD: rebranding • 12 May to 31 July 2012: marketing campaign under the slogan „we are changing for the better”, • 90% of the prospective clients surveyed spontaneously named PZU as one of the insurance brands, • over 2 thousand branches, agency outlets and repair netw
Slide 19: Implementing Everest to Achieve PZU 2.0 Strategy
Implementing Everest to Achieve PZU 2.0 Strategy … in Customer Focus by assuring higher customer satisfaction and active customer relations management DSP: new policy system for non-life insurance • 9 July 2012 – contract concluded with Guidewire Inc., • Total process transformation – new client ser
Slide 20: Outlook for 2013…
Outlook for 2013… ENVIRONMENT PZU Group INSURANCE 1. Continuing to unify sales units ● Possible price war 2. Devising new operating model and implementing IT product system ● Higher claims frequency in motor business (sales slated to commence at yearend (more traffic) 2013; full roll-out to last 3 y
Slide 21: Agenda
Agenda 1. PZU Management Board Composition 2. Insurance Market in Poland after Q3 2012 3. Operating Performance in 2012 4 Financial Results Overview in 2012 4. 5. Questions and Answers 21
Slide 22: Overview of PZU Group's Financial Highlights
Overview of PZU Group’s Financial Highlights Change Q4 m PLN, IFRS 2011 2012 Change YoY Q4 2011 Q4 2012 Change YoY Q3 2012 over Q3 Profit and Loss Statement Gross Written Premium 15 279 16 243 6.3% 3 853 4 084 6.0% 3 913 4.4% Premium Earned 14 891 16 005 7.5% 3 836 4 056 5.7% 4 083 (0.7)% Investment
Slide 23: Higher PZU Group Operating Profit Driven by Better Investment Result
Higher PZU Group Operating Profit Driven by Better Investment Result YTD, m PLN 6 423 6 614 6 179 6 364 GWP (Local GAAP) 3 054 1 824 1 840 1 859 1 090 573 121 142 164 196 INTERNATIONAL POLAND – NON-LIFE POLAND – LIFE NON-LIFE POLAND - OTHER SEGMENTS Corporate Mass Group and Individual Investment Ukr
Slide 24: 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 2011 2012 Change YoY 2011 2012 Change YoY 2011 2012 Total Non-Life 8 532 8 792 3.0% 760 1 030 35.6% 95.3% 92.8% Mass Insurance - P
Slide 25: Extraordinary Items Affecting the Results
Extraordinary Items Affecting the Results YTD, m PLN Impact of converting long-term contracts into yearly- mln PLN, IFRS 2011 2012 1 renewable term contracts under IFRS. 2 Adjusting the technical rate for IFRS mathematical Operating Profit (according to financial provisions to the level in Polish GA
Slide 26: Impact on PZU Group Results by Changing the Technical Rates
Impact on PZU Group Results by Changing the Technical Rates 1 PZU – capitalized annuity provision 1 PZU made the following changes to the capitalized annuity provision: • it cut the technical rate (from 3.7% to 3.6%) following the bond yield decline and the ensuing drop in future rates of (234.2) m
Slide 27: 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 +3.0% Y/Y mainly due to larger group Gross Operating Profit 2011 1 780 insurance portfolio (including riders to continued insurance) and higher average pr
Slide 28: Individual Life Insurance Segment
Individual Life Insurance Segment Primary Operating Profit Components in Individual Life Insurance (m PLN) Remarks Y/Y • GWP up 90.3% Y/Y primarily driven by high sales of Gross Operating Profit 2011 160 investment products via the bancassurance channel. Gross Written Premium 517 90.3% • Higher inve
Slide 29: 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 13.4 p.p. to 65.4%) in motor business 2011 96.2% stemming from lower loss frequency. • Effect of lower loss ratio in motor business partly offset by: o indemni
Slide 30: Profitability in Mass Non-life Insurance Segment
Profitability in Mass Non-life Insurance Segment Profitability of Mass Non-life Insurance (COR %) Remarks • Lower loss ratio in: 2011 94.6% o motor business (down 1.5 p.p. to 74.9%) as a result of lower loss frequency; o other non-life business due to low number of single high Loss ratio 0.8 p.p. 4.
Slide 31: High Profitability of Debt and Equity Instruments
High Profitability of Debt and Equity Instruments 2011 Investment Composition* 2012 Investment Composition* 1.1% 1.1% 1.9% Debt securities 2.0% 10.9% 12.5% Reverse repo and deposits 11.6% Loans 13.7% Equity instruments and derivatives Investment property 70.6% 74.5% Other investments Total: 47.2 bn
Slide 32: High Profitability of Main Portfolio in Q4 2012
High Profitability of Main Portfolio in Q4 2012 Net quarterly data Investment Revenues on PZU Group’s Investment Revenues (Total m PLN) Main Portfolio (m PLN) 5.3% 895 943 699 603 1 135 1 045 873 651 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Investment Revenues at Policyholders’ Risk*
Slide 33: 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) 687% 815% 333% 376% 10 956 9 192 5 704 6 551 2011 2012 2011 2012 Solvency Margin Coverage Ratio Solvency
Slide 34: PTE Segment Subject to Regulation Changes
PTE Segment Subject to Regulation Changes m PLN Segment change included in the valuation – Excluding PTE Regulation changes: • 2010 – management fees limitation; • 2011 – cutting of contributions to pension funds; (1 830) • 2012 – restrictiion of acquisition activity to new entrants to the pension f
Slide 35: PZU Group's EEV Growth Driven by Higher Value of the PZU Life Segment
PZU Group’s EEV Growth Driven by Higher Value of the PZU Life Segment m PLN Analysis of changes to the PZU Group’s EEV • The PZU Life segment’s EEV growth of 1 788 (1 937) 2,919 m PLN driven by: 26 407 o new sell value 177 m PLN; 23 638 2 919 o assumption changes 550 m PLN; 7 897 o increase in other
Slide 36: Change of the PZU Life Segment's EEV
Change of the PZU Life Segment’s EEV m PLN Net results of dividend paid • Additional investment income in 2012: 704 m PLN; by PZU Life and dividend • Effect of changing discount rates : 116 m PLN. received from PTE PZU. 820 (1 141) 18 510 550 917 455 16 732 177 • Policy administration expenses: 205
Slide 37: Agenda
Agenda 1. PZU Management Board Composition 2. Insurance Market in Poland after Q3 2012 3. Operating Performance in 2012 4. Financial Results Overview in 2012 5 Questions and Answers 5. 37
Slide 38: Questions and Answers
Questions and Answers Contact Details: 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 38
Powszechny Zakład Ubezpieczeń SA (PZU Group) — FY2012 Earnings Presentation on 6ix