Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — PZU Group — FY2013 Earnings Presentation
38 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Mar 12, 2014
Slide 1: PZU Group's Financial Results in 2013
PZU Group’s Financial Results in 2013 Warsaw, 12 March 2014
Slide 2: Agenda
Agenda R 1 Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. Shareholder Value 5. Everest 6. Overview of Financial Results in 2013 7. Questions and Answers 2
Slide 3: PZU's Group Management Board
PZU’s Group Management Board 3
Slide 4: Agenda
Agenda 1. Composition of the Management Board 2. 2 Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. Shareholder Value 5. Everest 6. Overview of Financial Results in 2013 7. Questions and Answers 4
Slide 5: Non-Life Insurance Market In Poland
Non-Life Insurance Market In Poland m PLN Gross written premium Technical result Non-life insurance Non-life insurance 5.8% 19 758 20 084 18 956 1 408 16 045 16 783 712 76 282 (1 122) Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '13 Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '13 4.6% 12.9% 4.2% 1.6% 152.6% 97.9% • Significan
Slide 6: Life Insurance Market In Poland
Life Insurance Market In Poland m PLN Regular gross written premium Technical result Life insurance* Life insurance 4.5% 3 510 11 827 11 901 11 114 10 958 9 974 2 768 2 591 2 717 2 327 Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '13 Q3 '09 Q3 '10 Q3 '11 Q3 '12 Q3 '13 9.9% 1.4% 6.4% 0.6% (21.1)% (6.4)% 4.8% (14.3
Slide 7: PZU Is the Leader in the Insurance Sector in Poland
PZU Is the Leader in the Insurance Sector in Poland PZU Life's market share PZU's market share Life insurance (regular premium) Non-life insurance ∆ Q3 2012 – Q3 2013 ∆ Q3 2012 – Q3 2013 18.8% 18.7% Other (0.1) p.p. 17.8% 18.2% Other 0.4 p.p. 0.0 p.p. (0.1) p.p. 4.3% 4.3% 4.4% 4.3% 4.0% 4.8% 0.8 p.p
Slide 8: Agenda
Agenda 1. Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. 3 Operating Results in 2013 4. Shareholder Value 5. Everest 6. Overview of Financial Results in 2013 7. Questions and Answers 8
Slide 9: Higher Profitability and Cost Discipline Are the Product of Strategy Implementation
Higher Profitability and Cost Discipline Are the Product of Strategy Implementation • Our strategy has produced robust financial results by implementing the following: • Restrictive cost policy • Optimizing claims handling processes and superb operational excellence • Enhancing profitability in the
Slide 10: Overview of the PZU Group's Financial Results in 2013
Overview of the PZU Group’s Financial Results in 2013 YTD Gross written premium (m PLN) Net profit (m PLN) 1.5% 1.3% 16 243 16 480 3 254 3 295 2012 2013 2012 2013 Equity (bn PLN)* Return on equity (%)** (8.0)% 0.1 p.p. 14.3 13.1 24.0% 24.1% 2012 2013 2012 2013 * Effect of dividend paid from net prof
Slide 11: Group Life Insurance and Continued Business Grow Steadily and Profitably
Group Life Insurance and Continued Business Grow Steadily and Profitably YTD Gross written premium Operating profit Group and continued segment Group and continued segment* (5.4)% 0.8% 24.5% 1 561 23.0% 6 364 6 415 1 476 Single 76 1 5.3% 338 281 4.4% premium Regular 6 288 2.0% 6 414 19.2% 1223 18.6%
Slide 12: Individual Insurance Is Growing Rapidly
Individual Insurance Is Growing Rapidly YTD, m PLN Gross written premium in Annual premium equivalent (APE) in individual life segment individual life segment* 22.0% 12.1% 1 330 140 125 1 090 846 81 72 606 484 (0.0)% 484 53 59 2012 2013 2012 2013 Bancassurance Own sale High sales of individual insur
Slide 13: Higher Profitability in the Tough Corporate Client Segment
Higher Profitability in the Tough Corporate Client Segment YTD, m PLN Gross written premium Operating profit in the Corporate Client Segment in the Corporate Client Segment (5.4)% 80.0% 1 840 1 740 391 218 112 939 853 125 101 901 887 130 154 (13) 2012 2013 2012 2013 • Lower sales of insurance to pat
Slide 14: Profitability Up in the Mass Client Segment
Profitability Up in the Mass Client Segment YTD, m PLN Gross written premium Operating profit in the Mass Client Segment in the Mass Client Segment (1.2)% 6 614 6 534 33.5% 1 067 800 285 4 164 4 003 276 243 276 2 450 2 531 539 248 2012 2013 2012 2013 • Decline of gross written premium in motor TPL –
Slide 15: Lower Administrative Expenses as a Result of Process Optimization
Lower Administrative Expenses as a Result of Process Optimization YTD, m PLN Administrative expenses (2.3)% • Lower level of administrative expenses driven among others 1 440 by lower payroll expenses, as a consequence of the following: 1 406 Other (including • Centralizing operations and claims han
Slide 16: Soaring financial results with significant decrease in conversion effect
Soaring financial results with significant decrease in conversion effect and enhance of operational results m PLN PZU Group 4 566 4 440 4 422 gross rsult 4 039 4 121 619 127 1 049 1 340 207 3 029 2 931 2 908 2 248 520 406 997 3 182 3 141 2 466 2 968 1 686 977 2 407 1 746 908 957 816 639 691 258 102
Slide 17: Agenda
Agenda 1. Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. 4 Shareholder Value 5. Everest 6. Overview of Financial Results in 2013 7. Questions and Answers 17
Slide 18: PZU Shapes TSR through Share Price Growth and Dividend Disbursement
PZU Shapes TSR through Share Price Growth and Dividend Disbursement PZU share price development adjusted for dividends paid from the first day of listing compared to selected indices 12 May 2010=100* 11 March 2014 20.00 PLN interim dividend 190,0 190.0 Return from per share for 2013 Index 28 April 2
Slide 19: Agenda
Agenda 1. Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. Shareholder Value 6. Everest 5 6. Overview of Financial Results in 2013 7. Questions and Answers 19
Slide 20: Small Pilot Is Merely the First Phase of Comprehensive Business Transformation
Small Pilot Is Merely the First Phase of Comprehensive Business Transformation 18 November 2013 we launched the pilot of the Everest Platform and the PZU Auto product on a small scale in the tied sales network in Lublin. In January 2014 we commenced the large-scale pilot, after which, we will implem
Slide 21: The Everest Platform Facilitates the Implementation of the PZU 2.0 Strategy
The Everest Platform Facilitates the Implementation of the PZU 2.0 Strategy PZU 2.0 Modular products – rapid changes to tariffs and launching new products Less than 1km of 3600 client picture: new hardcopy all relations, contact documentation, history and history electronic of changes administration
Slide 22: Timline to Launch New Insurance Products
Timline to Launch New Insurance Products By end of 2014 we will rollout Motor, Home and selected Proprietary products. Other mass products will be implemented from 2015. In 2016 we will implement products for Corporate Clients. We plan to end implementation of the new policy system by mid 2016. 22
Slide 23: Agenda
Agenda 1. Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. Shareholder Value 5. Everest 6. 6 Overview of Financial Results in 2013 7. Questions and Answers 23
Slide 24: PZU Group's Financial Highlights
PZU Group’s Financial Highlights Change Q4 2013 Change Q4 2013 m PLN, IFRS 2012 2013 Change YoY Q4 2012 Q4 2013 Q3 2013 over Q4 2012 over Q3 2013 Profit and Loss Statement Gross Written Premium 16 243 16 480 1.5% 4 084 4 077 (0.2)% 3 907 4.4% Premium Earned 16 005 16 249 1.5% 4 056 4 009 (1.2)% 4 06
Slide 25: High Profitability of Corporate and Mass Segments Accompanied by Low Investment Income
High Profitability of Corporate and Mass Segments Accompanied by Low Investment Income YTD, m PLN 6 614 6 534 6 364 6 415 GWP (Local GAAP) 1 840 1 740 1 859 1 0901 330 1 098 142 204 196 262 INTERNATIONAL – LIFE POLAND – NON-LIFE POLAND - LIFE POLAND - OTHER AND NON-LIFE SEGMENTS Corporate Clients Ma
Slide 26: Profitability by Insurance Business Segment
Profitability by Insurance Business Segment Combined Ratio / Insurance Business Segments Gross Written Premium Operating Profit Operating profit ratio* m PLN, local GAAP 2012 2013 Change YoY 2012 2013 Change YoY 2012 2013 Total Non-Life - Poland 8 453 8 274 (2.1)% 1 017 1 459 43.4% 92.3% 87.3% Mass
Slide 27: Extraordinary Items Affecting the Results
Extraordinary Items Affecting the Results YTD, m PLN m PLN, IFRS 2012 2013 1 Impact of converting long-term contracts into yearly- renewable term contracts under IFRS. Operating Profit (according to financial 2 Adjustment of the technical rate for mathematic 4 080.2 4 181.0 statements) provisions un
Slide 28: Group and Continued Business (Life Insurance)
Group and Continued Business (Life Insurance) Primary Operating Profit Components in Group and Continued Life Insurance (m PLN) Remarks • Gross written premium up +0.8% y/y mainly due to larger risk portfolio in protection insurance (including riders to continued business) and higher average premium
Slide 29: Individual Insurance Segment (Life Insurance)
Individual Insurance Segment (Life Insurance) Primary Operating Profit Components in the Individual Insurance Segment (m PLN) Remarks • Gross written premium up +22.0% y/y primarily driven by high sales of investment products in bancassurance channel. • Investment result on investment products went
Slide 30: Profitability of Corporate Segment (Non-Life Insurance)
Profitability of Corporate Segment (Non-Life Insurance) Profitability of Corporate Segment Combined Ratio (COR - %) Remarks • Lower loss ratio: o Improvement in motor business as a result of decrease in claims COR 2012 92.0% frequency (effect of better road conditions) and of curtailing of unprofita
Slide 31: Profitability of Mass Segment (Non-Life Insurance)
Profitability of Mass Segment (Non-Life Insurance) Profitability of Mass Segment Combined Ratio (COR - %) Remarks • Decrease in loss ratio as a result of a significantly lower level of losses caused by natural disasters (adverse effects of wintering and frost) in COR 2012 92.4% agricultural insuranc
Slide 32: Decline of Debt Instrument Valuation Conditions on Capital Markets Below 2012
Decline of Debt Instrument Valuation Conditions on Capital Markets Below 2012 Investment Composition 2012* Investment Composition 2013* 0.1% 2.9% 1.1% 7.8% Treasury debt securities, repo, • The yield on 5-year treasury 5.6% 4.8% reverse repo and deposits 6.7% bonds rose by 42 basis points per Non-Tr
Slide 33: Low Profitability in Main Portfolio and at Policyholder's Risk
Low Profitability in Main Portfolio and at Policyholder’s Risk Net quarterly data Investment Income Investment Income in the PZU Group’s (Total, m PLN) Main Portfolio (m PLN) 889 711 630 558 543 429 540 436 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Investment Income at the Policyholder
Slide 34: Robust Capitalization and Strong Solvency Ratios
Robust Capitalization and Strong Solvency Ratios YTD PZU Own Funds and Solvency Margin PZU Life Own Funds and Solvency Margin Coverage Ratio (m PLN, Polish GAAP) Coverage Ratio (m PLN, Polish GAAP) 815% 698% 376% 236% 10 956 9 506 6 551 4 185 2012 2013 2012 2013 Solvency Margin Coverage Ratio Solven
Slide 35: Decline in the PZU Group's EEV Driven by Dividend Payment
Decline in the PZU Group’s EEV Driven by Dividend Payment Analysis of the PZU Group’s EEV changes 1 619 • EEV growth in the Life segment by 26 407 1 999 (4 292) 1 999 m PLN caused by: 25 734 - Value of new business 215 m PLN, - Change of assumptions 707 m PLN, 7 897 9 016 - Other operating growth 1.
Slide 36: EEV Bridge for the Life Segment
EEV Bridge for the Life Segment • 2013 investment income down - 408 m PLN Net effect of divided paid by • Effect of changing discount rates 172 m PLN PZU.Życie and received from PTE PZU 707 (236) (3 791) 18 510 710 604 215 16 718 • Costs of handling contracts • Conversion of group contracts 50 m PLN
Slide 37: Agenda
Agenda 1. Composition of the Management Board 2. Polish Insurance Market after Q3 2013 3. Operating Results in 2013 4. Shareholder Value 5. Everest 6. Overview of Financial Results in 2013 78. Questions and Answers 37
Slide 38: 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