32 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Nov 8, 2011
Slide 1: Presentation of PZU's Q3 2011 financial results
Presentation of PZU’s Q3 2011 financial results 0 Warsaw, 08 November 2011
Slide 2: Management Board, strategy progress, financial results overview
Current composition of the PZU Group’s Management Board Progress in strategy implementation Overview of the financial results in the first 3 quarters of 2011 1 PZU Group: Presentation of the Q3 2011 financial results
Slide 3: Management Board of the PZU Group
Management Board of the PZU Group Andrzej Klesyk CEO PZU SA Dariusz Krzewina Przemysław Dąbrowski Witold Jaworski Bogusław Skuza Tomasz Tarkowski Ryszard Trepczyński Rafał Grodzicki CEO PZU Życie SA CFO PZU SA PZU Życie SA Responsible for Responsible for Responsible for retail Re
Slide 4: Delivering on IPO Promises
Delivering on IPO Promises Life insurance: stable growth in group insurance, development of individual insurance Non-life insurance: sales growth on the mass market, enhancing profitability in the corporate segment Restructuring: ongoing headcount optimization, other savings measures regarding IT an
Slide 5: Overview of the Financial Results for 1-3Q 2011
Overview of the Financial Results for 1- 3 Q 2011 m PLN 1-3Q 2010 1-3Q 2011 Change YoY Gross Written Premium 10 801 11 426 5.8% Investment Result 2 186 1 040 (52.4%) Operating Profit 2 378 2 332 (2.0%) Net Profit 1 874 1 857 (0.9%) ROE * 21.3% 19.6% (1.7 p.p.) * Computed using average equity of the
Slide 6: Agenda
Agenda Business Overview Financial Results Overview Questions and Answers 5 PZU Group: Presentation of the Q3 2011 financial results
Slide 7: Growth in Life Insurance Coupled with a Stable Level of Profitability
Growth in Life Insurance Coupled with a Stable Level of Profitability Regular Gross Written Premium Technical Result Life Insurance (m PLN) Life Insurance (m PLN) 7 822 7 251 6 987 2 488 6 904 1 924 1 806 6 692 1 617 1 754 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2007 1H 2008 1H 2009 1H 2010 1H 20
Slide 8: Non-life Insurance Segment Still Growing but Considerable Pressure on Profitability
Non-life Insurance Segment Still Growing but Considerable Pressure on Profitability Continues to be Present Gross Written Premium – Technical Result Non-life Insurance (m PLN) Non-life Insurance (m PLN) 12 757 11 218 10 876 10 325 741 769 9 127 210 257 -785 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H
Slide 9: Gross Written Premium Growth vs. Growth in Non-life Claims Paid
Gross Written Premium Growth vs. Growth in Non-life Claims Paid Gross Written Premium – Claims Paid – Non-life Insurance (m PLN) Non-life Insurance (m PLN) 8.8% 12 757 11 218 10 876 10 325 12.7% 6 797 6 984 9 127 5 935 4 773 4 379 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2007 1H 2008 1H 2009 1H 20
Slide 10: Decelerating Pace of Market Share Constriction
Decelarating Pace of Market Share Constriction Effect of Restructuring Corporate Insurance in Non-life Business PZU’s Market Share – Life Insurance (Regular Premium) PZU’s Market Share – Non-life Insurance ∆‘1H10-’ 1H11 ∆‘1H 10-’ 1H11 31,9% 35,5% Others +3.6 pp 37,7% 39,9% Others +2.2 pp 5,8% -0.5 p
Slide 11: Delivering on IPO Promises
Delivering on IPO Promises Life insurance: stable growth in group insurance, development of individual insurance Non-life insurance: sales growth on the mass market, enhancing profitability in the corporate segment Restructuring: ongoing headcount optimization, other savings measures regarding IT an
Slide 12: In Group Life Insurance and Continued Business Remain Stable
In Group Life Insurance and Continued Business Remain Stable... PZU’s Gross Written Premium – Group and PZU’s Operating Profit – Group and Continued Continued Business (m PLN) Business* (m PLN) 3.1% 1 130 1 039 (8.0)% Non-recurring 4 608 result on adjusting 4 469 8.7% provisions for 387 315 unpaid c
Slide 13: Individual Insurance Is Expanding Rapidly
… while Individual Insurance Is Expanding Rapidly PZU’s Gross Written Premium in Life Insurance (m PLN) PZU’s APE in Individual Life Insurance* (m PLN) 52 36.8% 7.1% 404 38 377 30 24 18 14 4 1- 3Q 2010 1- 3Q 2011 1- 3Q 2010 1- 3Q 2011 Other Plan na Życie PZU Ochrona Rodziny Launching new product: "P
Slide 14: In Non-life PZU's Position Has Stabilized in Individual Insurance
In Non-life PZU’s Position Has Stabilized in Individual Insurance while the Corporate Client Portfolio Is Still Undergoing Restructuring PZU SA’s Market Share – Individual Clients PZU SA’s Market Share – Corporate Clients 53,3% 51,7% 51,3% 62,8% 56,8% 61,2% 52,1% 54,2% 33,5% 34,2% 33,9% 47,9% 33,9%
Slide 15: Market Context in Motor Business Drives PZU's Sales and Profitability
Market Context in Motor Business Drives PZU’s Sales and Profitability PZU’s Gross Written Premium in Motor PZU’s Technical Result in Motor Insurance for Insurance for the Mass Market (m PLN) the Mass Market (m PLN) 11.1% 3 067 121 2 761 1- 3Q 2010 1- 3Q 2011 -28 1- 3Q 2010 1- 3Q 2011 End of price wa
Slide 16: Restructuring the Corporate Insurance Portfolio Is Producing Visible Improvement
Restructuring the Corporate Insurance Portfolio Is Producing Visible Improvement of Profitability PZU’s Gross Written Premium in Motor PZU’s Technical Result in Motor Insurance for Insurance for Corporate Clients (m PLN) Corporate Clients (m PLN) 3.3% 775 750 5 1- 3Q 2010 1- 3Q 2011 -138 1- 3Q 2010
Slide 17: PZU's Administrative Expenses Cut by PLN 164 m
PZU’s Administrative Expenses Cut by PLN 164 m in Q1- 3 2011 vs. Q1- 3 2010 Recurring Administrative Administrative Expenses Expenses (m PLN) (m PLN) • Centralizing functions and optimizing headcount. 1104 (14.8%) 1016 (10.6%) • Strict control of fixed expenses. 940 908 • No IPO costs in 2011. 1-3Q
Slide 18: Group's 2010-2012 restructuring program – next phase of headcount reduction
Group’s 2010-2012 restructuring program – next phase of headcount reduction Headcount in the PZU Group (FTEs) 16.7 about 1,070 employees are still on PZU payroll (1.2) 15.5 (2.3) 13.2 (1.2) 12.0 • The second phase of the restructuring program is almost completed. • The main areas are claims handling
Slide 19: Agenda
Agenda Business Overview Financial Results Overview Questions and Answers 18 PZU Group: Presentation of the Q3 2011 financial results
Slide 20: Overview of PZU's Financial Results in Q1-3 2011
Overview of PZU’s Financial Results in Q1- 3 2011 Gross Written Premium (m PLN) Net Profit (m PLN) 5.8% -0.9% 10 801 11 426 1 874 1 857 1- 3Q 2010 1- 3Q 2011 1- 3Q 2010 1- 3Q 2011 Equity (bn PLN) ROE (%) * 1.4% -1.7 pp 12,2 12,4 21,3% 19,6% 3Q 2010 3Q 2011 1- 3Q 2010 1- 3Q 2011 * Computed using aver
Slide 21: Overview of PZU's Financial Highlights
Overview of PZU’s Financial Highlights Change Q3 m PLN. IFRS 1- 3Q 2010 1- 3Q 2011 Change YoY Q3 2010 Q3 2011 Change YoY Q2 2011 over Q2 Profit and Loss Statement Gross Written Premium 10 801 11 426 5.8% 3 509 3 753 7.0 % 3 696 1.5% Non-life Insurance 5 955 6 414 7.7% 1 891 2 074 9.7% 2 023 2.5% Lif
Slide 22: Profitability by Major Product Lines
Profitability by Major Product Lines Gross Written Premium Operating Profit m PLN, IFRS Combined Ratio (m PLN) (m PLN) 1- 3Q 2010 1- 3Q 2011 Change YoY 1- 3Q 2010 1- 3Q 2011 Change YoY 1- 3Q 2010 1- 3Q 2011 Total 5 955 6 414 7.7% 3 445 2 618 (24.0%) 106.9% 95.0% Mass motor insurance 2 761 3 067 11.1
Slide 23: Changes in PZU SA reporting: premium recognition & ABC cost allocation
Changes in PZU SA reporting: premium recognition & ABC cost allocation GWP of PZU SA 1-3 Q 2010 1-3 Q 2011 % Previous m ethod Gross w ritten premium 5 915 6 332 7,1% Change of premium reserve 227 335 47,4% Gross earned premium 5 688 5 997 5,4% New m ethod Gross w ritten premium 5 769 6 217 7,8% Chan
Slide 24: Several Extraordinary Items Affected the Results
Several Extraordinary Items Affected the Results m PLN, IFRS 1- 3Q 2010 1- 3Q 2011 1 In Q1-3 2011 there were no claims related to snowfall and Operating Profit (according to flooding, which took place in 2010. 2 378.0 2 331.5 financial statements) 2 In Q1-3 2011 there were no costs to finance the di
Slide 25: Life Insurance Segment Profitability Under Pressure from Financial Markets
Life Insurance Segment Profitability Under Pressure from Financial Markets Primary Operating Profit Components in Life Insurance (m PLN) Remarks (YoY) • Gross written premium growth gained thanks to group and Gross Written Premium 5 012 +3.4% continued insurance +3.1% YoY; in addition, high growth i
Slide 26: Profitability of Non-life Insurance Improved
Profitability of Non-life Insurance Improved Profitability of Non-life Insurance (COR %) Remarks • Reduction of administrative expenses in conjunction 1-3 Q 2010 106.9% with headcount downsizing and strict control of fixed expenses. Acquisition Expense Ratio 0% • Lower loss ratio as a result of the
Slide 27: Profitability of the Pension Segment
Profitability of the Pension Segment Assets under Management (bn PLN) Growth in assets under management as a result of ZUS +4.1% contributions, investment performance and the net balance of 30.2 29.0 incoming and outgoing clients. 1-3 Q 2010 1-3 Q 2011 Net Result (m PLN, IFRS) Net profit fell in
Slide 28: Investment Activity
Investment Activity Investment Revenues (m PLN) 2 186 1 389 1 475 1 040 602 195 (355) (80) Net Investment Revenues Net Realized Result and Impairment Movement in the Net Fair Value of Assets Investment Result (Total) Charges and Liabilities 1-3 Q 2010 1-3 Q 2011 Financial Asset Composition Total: PL
Slide 29: Investment Activity
Investment Activity Investment Revenues (Total) Investment Revenues from the main (m PLN) portfolio (m PLN) 581 605 407 474 183 1Q 2011 2Q 2011 3Q 2011 -39 Investment Revenues on policyholders’ 1Q 2011 2Q 2011 3Q 2011 risk* (m PLN) No impact on Financial assets on PZU Group’s policyholders’ risk* -
Slide 30: Strong Capitalization and Ongoing Control of Solvency
Strong Capitalization and Ongoing Control of Solvency Lead to Satisfactory Performance PZU SA’s Own Funds and Solvency Margin Coverage Ratio PZU Życie SA’s Own Funds and Solvency Margin Coverage (m PLN, PAS) Ratio (m PLN, PAS) 680% 666% 357% 313% 9 096 8 909 5 757 5 323 3 Q 2010 3 Q 2011 3Q 2010 3Q
Slide 31: Agenda
Agenda Business Overview Financial Results Overview Questions and Answers 30 PZU Group: Presentation of the Q3 2011 financial results
Slide 32: Questions and Answers
Questions and Answers Contact data PZU Al. Jana Pawła II. 24 00-133 Warsaw, Poland Investor Relations Team Piotr Wiśniewski, phone (+48 22) 582 26 23 Agata Bednarczyk, phone (+48 22) 582 36 05 Aleksandra Jakima-Moskwa, phone (+48 22) 582 26 17 ir@pzu.pl www.pzu.pl/ir Spokesman Michał Witkowski, phon