Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — Powszechny Zakład Ubezpieczeń SA (PZU) — H1 2016 Earnings Presentation
43 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Aug 24, 2016
Slide 1: PZU Group's financial results for H1 2016
Warsaw Vilnius Riga Tallinn Kiev PZU Group’s financial results for H1 2016 Warsaw, 24 August 2016
Slide 2: What differentiates us
What differentiates us ~16 million clients in Poland, including~12 million life insurance clients #1 in Poland measured by gross written premium in non-life insurance and life insurance #1 in Lithuania and Latvia measured by gross written premium in non-life insurance 12.9% share in the open-end pen
Slide 3: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 4: Insurance market in Poland
Insurance market in Poland Non-life gross written premium (m PLN) 4.4% 6.3% 7 645 7 046 7 037 7 191 6 953 6 377 5 719 5 655 03.2009 03.2010 03.2011 03.2012 03.2013 03.2014 03.2015 03.2016 Life periodical gross written premium (m PLN) 2.4% (3.4)% 3 460 3 645 3 774 3 970 3 991 4 107 4 226 4 083 03.200
Slide 5: PZU insurance leader in Baltic States
PZU insurance leader in Baltic States* PZU in CEE region (m PLN) Lietuvos Draudimas 28.7% Lietuva Gyvybës Draudimas 5.5% AAS Balta 25.9% PZU Estonia 14.5% PZU Ukraine 4.3% PZU Ukraine Life 9.0% 4 *Market share in Ukraine and Latvia for Q1 2016, for Lithuania and Estonia for H1 2016.
Slide 6: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 7: Key drivers of PZU's performance in H1 2016
Key drivers of PZU’s performance in H1 2016 Significantly higher market share in life and non-life insurance Rapid sales growth in health care Rigorous cost discipline coupled with portfolio expansion Higher profitability of group and individually continued insurance Adverse consequences of ground f
Slide 8: Significantly higher market share in life and non-life insurance
Significantly higher market share in life and non-life insurance ● PZU Group’s strong market position in motor own damage insurance with non-life insurance a market share of 41.9% and MTPL with a market share of 43.1%*. ● The PZU Group’s share in the non-life insurance market in Q1 2016 is 37.3%* (o
Slide 9: Rapid sales growth in health care
Rapid sales growth in health care Health revenues (m PLN)* ● Another year of rapid health insurance growth – premium growth rate of 40.5%. ● Launch of health subscription plans (2015). 156.7 40.4% ● Expansion of proprietary medical centers. 111.6 66.8% 66.9 ● New acquisitions of medical centers to e
Slide 10: Rigorous cost discipline coupled with portfolio expansion
Rigorous cost discipline coupled with portfolio expansion m PLN PZU Group’s administrative expenses • The y/y increase in the PZU Group’s administrative expenses was chiefly driven by commencing the consolidation of Alior Bank. • At the same time, a positive effect was recorded in comparison to 1 25
Slide 11: Higher profitability of group and individually continued insurance
Higher profitability of group and individually continued insurance Gross written premium (m PLN) ● Limiting the emphasis on the growth rate of premium making it 1.7% possible to contain the loss ratio 1.6% 2.2% ● New riders to group and continued insurance making a positive 2.1% contribution to the
Slide 12: Adverse consequences of ground frost in crop insurance
Adverse consequences of ground frost in crop insurance m PLN Claims for adverse consequences of ground frost • The adverse consequences of ground frost signify losses caused by crops being affected by frost or wetness from the beginning of December to the end of April leading to partial or total cro
Slide 13: Low profitability of the motor insurance portfolio
Low profitability of the motor insurance portfolio Loss ratio in motor insurance (Poland) • Following the price war from 2005 to 2010 (that ended after flooding in 2010) the results of the overall motor insurance market started to improve. Another price war ensued shortly thereafter.... • ...and the
Slide 14: Considerably lower investment result, decline in Grupa Azoty valuation
Considerably lower investment result, chiefly on account of the decline in the valuation of the stake in the Grupa Azoty m PLN Change in net investment result following the recognition of interest expense (m PLN) 318 715 180 182 1 024 1 059 interest expense 01-06.2015 interest expense 01-06.2016 Ali
Slide 15: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 16: Net profit affected by the declining valuation of equity instruments
Net profit affected by the declining valuation of equity instruments Gross written premium (m PLN) Net profit (m PLN) 8.1% (40.2)% 9 126 9 862 1 322 790 06.2015 06.2016 06.2015 06.2016 Equity – parent company (bn PLN) Return on equity (ROE) – consolidated (%) * (0.7)% (10.4) p.p. 11.85 11.77 21,1% 1
Slide 17: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 18: Drivers of the Group's result
Drivers of the Group’s result ● Suppressed profitability due to the following: Non-life - significantly higher y/y level of claims and benefits in the agricultural insurance portfolio as a consequence of the adverse effects of ground frost; insurance - low profitability of the motor insurance portfo
Slide 19: Non-life insurance
Non-life insurance Growth in motor insurance sales mass segment corporate segment Gross written premium (m PLN) Gross written premium (m PLN) 18,1% 28,2% 4 305 3 646 274 1 030 188 804 2 2 745 11 557 2 169 25 405 39 67 1 477 1 560 399 12 473 06.2015 06.2016 06.2015 06.2016 Combined ratio (%) Combined
Slide 20: Recap – non-life insurance
Recap – non-life insurance mass segment corporate segment Higher gross written premium y/y as an effect of the following: Higher gross written premium y/y as an effect of the following: • growth in motor insurance sales (higher average premium following • rising motor insurance sales driven by the h
Slide 21: Life insurance
Life insurance High operating profit margin group and continued insurance segment individual insurance segment Gross written premium (m PLN) Gross written premium (m PLN) 1.6% (20.9)% 680 3 338 3 390 538 258 263 422 275 06.2015 06.2016 03.2015 06.2016 Single Premium Periodical Premium Margin (%)* Ma
Slide 22: Recap – life insurance
Recap – life insurance group and continued insurance segment individual insurance segment Drivers of higher gross written premium: Gross written premium down driven by the following: • rising number of insured parties in group protection products and rising • lower contributions to the unit-linked i
Slide 23: International business
International business Higher result driven by lower insurance activity expenses in the Baltic States non-life insurance life insurance Gross written premium (m PLN) Gross written premium (m PLN) 0.3% 18.5% 648 650 80 100 Estonia 140 170 41 Latvia 35 258 Lithuania (LD) 290 20 24 Lithuania PZU Lithua
Slide 24: Recap – international business
Recap – international business gross written premium operating results Non-life insurance Non-life insurance • Rapid growth in the gross written premium generated by the various • Combined ratio decline as a result of the following: insurance companies acquired in 2014: • savings mostly in IT among
Slide 25: Alior Bank
Alior Bank Positive growth rate in credit receivables portfolio composition banking activity Loan portfolio by segment (m PLN) Operating profit (m PLN) 10.8% (1.4)% 33 526 30 254 13 331 14 770 16 923 18 756 220 217 12.2015 06.2016 06.2015 06.2016 Retail segment Corporate segment Illustrative data, c
Slide 26: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 27: Key financial highlights
Key financial highlights Change Q2 2016 m PLN, IFRS 1H 2015* 1H 2016 Change YoY Q1 2016* Q2 2016 over Q1 2016 Profit and Loss Statement Gross Written Premium 9 126 9 862 8.1% 4 801 5 061 5.4% Premium Earned 8 744 8 985 2.8% 4 317 4 668 8.1% Net investment Result 1 086 1 456 34.1% 983 473 (51.8)% Int
Slide 28: Operating segment results
Operating segment results m PLN 4 305 3 646 3 390 3 338 Gross written premium (according to local GAAP) 1 030 804 680 538 608 585 74 61 74 106 INTERNATIONAL – LIFE POLAND – NON-LIFE POLAND – LIFE INSURANCE POLAND - OTHER AND NON-LIFE SEGMENTS Corporate client Mass client Group and continued Individu
Slide 29: Profitability by insurance activity segment
Profitability by insurance activity segment Combined Ratio / Insurance Business Segments Gross Written Premium Operating Profit Operating profit ratio* m PLN, local GAAP H1 2015 H1 2016 Change YoY H1 2015 H1 2016 Change YoY H1 2015 H1 2016 Total Non-Life - Poland 4 450 5 335 19.9% 608 509 (16.4)% 90
Slide 30: Normalized operating profit
Normalized operating profit m PLN Operating profit (according to the financial statements) Impact exerted by conversion of long-term policies into yearly 1 renewable term agreements in type P group insurance. m PLN, IFRS 06.2015 06.2016 Above average claims in agricultural insurance versus the last
Slide 31: Profitability of the mass insurance segment (non-life insurance)
Profitability of the mass insurance segment (non-life insurance) Profitability of the mass insurance segment • Change in the loss ratio driven by the following: • higher loss ratio in agricultural insurance, mostly for subsidized crop insurance as a consequence of the occurrence of many losses cause
Slide 32: Profitability of the corporate insurance segment
Profitability of the corporate insurance segment (non-life insurance) Profitability of the corporate insurance segment • Movement in the loss ratio driven by the following: • declining claims and benefits mostly in motor TPL and insurance guarantees; COR 06.2015 87.9% • higher loss ratio in motor ow
Slide 33: Group and continued insurance segment (life insurance)
Group and continued insurance segment (life insurance) m PLN Fundamental components of operating profit in the group and continued insurance segment • Gross written premium up by 1.6% y/y due to incremental growth in the portfolio of risks in protection and health insurance (including riders to cont
Slide 34: Individual insurance segment
Individual insurance segment (life insurance) m PLN Fundamental components of operating profit in the individual insurance segment • The y/y decline in gross written premium of 142.1 m PLN transpired mostly as a result of lower contributions to the unit-linked insurance accounts offered jointly with
Slide 35: Profitability of international companies
Profitability of international companies (non-life insurance) Profitability of international companies • Higher y/y loss ratio driven by the growth in this ratio in Estonia and Lithuania among others as the effect of growth in large claims and higher frequency (outcome of bad weather conditions in t
Slide 36: Investments
Investments Lower results in equity instruments and derivatives m PLN and funds within the unit-linked portfolio June 2016 investment Net investment result* The higher result in H1 is above all the effect of incorporating composition** the activity conducted by the banking sector (among others, Tota
Slide 37: Investments
Investments Weaker performance of unit-linked products m PLN Net investment result Net investment result 1 in the PZU Group’s portfolio 34.1% 1 491 1 456 941 1 086 01-06.2015 01-06.2016 01-06.2015 01-06.2016 Net investment result Investment composition in 06.2016 2 in investment products* Investment
Slide 38: Agenda
Agenda 1. Insurance market in Poland, the Baltic States and Ukraine 2. Key drivers of PZU’s performance in H1 2016 3. Recap of the PZU Group’s financial results for H1 2016 4. Operating results for H1 2016 5. Detailed financials 6. Group’s preliminary data as at 31 March 2016 according to Solvency I
Slide 39: Group solvency ratios
Group solvency ratios Solvency II data as at 31 March 2016 bn PLN, unaudited data Solvency I Solvency II • Starting from 1 January 2016 the basis for assessing the Group’s capital adequacy is Solvency II; the Group does not calculate Solvency I requirements. • In Q1 2016 own funds according to Solve
Slide 40: Group's own funds
Group’s own funds Solvency II data as at 31 March 2016 bn PLN, unaudited data Comparison of own funds and consolidated equity according to IFRS Own funds according to Solvency II (“SII”) are calculated using the net assets carried in the Group’s economic balance sheet. For the purpose of -2.9 SII, t
Slide 41: The Group's capital solvency requirement
The Group’s capital solvency requirement Solvency II data as at 31 December 2015 and 31 March 2016 bn PLN, unaudited data SII 12.2015 SII 03.2016 The Solvency Capital Requirement (SCR) is calculated using the standard formula and it includes, among others, the following risks: actuarial, market, cou
Slide 42: Investor relations contact
Piotr Wiśniewski – IRO tel.(+48 22) 582 26 23 ir@pzu.pl www.pzu.pl/ir PZU Al. Jana Pawła II 24 00-133 Warszawa, Polska www.pzu.pl https://twitter.com/GrupaPZU 41
Slide 43: Disclaimer
Disclaimer This Presentation has been prepared by PZU SA (“PZU”) and is purely informational in nature. Its purpose is to present selected data concerning the PZU Group (“PZU Group”), including its growth prospects. The PZU Group is not liable for the consequences of decisions made after reading thi
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