Powszechny Zaklad Ubezpieczen Spolka Akcyjna · GPW:PZU
Powszechny Zaklad Ubezpieczen Spolka Akcyjna — PZU — H1 2014 Earnings Presentation
35 slides from Powszechny Zaklad Ubezpieczen Spolka Akcyjna's earnings presentation, Aug 27, 2014
Slide 1: PZU Group's Financial Results in H1 2014
PZU Group’s Financial Results in H1 2014 Warsaw, 27 August 2014
Slide 2: Agenda
Agenda 1. Polish Insurance Market after Q1 2014 2. Operating performance in H1 2014 3. Shareholder Value 4. PZU 2.0 Strategy – selected items 5. Detailed financials 1
Slide 3: Non-life Insurance Market in Poland
Non-life Insurance Market in Poland Gross Written Premium in Non-Life (m PLN) 4.5% ● Return to growth trend following 1.2% minimal deceleration in 2013. 7 046 6 953 7 037 6 377 5 655 5 719 ● PZU’s non-life market share is 32.4%. 03.2009 03.2010 03.2011 03.2012 03.2013 03.2014 ● PZU’s technical resul
Slide 4: Life Insurance in Poland
Life Insurance in Poland Regular Gross Written Premium (m PLN) ● Return to stable growth trend after 3.5% minimal deceleration in 2013. 2.9% 3 970 3 991 4 107 ● PZU Life’s percentage of the 3 645 3 774 3 460 regular premium market is roughly 43%. ● Potential adverse impact of regulatory changes on d
Slide 5: PZU Retains Leading Position in Poland
PZU Retains Leading Position in Poland PZU’s market share PZU Life’s market share Non-life Insurance Life insurance (regular premium) (0.3) p.p. 4.5% 0.0 p.p. 4.4% 4.8% 0.2 p.p. 8.0% 0.3 p.p. (0.1) p.p. 5.7% 9.0% (0.4) p.p. (0.2) p.p. 5.7% 12.3% 0.4 p.p. 0.5 p.p. 7.6% 16.2% 1.1 p.p. 9.9% (0.2) p.p.
Slide 6: Agenda
Agenda 1. Polish Insurance Market after Q4 2013 2. Operating performance in H1 2014 3. Shareholder Value 4. PZU 2.0 Strategy – selected items 5. Detailed financials 5
Slide 7: Higher Profitability and Cost Discipline Are the Product of Strategy Implementation
Higher Profitability and Cost Discipline Are the Product of Strategy Implementation ● High profitability in the mass segments (COR equal to 85.7%) and the corporate segments (COR equal to Non-Life 84.1%): - claims frequency down in motor insurance (effect of favorable good conditions); Insurance - l
Slide 8: Group's Financial Results in H1 2014
Group’s Financial Results in H1 2014 Gross Written Premium (m PLN) Net Profit (m PLN) (0.7)% 2.7% 8 495 8 438 1 675 1 720 06.2013 06.2014 06.2013 06.2014 Equity (bn PLN) Return on Equity - ROE (%)* (10.3)% 3.2 p.p. 13.3 11.9 27.5% 24.3% 06.2013 06.2014 06.2013 06.2014 x% - Change year on year * Annu
Slide 9: Non-Life Insurance Combined Ratio at a Low Level
Non-Life Insurance Combined Ratio at a Low Level Mass Segment Corporate Segment Gross Written Premium (m PLN) Gross Written Premium (m PLN) (1.5)% 3 381 3 330 0.8% 2 053 1 971 956 964 410 399 1 328 1 359 546 565 06.2013 06.2014 06.2013 06.2014 Combined Ratio (%) Combined Ratio (%) 82.6% 85.7% 77.0%
Slide 10: Summary – Non-Life Insurance
Summary – Non-Life Insurance Mass Segment Corporate Segment Gross written premium down: • in motor insurance on the tail of a lower average premium (lower sums insured, higher discounts for accident-free driving) and the rate Gross written premium y/y: cuts introduced last year (following fierce pri
Slide 11: Life Insurance Profitability Expansion
Life Insurance Profitability Expansion Group and Continued Insurance Segment Individual Segment Gross Written Premium (m PLN) Gross Written Premium (m PLN) 2.0% 2.1% (13.6)% 3 199 3 266 745 643 243 227 502 416 06.2013 06.2014 06.2013 06.2014 Single Premium Regular Premium Margin (%) 22.3% 24.4% Marg
Slide 12: Summary – Life Insurance
Summary – Life Insurance Group and Continued Individual Gross written premium down caused by: Factors contributing to higher gross written premium: • structured product sales in cooperation with Citi Handlowy • expansion of the group protection insurance portfolio and higher substantially lower than
Slide 13: Higher Administrative Expenses
Higher Administrative Expenses Offshoot of executing projects in previous years m PLN Administrative Expenses* Other ADMINISTRATIVE EXPENSES UNDER CONTROL 9.5% 702 • the expense ratio as a percentage of premium has been (including 641 project-related 83 driven by executing business investments requi
Slide 14: Agenda
Agenda 1. Polish Insurance Market after Q4 2013 2. Operating performance in H1 2014 3. Shareholder Value 4. PZU 2.0 Strategy – selected items 5. Detailed financials 13
Slide 15: TSR Management – High ROE
TSR Management – High ROE PZU Share Price Development Adjusted for Dividends Paid from the First Listing against the Backdrop of Selected Indices 12 May 2010=100* 30 June 2014 dynamika zwrotu w 20.00 PLN/share as an interim indeks okresie 28.04.2010 - 30.06.2014 dividend from the 2013 result 552.79
Slide 16: Execution of the New Capital and Dividend Policy
Execution of the New Capital and Dividend Policy Assumptions for the PZU Group’s revised Objectives for capital and dividend policy Execution 2014 - 2015 Capital management: √ • The PZU Group issued 5-year ● maintain the PZU Group’s own funds net of Managing the ALM bonds on 3 July 2014 for 500 m su
Slide 17: Agenda
Agenda 1. Polish Insurance Market after Q4 2013 2. Operating performance in H1 2014 3. Shareholder Value 4. PZU 2.0 Strategy – selected items 5. Detailed financials 16
Slide 18: PZU's Expansion in the CEE Region
PZU’s Expansion in the CEE Region Status of the acquisition of 3 companies on the Baltic market and the direct insurance leader in Poland: Estonia: 1 AAS Balta 10% non – life ● 21% market share in Latvia, GWP of roughly 200 m PLN per annum market share ● Acquisition completed 2 Lietuvos Draudimas
Slide 19: PZU Zdrowie – first effects
PZU Zdrowie – first effects Rollout of our proprietary branch network in the ambulatory segment (and in the long-run providing clients a comprehensive 1 offering of medical benefits in managed health care). Acquisitions in the strategic ambulatory segment: Włocławek • Centrum Medyczne Medica from PK
Slide 20: Everest Platform rollout
We are steadily executing projects launched to date Everest Platform rollout The Everest Platform has had 3 releases to date: Nov. 2013, March and July 2014. The next release is planned for February 2015 Status of implementation: products implemented: PZU Auto, PZU Dom Home Insurance, PZU Wojażer
Slide 21: PZU Offers a Revolutionary Service: Direct Claims Handling
PZU Offers a Revolutionary Service Direct Claims Handling Direct claims handling poses an opportunity to transform the MTPL market entirely: Relationship becomes Price becomes more important in less important in MTPL insurance selecting insurer Lower churn rate Direct Better price claims handling mo
Slide 22: Agenda
Agenda 1. Polish Insurance Market after Q4 2013 2. Operating performance in H1 2014 3. Shareholder Value 4. PZU 2.0 Strategy – selected items 5. Detailed financials 21
Slide 23: Detailed financials
Slide 24: PZU Group's Financial Highlights
PZU Group’s Financial Highlights Change Q2 2014 m PLN, IFRS H1 2013 H1 2014 Change YoY Q2 2014 Q1 2014 over Q1 2014 Profit and Loss Statement Gross Written Premium 8 495 8 438 (0.7)% 4 084 4 354 (6.2)% Premium Earned 8 177 8 033 (1.8)% 4 043 3 990 1.3% Investment Result 969 1 358 40.1% 823 535 53.8%
Slide 25: Segment Results
Segment Results YTD, m PLN 3 381 3 330 3 199 3 266 Gross Written Premium (according to local GAAP) 956 964 858 745 643 278 125 159 91 77 INTERNATIONAL – LIFE & POLAND – NON-LIFE POLAND – LIFE POLAND - OTHER NON-LIFE SEGMENTS Corporate Mass Group & continued Individual Investment contracts Ukraine Ba
Slide 26: Profitability by Insurance Segment
Profitability by Insurance Segment Insurance Business Gross Written Premium Operating Profit Combined Ratio / Segments Operating profit ratio* m PLN, local GAAP H1 2013 H1 2014 Change YoY H1 2013 H1 2014 Change YoY H1 2013 H1 2014 Total Non-Life - Poland 4 337 4 294 (1.0)% 990 821 (17,1)% 81.5% 85.4
Slide 27: Normalized Operating Profit
Normalized Operating Profit YTD, m PLN m PLN, IFRS H1 2013 H1 2014 Operating Profit (according to financial 2 145.4 2 235.7 1 Impact exerted by converting long-term contracts into yearly- statements) renewable term contracts according to IFRS. including: Commencing the consolidation of mutual funds
Slide 28: Profitability of Mass Insurance Segment (Non-Life Insurance)
Profitability of Mass Insurance Segment (Non-Life Insurance) Profitability of Mass Segment Combined Ratio (COR - %) • Loss ratio down following: o lower claims in motor insurance as a result of lower claims provisions for claims in previous years and a slower rate of incremental claims growth; COR 0
Slide 29: Profitability of Corporate Insurance Segment (Non-Life Insurance)
Profitability of Corporate Insurance Segment (Non- Life Insurance) Profitability of Corporate Segment Combined Ratio (COR - %) • Loss ratio up following: o lower earned premium in motor business coupled with claims paid at last year’s level; COR June 2013 77.0% o higher claims paid in other TPL insu
Slide 30: Group and Continued Insurance (Life Insurance)
Group and Continued Insurance (Life Insurance) Major Components of Operating Profit in the Group and Continued Segment (m PLN) Change • GWP up 2.1% y/y, primarily driven by incremental growth in the risk Gross Operating Profit June 2013 798 year on year portfolio in protection and health insurance (
Slide 31: Individual Insurance Segment (Life Insurance)
Individual Insurance Segment (Life Insurance) Major Components of Operating Profit in the Individual Segment (m PLN) • GWP down 13.6% y/y, primarily driven by lower sales of investment Operating Result in June 2013 67 Change YoY products in the bancassurance channel. • Higher investment result prima
Slide 32: Investments: Suppressed Bond Yields
Investments Suppressed Bond Yields Investment Income m PLN TOTAL Investment Composition, December 2013* Investment Composition, June 2014* 40.1% Debt treasuries 2.9% 2.7% 0.1% 1 358 969 .5,1% Repo, reverse repo and deposits 5.7% 7.2% Debt securities - non-treasury and 8.3% 8.8% 01-06.2013 01-06.2014
Slide 33: Investments: Equity Price Growth
Investments Equity Price Growth Net quarterly data Net Investment Result (total, m PLN) Investment Income in the PZU Group’s Main Portfolio (m PLN) Including the non-recurring effect of fund consolidation +172.7 m PLN 1358 969 1229 994 01-06.2013 01-06.2014 01-06.2013 01-06.2014 Investment Income at
Slide 34: Robust Capitalization and High Solvency Ratios
Robust Capitalization and High Solvency Ratios YTD PZU’s Own Funds and Solvency Coverage PZU Życie’s Own Funds and Solvency Margin Ratio (m PLN, PAS) Coverage Margin Ratio (m PLN, PAS) 720.0% 598.2% 193.7% 211.6% 9 858 8 190 3 404 3 750 06.2013 06.2014 06.2013 06.2014 Solvency margin coverage ratio
Slide 35: 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