Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : Supervisory Board report on the activity of the PZU SA Supervisory Board as the Company's governing body in 2021

Attachment to Resolution No. URN/88/2022

adopted by the PZU SA Supervisory Board on 01.06.2022

PZU SA SUPERVISORY BOARD'S REPORT ON THE ACTIVITY OF THE PZU SA SUPERVISORY BOARD AS A CORPORATE BODY IN 2021

1. Composition of the Supervisory Board

As at 1 January 2021, the following persons sat on	• Krzysztof Opolski - Supervisory Board
the PZU SA Supervisory Board:	Member,
• Maciej Łopiński - Supervisory Board	• Józef Wierzbowski - Supervisory Board
	Chairman,	Member,
• Paweł Górecki - Supervisory Board Deputy	• Maciej Zaborowski - Supervisory Board
	Chairman,	Member.
• Robert Śnitko - Supervisory Board Secretary,	On 11 October 2021 Tomasz Kuczur tendered his
• Marcin Chludziński - Supervisory Board	resignation. On 12 October 2021, the PZU SA
	Member,	Shareholder	Meeting	appointed	Radosław
• Agata Górnicka - Supervisory Board Member,	Sierpiński	to	the	Supervisory	Board.
• Robert Jastrzębski - Supervisory Board	Consequently, as of 12 October 2021 the
	Member,	composition of the PZU SA Supervisory Board was
• Tomasz Kuczur - Supervisory Board Member,	as follows:
•	Elżbieta Mączyńska-Ziemacka - Supervisory	• Paweł Mucha - Supervisory Board Chairman,
	Board Member,	• Paweł Górecki - Supervisory Board Deputy
• Krzysztof Opolski - Supervisory Board	Chairman,
	Member,	• Robert Śnitko - Supervisory Board Secretary,
• Józef Wierzbowski - Supervisory Board	• Marcin Chludziński - Supervisory Board
	Member,	Member,
• Maciej Zaborowski - Supervisory Board	• Agata Górnicka - Supervisory Board Member,
	Member.	• Robert Jastrzębski - Supervisory Board
On 7 June 2021, Maciej Łopiński submitted his	Member,
resignation from serving on the PZU Supervisory	• Radosław Sierpiński - Supervisory Board
Board. On 16 June 2021, the PZU SA Shareholder	Member,
Meeting appointed Paweł Mucha to the	• Elżbieta Mączyńska-Ziemacka - Supervisory
Supervisory Board. On 16 June 2021, the	Board Member,
Supervisory Board elected Paweł Mucha to the	• Krzysztof Opolski - Supervisory Board
position of the Supervisory Board Chairman.	Member,
Accordingly, the composition of the PZU SA	• Józef Wierzbowski - Supervisory Board
Supervisory Board was as follows:	Member,
• Paweł Mucha - Supervisory Board Chairman,	• Maciej Zaborowski - Supervisory Board
• Paweł Górecki - Supervisory Board Deputy	Member.
	Chairman,	The independence criteria set out in § 20 sec. 8 of
• Robert Śnitko - Supervisory Board Secretary,	the PZU SA Articles of Association, set out in the Act
• Marcin Chludziński - Supervisory Board	of 11 May 2017 on Statutory Auditors, Audit Firms
	Member,	and Public Supervision were satisfied by Paweł
• Agata Górnicka - Supervisory Board Member,	Mucha, Elżbieta Mączyńska-Ziemacka, Krzysztof
• Robert Jastrzębski - Supervisory Board	Opolski, Józef Wierzbowski, Maciej Zaborowski,
	Member,	Robert Śnitko and Robert Jastrzębski.
• Tomasz Kuczur - Supervisory Board Member,	As at 31 December 2021, the composition of the
•	Elżbieta Mączyńska-Ziemacka - Supervisory	PZU SA Supervisory Board remained unchanged.
	Board Member,

1. Activity of the Supervisory Board

During the reporting period, the Supervisory Board	convened and prepared meetings, while
carried out its activity on the basis of the following	maintaining a high attendance level.
regulations: the Commercial Company Code, the	During the financial year, the Supervisory Board
Insurance Activity Act, other generally applicable	held fourteen meetings on the following dates:
laws, the Company's Articles of Association and	•	18 January 2021,
the Rules and Regulations of the Supervisory	•	10 February 2021,
Board. In compliance with the provisions of the	•	15 March 2021,
Articles of Association and the Rules and	•	24-25 March 2021,
Regulations, the Supervisory Board held properly	•	7 April 2021,

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• 12 May 2021,
• 26 May 2021,
• 7-10June 2021,
• 15-16June 2021,
• 20 July 2021,
• 25 August 2021,
• 7-11-12October 2021,
• 17 November 2021,
• 15 December 2021

The Supervisory Board made its decisions in the form of resolutions or opinions forwarded to the PZU SA Management Board or Shareholder Meeting.

In the reporting period, the Supervisory Board adopted 142 resolutions, including 7 resolutions by circulation (the list of resolutions forms Attachment 1 to this Report).

Most resolutions of the Supervisory Board - with the exception of Resolution Nos. URN/37/2021, URN/38/2021, URN/49/2021, URN/50/2021, URN/65/2021, URN/66/2021, URN/67/2021 and URN/106/2021 - were adopted unanimously while maintaining the quorum required by the applicable laws.

The agendas of the Supervisory Board meeting prepared by the Chairperson of the PZU SA Supervisory Board covered all business to be dealt with by the Supervisory Board in accordance with its powers and included additional issues that the Management Board or Supervisory Board members deemed important.

All meetings were attended by a majority of PZU SA Supervisory Board members. The absence of individual persons at Supervisory Board meetings was caused mainly by important official duties. After the adoption of Resolution No. 5/2017 of 8 February 2017 by the PZU SA Extraordinary Shareholder Meeting to define the rules for setting

the compensation of Supervisory Board Members of Powszechny Zakład Ubezpieczeń Spółka Akcyjna, the adoption of resolutions justifying absence was not required (list of attendance at the meetings of the Supervisory Board forms attachment 2 to this report). In connection with the Covid-19 pandemic in 2021, Supervisory Board Members participated in the meetings also using means of direct remote communication.

In compliance with § 26 sec. 1 of the Rules and Regulations of the PZU SA Supervisory Board, invitations to attend its meetings in 2021 were sent to PZU SA Management Board members, PZU Group Directors, Managing Directors, Directors of the Head Office Departments and representatives of advisory companies and law firms cooperating with the Company within the framework of its various ongoing projects, who provided comprehensive explanations and submitted all documents regarding the Company's business. Also, the PZU SA Supervisory Board's meetings were attended by representatives of the auditor, KPMG Audyt sp. z o.o. sp. k.

Outside its meetings, the Supervisory Board was continuously informed about key aspects of the Company's business by e-mail (current and periodic reports prepared due to PZU SA's status of a public company listed on the Warsaw Stock Exchange were sent to the Supervisory Board members on an ongoing basis).

The cooperation between the PZU SA Supervisory Board and the Management Board proceeded properly with the aim of increasing the Company's value and out of concern to secure its interests. The information and materials provided by the Management Board were prepared in a clear and reliable manner, their content consistent with the requirements adopted by the Supervisory Board.

1. Material issues addressed by the PZU SA Supervisory Board

During the financial year ended 31 December 2021,	• ongoing assessment of the financial and
the PZU SA Supervisory Board addressed all	economic standing and market position of the
matters falling under its powers in accordance	Company and the PZU Group and their major
with the Company's Articles of Association. Within	strategic initiatives and plans for 2021,
the framework of its activities, the Supervisory	• ongoing monitoring of the implementation of
Board actively supported the Management Board	the financial plan of PZU SA and the PZU
in the pursuit of the Company's strategic	Group for 2021,
objectives, examined the Management Board's	• monitoring the implementation status of the
motions regarding various issues that require the	PZU Group Strategy "#PZU Potential and
consent of the Supervisory Board in accordance	growth - We care about the most important
with the Company's Articles of Association and	things in life. PZU Group Strategy in 2021-2024
familiarized itself with other matters presented by	• appointment of the Company's Management
the Management Board.	Board Members,
Material issues addressed by the PZU SA	• suitability assessment of Management Board
Supervisory Board in 2021:	Members;

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• assessment of PZU SA's consolidated financial statements for the year ended 31 December 2020 and recommendation to the PZU Ordinary Shareholder Meeting to approve them,
• assessment of the Management Board report on the activity of the PZU Group and PZU SA in
  2020 and recommendation to the PZU SA Ordinary Shareholder Meeting to approve it,
• assessment of the Management Board's motion on the distribution of PZU SA's net profit for the year ended 31 December 2020 and recommendation to the PZU Ordinary Shareholder Meeting to approve it,
• assessment of the PZU SA Group's consolidated financial statements for the year
  ended 31 December 2020 and recommendation to the PZU Ordinary Shareholder Meeting to approve them,
• acceptance of the PZU SA Supervisory Board report on its assessment of PZU SA's Financial Statements for the year ended 31 December 2020, the Consolidated Financial Statements of the PZU SA Group for the year ended 31
  December 2020, the Management Board Report on the Activity of the PZU Group and
  PZU SA in 2020 and the Management Board's motion to distribute PZU SA's net profit for the year ended 31 December 2020,
• approval of PZU SA's Solvency and Financial Condition Report (SFCR),
• approval of the PZU Group's Solvency and Financial Condition Report (SFCR),
• approval of the PZU Group's Risk Management
  Strategy,
• extension of the agreement with an audit firm to review and audit the financial statements of
  PZU SA and the PZU SA Group for 2023,
• adoption of the PZU SA Supervisory Board report on the activity of the PZU SA Supervisory Board as a governing body of the Company in 2020,
• ongoing monitoring of the execution of strategic projects,
• ongoing risk monitoring, including the level of the actuarial risk, market risk, credit risk, operational risk and compliance risk
• ongoing investment activity monitoring,
• monitoring of acquisition projects, which includes making relevant decisions,
• approval of answers provided in the SREP questionnaire,
• in connection with the changes in the PZU SA Supervisory Board - electing the Supervisory Board Chairperson and establishing the

composition of the Nomination and Compensation Committee,

• ongoing monitoring of work of the following
  Committees: the Audit Committee, the Nomination and Compensation Committee and the Strategy Committee of the PZU SA

Supervisory Board.

During the reporting period, within the framework of ongoing monitoring of risks, the Supervisory Board was presented with the key changes to PZU SA's legal environment, leading to analysis and discussion of the challenges and risks present in PZU SA's regulatory environment. In particular, the Supervisory Board dealt with the following issues related to changes in PZU SA's existing legal and regulatory environment or the need to fulfill new obligations:

• Act of 18 November 2020 on Electronic Service;
• revision of Directive 2009/138/EC of the European Parliament and of the Council of 25
  November 2009 on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II);
• International Financial Reporting Standard 17
  "Insurance Contracts" (IFRS 17);
• Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law;
• Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector;
• Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to

facilitate sustainable investment, amending Regulation (EU) 2019/2088.

With a view to properly performing its supervisory duties in the Company, the Supervisory Board established certain advisory and consultative committees. In 2021, three such committees operated within the PZU SA Supervisory Board:

• Audit Committee,
• Nomination and Compensation Committee,
• Strategy Committee.

Audit Committee

The Audit Committee was appointed by resolution of the PZU SA Supervisory Board of 3 June 2008 to increase the effectiveness of supervisory activities performed by the Supervisory Board with regard to monitoring the Company's financial reporting, financial audit activities in the Company and

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effectiveness of internal control, internal audit and risk management systems in the Company. Moreover, the scope of the Audit Committee's activities may include other matters entrusted to it by the Supervisory Board. The obligation to establish an Audit Committee in PZU SA as a public-interest entity, follows from the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision.

The Audit Committee includes at least three members. Most members, including the chairperson, satisfy the independence criteria laid down in the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision. At least one Audit Committee member must hold knowledge and qualifications in accounting or audit of financial statements. Detailed tasks and principles governing the appointment and operation of the Audit Committee are laid down in the PZU SA Articles of Association, Rules and Regulations of the PZU SA Supervisory Board, the Rules and Regulations of the PZU SA Supervisory Board Audit Committee and the pertinent resolution of the Supervisory Board which, in selecting members of the Audit Committee, takes into account the competences and experience of candidates in respect of the matters entrusted to the Committee.

As at 1 January 2021, the PZU SA Supervisory Board's Audit Committee functioned in the following composition:

1. Krzysztof Opolski - Committee Chairperson,
2. Marcin Chludziński - Committee Member,
3. Robert Śnitko - Committee Member,
4. Maciej Zaborowski - Committee Member.
   Krzysztof Opolski, Robert Śnitko and Maciej Zaborowski were designated as independent members within the meaning of Article 129 Section 3 of the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision. Marcin
   Chludziński, Krzysztof Opolski and Robert Śnitko were designated as members holding qualifications in accounting or auditing financial statements. All Audit Committee Members were named as members who have knowledge and skills in the industry in which the Company operates.
   As at 31 December 2021, the PZU SA Supervisory Board Audit Committee's composition was unchanged.
   In the reporting period, i.e. from 1 January 2021 to 31 December 2021, the Committee held 11 meetings on the following dates:
5. • 18 January 2021,
   • 15 March 2021,

• 24 March 2021,
• 7 April 2021,
• 12 May 2021,
• 26 May 2021,
• 7 June 2021,
• 25 August 2021,
• 7 October 2021,
• 17 November 2021,
• 15 December 2021

Decisions of the PZU SA Supervisory Board Audit Committee were made in the form of resolutions, opinions and recommendations which were each time submitted to the Company's Supervisory Board. The activity report of the PZU SA Supervisory Board Audit Committee in 2021 forms Attachment 3 to this Report.

Nomination and Compensation Committee

Pursuant to the PZU SA Articles of Association, from the moment the Company's shares were introduced into trading on the regulated market within the meaning of the Act of 29 July 2005 on Trading in Financial Instruments, the Supervisory Board could appoint the Nomination and Compensation Committee which was appointed on 12 May 2010.

The Nomination and Compensation Committee is an advisory and consultative body to the Supervisory Board in respect of issues related to the development of the management structure, including organizational solutions, the compensation principles and the selection of properly qualified staff.

As at 1 January 2021, the PZU SA Supervisory Board Nomination and Compensation Committee functioned in the following composition:

• Robert Jastrzębski - Committee Chairman,
• Paweł Górecki - Committee Member,
• Agata Górnicka - Committee Member,
• Tomasz Kuczur - Committee Member,
• Maciej Łopiński - Committee Member,
• Elżbieta Mączyńska-Ziemacka - Committee Member.

On 7 June 2021, Maciej Łopiński submitted his resignation from serving on the PZU Supervisory Board. On 16 June 2021, the Supervisory Board appointed Paweł Mucha to the Committee. Accordingly, from 16 June 2021, the Nomination and Compensation Committee composition was as follows:

• Robert Jastrzębski - Committee Chairman,
• Paweł Górecki - Committee Member,
• Agata Górnicka - Committee Member,
• Tomasz Kuczur - Committee Member,

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