Powszechny Zaklad Ubezpieczen : Financial statement of the PZU Group (Q2 2021)

Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Group

Condensed interim

consolidated financial statements for the 6 months ended

30 June 2021

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Condensed interim consolidated financial statements for the 6 months ended 30 June 2021
Table of contents
Interim consolidated profit and loss account....................................................................................	3
Interim consolidated statement of comprehensive income.............................................................	4
Interim consolidated statement of financial position.......................................................................	5
Interim consolidated statement of changes in equity ......................................................................	6
Interim consolidated cash flow statement ........................................................................................	9
Supplementary notes to the condensed interim consolidated financial statements ...................	11
1.	Introduction ..............................................................................................................................................................	11
2.	Information on PZU and the PZU Group ..................................................................................................................	14
3.	Composition of the Management Board, Supervisory Board and PZU Group Directors........................................	29
4.	Key accounting policies, key estimates and judgments..........................................................................................	31
5.	Information about major events that materially influence the structure of financial statement items ...............	38
6.	Corrections of errors from previous years ...............................................................................................................	38
7.	Material events after the end of the reporting period .............................................................................................	38
8.	Supplementary notes to the condensed interim consolidated financial statements............................................	38
9.	Assets securing receivables, liabilities and contingent liabilities ...........................................................................	79
10.	Contingent assets and liabilities ..............................................................................................................................	80
11.	Equity management .................................................................................................................................................	80
12.	Segment reporting....................................................................................................................................................	81
13.	Information on the changes in the economic situation and business conditions exerting a material effect on the
	fair value of financial assets and liabilities. .............................................................................................................	91
14.	Issues, redemptions and repayments of debt securities and equity securities......................................................	91
15.	Default or breach of material provisions of loan agreements.................................................................................	92
16.	Dividends...................................................................................................................................................................	92
17.	Disputes.....................................................................................................................................................................	92
18.	Related party transactions .......................................................................................................................................	95
19.	Other information .....................................................................................................................................................	96

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed interim consolidated financial statements for the 6 months ended 30 June 2021 (in millions of PLN)

Interim consolidated profit and loss account

Consolidated profit and loss account		Note		1 April -		1 January -		1 April -		1 January -
		30 June 2021		30 June 2021		30 June 2020		30 June 2020
	Gross written premiums		8.1		6,194		12,342		5,594		11,691
Reinsurers' share in gross written premium			(293)	(446)	(118)	(274)
	Net written premiums				5,901		11,896		5,476		11,417
Movement in net provision for unearned premiums			(70)	(379)	214	35
	Net earned premiums				5,831		11,517		5,690		11,452
	Revenue from commissions and fees		8.2		1,161		2,226		964		1,983
Interest income calculated using the effective interest rate	8.3	2,315	4,675	2,674	5,670
	Other net investment income		8.4		286		254		186		186
Result on derecognition of financial instruments and investments	8.5	14	526	(260)	(185)
	Movement in allowances for expected credit losses and impairment		8.6		(445)		(883)		(1,415)		(2,075)
	losses on financial instruments
Net movement in fair value of assets and liabilities measured at fair	8.7	250	380	1,108	553
value
	Other operating income		8.8		379		752		349		669
	Claims, benefits and movement in technical provisions				(4,170)		(8,186)		(4,117)		(7,608)
Reinsurers' share in claims, benefits and movement in technical			26	116	107	317
provisions
	Net insurance claims and benefits		8.9		(4,144)		(8,070)		(4,010)		(7,291)
	Fee and commission expenses		8.10		(283)		(539)		(243)		(478)
Interest expenses	8.11	(71)	(197)	(321)	(806)
	Acquisition expenses		8.12		(825)		(1,623)		(812)		(1,647)
Administrative expenses	8.12	(1,754)	(3,456)	(1,656)	(3,335)
	Other operating expenses		8.13		(940)		(2,156)		(1,854) 1)		(3,640) 2)
Operating profit			1,774	3,406	400	1,056
	Share of the net financial results of entities measured by the equity				(2)		(8)		-		(1)
	method
Profit before tax			1,772	3,398	400	1,055
	Income tax		8.14		(419)		(874)		(381)		(747)
Net profit on continuing operations			1,353	2,524	19	308
	Loss on discontinued operations				-		-		(4)		(4)
Net profit, including:			1,353	2,524	15	304
	- profit attributable to the equity holders of the Parent Company				774		1,671		185		301
- profit (loss) attributed to holders of non-controlling interest			579	853	(170)	3
	Weighted average basic and diluted number of common shares		8.15		863,339,389		863,341,671		863,320,531		863,325,925
Basic and diluted profit (loss) per common share (in PLN)	8.15	0.90	1.94	0.21	0.35

1. Including impairment losses on goodwill arising from the acquisition of Alior Bank (PLN 230 million) and Pekao (PLN 555 million) and intangible assets identified during the acquisition of Alior Bank (PLN 161 million).
2. Including impairment losses on goodwill arising from the acquisition of Alior Bank (PLN 746 million) and Pekao (PLN 555 million) and intangible assets identified during the acquisition of Alior Bank (PLN 161 million).

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed interim consolidated financial statements for the 6 months ended 30 June 2021 (in millions of PLN)

Interim consolidated statement of comprehensive income

Consolidated statement of comprehensive income		Note		1 April -		1 January -		1 April -		1 January -
		30 June 2021		30 June 2021		30 June 2020		30 June 2020
	Net profit				1,353		2,524		15		304
Other comprehensive income	8.14	(542)	(1,273)	1,138	1,202
	Subject to subsequent transfer to profit or loss				(591)		(1,371)		1,026		1,138
	Valuation of debt instruments			(335)	(699)	848	445
	Measurement of loan receivables from clients				(32)		(36)		14		2
	Foreign exchange translation differences			(54)	(28)	(28)	59
	Cash flow hedging				(170)		(608)		192		632
	Not to be transferred to profit or loss in the future			49	98	112	64
	Valuation of equity instruments				49		98		112		64
Total net comprehensive income			811	1,251	1,153	1,506
	- comprehensive income attributable to equity holders of the Parent				567		1,165		779		807
	Company
- comprehensive income attributable to holders of non-controlling			244	86	374	699
interest

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed interim consolidated financial statements for the 6 months ended 30 June 2021 (in millions of PLN)

Interim consolidated statement of financial position

Assets		Note		30 June		31 December
	2021	2020
	Goodwill		8.16		2,768		2,776
Intangible assets	8.17	3,234	3,206
	Deferred tax assets				2,721		2,511
Other assets	8.18	646	753
	Deferred acquisition costs				1,632		1,550
Reinsurers' share in technical provisions	8.32	2,065	2,101
	Property, plant and equipment		8.19		4,118		4,188
Investment property			2,742	2,493
	Entities measured by the equity method		8.20		100		72
Assets held for sale	8.21	116	590
	Loan receivables from clients		8.22		209,645		197,288
Financial derivatives	8.23	4,659	6,339
	Investment financial assets		8.24		139,615		140,922
	Measured at amortized cost			76,074	66,864
	Measured at fair value through other comprehensive income				53,608		64,248
	Measured at fair value through profit or loss			9,933	9,810
	Receivables		8.25		6,360		6,246
Cash and cash equivalents			10,921	7,939
	Total assets				391,342		378,974
Equity and liabilities		Note		30 June		31 December
	2021	2020
	Equity
Equity attributable to equity holders of the parent			16,916	18,777
	Share capital		8.30		86		86
	Other capital			15,793	17,093
	Retained earnings				1,037		1,598
	Retained profit or loss			(634)	(314)
	Net profit				1,671		1,912
Non-controlling interest			24,711	24,626
	Total equity				41,627		43,403
	Liabilities
Technical provisions	8.32	49,463	48,471
	Subordinated liabilities		8.33		6,415		6,679
Liabilities on the issue of own debt securities	8.34	6,133	7,532
	Liabilities to banks		8.35		7,939		9,751
Liabilities to clients under deposits	8.36	257,775	241,975
	Financial derivatives		8.23		4,767		6,281
Other liabilities	8.37	14,747	12,434
	Provisions		8.38		1,330		1,378
Deferred tax liability			1,083	949
	Liabilities related directly to assets classified as held for sale		8.21		63		121
Total liabilities			349,715	335,571
	Total equity and liabilities				391,342		378,974

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