Powszechny Zaklad Ubezpieczen : Financial statement of the PZU Group (Q3 2021)

Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Group

Condensed interim

consolidated financial statements

for the 9 months ended 30 September 2021

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Condensed interim consolidated financial statements for the 9 months ended 30 September 2021
Table of contents
Financial highlights .............................................................................................................................	4
1.	Selected consolidated financial data of the PZU Group............................................................................................	4
2.	Selected standalone financial data of PZU (PAS) ......................................................................................................	4
3.	Selected standalone financial data of Powszechny Zakład Ubezpieczeń na Życie Spółka Akcyjna (PAS) ..............	5
4.	Summary of consolidated quarterly results ..............................................................................................................	5
Interim consolidated profit and loss account....................................................................................	7
Interim consolidated statement of comprehensive income.............................................................	8
Interim consolidated statement of financial position.......................................................................	9
Interim consolidated statement of changes in equity ....................................................................	10
Interim consolidated cash flow statement ......................................................................................	13
Notes to the condensed interim consolidated financial statements .............................................	15
1.	Introduction ..............................................................................................................................................................	15
2.	Information on PZU and the PZU Group ..................................................................................................................	19
3.	Shareholder structure...............................................................................................................................................	35
4.	Composition of the Management Board, Supervisory Board and PZU Group Directors........................................	36
5.	Key accounting policies, key estimates and judgments..........................................................................................	38
6.	Information about major events that materially influence the structure of financial statement items ...............	45
7.	Corrections of errors from previous years ...............................................................................................................	45
8.	Material events after the end of the reporting period .............................................................................................	45
9.	Supplementary notes to the condensed interim consolidated financial statements............................................	45
10.	Assets securing receivables, liabilities and contingent liabilities ...........................................................................	83
11.	Contingent assets and liabilities ..............................................................................................................................	84
12.	Commentary to the condensed interim consolidated financial statements..........................................................	84
13.	Equity management .................................................................................................................................................	87
14.	Segment reporting....................................................................................................................................................	88
15.	Commentary to segment reporting and investing activity .....................................................................................	99
16.	Impact of non-recurring events on operating results............................................................................................	108
17.	Information on the changes in the economic situation and business conditions exerting a material effect on the
	fair value of financial assets and liabilities. ...........................................................................................................	108
18.	Management Board's position on previously published result forecasts.............................................................	113
19.	Issues, redemptions and repayments of debt securities and equity securities....................................................	113
20.	Default or breach of material provisions of loan agreements...............................................................................	113
21.	Dividends.................................................................................................................................................................	113
22.	Disputes...................................................................................................................................................................	113
23.	Evaluation of the PZU Group companies' standing by rating agencies ................................................................	116
24.	Related party transactions .....................................................................................................................................	117
25.	Other information ...................................................................................................................................................	118

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Condensed interim consolidated financial statements for the 9 months ended 30 September 2021
PZU's quarterly standalone financial information (in compliance with PAS) .............................	120
1.	Interim balance sheet .............................................................................................................................................	120
2.	Interim statement of off-balance sheet line items ................................................................................................	122
3.	Interim revenue account of non-life insurance......................................................................................................	123
4.	Interim general profit and loss account .................................................................................................................	124
5.	Interim statement of changes in equity .................................................................................................................	125
6.	Interim cash flow statement...................................................................................................................................	127
7.	Introduction ............................................................................................................................................................	129
8.	Key accounting principles (accounting policy)......................................................................................................	129
9.	Changes in accounting policies ..............................................................................................................................	129

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed interim consolidated financial statements for the 9 months ended 30 September 2021 (in millions of PLN)

Financial highlights

1. Selected consolidated financial data of the PZU Group

			m PLN			m PLN			m EUR			m EUR
Data from the consolidated profit and loss account		1 January -			1 January -			1 January -			1 January -
30 September		30 September			30 September			30 September
		2021		2020		2021		2020
	Gross written premiums	18,250			17,291			4,004			3,893
Net earned premiums	17,372		17,317		3,811		3,898
	Revenue from commissions and fees	3,460			3,037			759			684
Net investment result	7,073		6,272		1,552		1,412
	Net insurance claims and benefits	(11,964)			(11,352)			(2,625)			(2,556)
Profit before tax	5,242		2,676		1,150		602
	Profit attributable to equity holders of the Parent Company	2,430			1,191			533			268
Profit attributable to holders of non-controlling interests	1,464		367		321		83
	Basic and diluted weighted average number of common shares	863,341,351			863,326,940			863,341,351			863,326,940
Basic and diluted earnings per common share (in PLN/EUR)	2.81		1.38		0.62		0.31
			m PLN			m PLN			m EUR			m EUR
Data from the consolidated statement of financial position	30 September		31 December		30 September		31 December
		2021			2020			2021			2020
	Assets		396,433			378,974			85,569			82,121
Share capital	86			86			19			19
	Equity attributable to equity holders of the Parent		17,440			18,777			3,764			4,069
Non-controlling interest	24,275			24,626			5,240			5,336
	Total equity		41,715			43,403			9,004			9,405
Basic and diluted number of common shares	863,342,581			863,349,616			863,342,581			863,349,616
	Book value per common share (in PLN/EUR)		20.20			21.75			4.36			4.71
			m PLN			m PLN			m EUR			m EUR
Data from the consolidated cash flow statement		1 January -			1 January -			1 January -			1 January -
30 September		30 September		30 September		30 September
		2021		2020		2021		2020
	Net cash flows from operating activities		5,814			28,821			1,275			6,488
Net cash flows from investing activities	(724)		(26,126)		(159)		(5,881)
	Net cash flows from financing activities		(2,974)			(1,847)			(652)			(416)
Total net cash flows	2,116		848		464		191

2. Selected standalone financial data of PZU (PAS)

	m PLN	m PLN	m EUR	m EUR
Data from the balance sheet	30 September	31 December	30 September	31 December
	2021	2020	2021	2020
Assets	47,290	44,665	10,207	9,679
Share capital	86	86	19	19
Total equity	16,374	17,689	3,534	3,833
Basic and diluted number of common shares	863,523,000	863,523,000	863,523,000	863,523,000
Book value per common share (in PLN/EUR)	18.96	20.48	4.09	4.44

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed interim consolidated financial statements for the 9 months ended 30 September 2021 (in millions of PLN)

	m PLN	m PLN	m EUR	m EUR
Data from the revenue account of non-life insurance and the general profit	1 January -	1 January -	1 January -	1 January -
and loss account	30 September	30 September	30 September	30 September
	2021	2020	2021	2020
Gross written premiums	9,604	9,013	2,107	2,029
Technical result of non-life insurance	947	1,044	208	235
Net investment result 1)	1,916	948	420	213
Net result	2,269	1,430	498	322
Basic and diluted weighted average number of common shares	863,523,000	863,523,000	863,523,000	863,523,000
Basic and diluted earnings per common share (in PLN/EUR)	2.63	1.66	0.58	0.37

1. Including the item "Share of the net profit (loss) of related parties measured by the equity method".

3. Selected standalone financial data of Powszechny Zakład Ubezpieczeń na Życie Spółka Akcyjna (PAS)

			m PLN	m PLN	m EUR	m EUR
Data from the balance sheet	30 September	31 December	30 September	31 December
		2021	2020	2021	2020
	Assets		29,901	28,512	6,454	6,178
Total equity	3,805	4,486	821	972
			m PLN	m PLN	m EUR	m EUR
Data from the technical life insurance account and the general profit and		1 January -	1 January -	1 January -	1 January -
loss account	30 September	30 September	30 September	30 September
		2021	2020	2021	2020
	Gross written premiums	6,654	6,519	1,460	1,468
Technical life insurance result	816	1,519	179	342
	Net investment result	542	756	119	170
Net profit	534	1,185	117	267

4. Summary of consolidated quarterly results

The net financial result of the PZU Group for the period of 9 months ended 30 September 2021 was PLN 3,894 million and was 149.9% higher than the net result in the corresponding period of the previous year. Net profit attributable to the parent company's shareholders was PLN 2,430 million compared to PLN 1,191 million in 2020 (up PLN 1,239 million).

ROE attributable to the parent company (PZU) for the period from 1 January to 30 September 2021 was 17.9%, up 8.6 percentage points from the corresponding period of the previous year.

The following factors also affected the PZU Group's activity in the 9 months ended 30 September 2021, as compared to the corresponding period of the previous year:

• higher gross written premium, especially in non-motor insurance in the mass and corporate client segment, in unit-linked insurance offered in cooperation with banks, individual protection products in the bancassurance channel and growth of sales in the Baltic companies, including health and property insurance products;
• higher performance on investing activities, including an increased valuation of shares in a logistics company following its IPO;
• better performance of the banking business, last year, there was a one-off effect of the impairment loss on goodwill arising from the acquisition of Alior Bank (PLN 746 million) and Bank Pekao (PLN 555 million) coupled with a lower than last year costs of risk stemming from the recognition of additional provisions for expected credit losses;
• decreased profitability in group and individually continued insurance due to the higher loss ratio on account of deaths of the insured and co-insured in the group protection portfolio and in continued insurance;
• slightly lower operating result in individual insurance with a growing portfolio of banking investment products and a higher level of insurance activity expenses;
• lower profitability in the mass insurance segment - driven by the lower net earned premium, particularly evident in the motor third party liability insurance portfolio, while the cost of claims remained level;

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