PZU Group, 3Q2018: the highest quarterly profit for 5 years and record GWP

In Q3 2018 the PZU Group recorded the highest quarterly net profit in the last five years. At Group level, the net profit reached PLN 1.56 billion (EUR 366.75 million) in Q3 and increased by 34.6% y-o-y, to PLN 3.9 billion (EUR 916.9 million) for the first three quarters.

Gross written premium amounted to PLN 5.38 billion (EUR 1.26 billion) in Q3, which gives a record PLN 17.3 billion (EUR 4.07 billion) after 9 months of this year.

In the third quarter, the parent company of the Group, PZU, has also reported a record high net profit, of PLN 1.01 billion, 47.4% up y-o-y, and ROE of 29.3%, increasing by 9pp y-o-y. The main factors enabling the significantly higher profitability were: the improving combined ration in non-life insurance (84.3%), an increasing operating margin in life insurance (26.1%, 6 pp above the strategic goal), as well as a high cost discipline (administrative cost ratio of PZU SA and PZU Zycie amounted to 6.0%).

Pawel SUROWKA, president of PZU SA said: "The excellent financial standing of the PZU Group after three quarters of this year results from very good results in the basic insurance segments, supported by the growing contribution of the banking segment. Overall, this is the best result in the last 5 years. This year's results are distinguished by high quality, which is visible at the level of profitability ratios, with a limited impact of the investment result." He also stated that the Group's management intends to increase dividend payouts per share year by year.

"In parallel to activities aimed at profitable growth, we consistently implement our strategy based on innovation and new technologies. Since the beginning of the year, we have significantly increased the number of customer interactions primarily in the area of remote sales. We increased the degree of automation of processes operating in the field of claims handling and launched a modern, intuitive and user-friendly new website," he added.

The main drivers of the GWP increase were the motor insurance segment, both mass and corporate client segment, the fire insurance and other property damage lines in the corporate client segment and sales development in foreign companies. The increases were partially offset by a lower premium in the individual life insurance segment mainly due to lower payments to accounts in unit-linked products in the bancassurance channel.

Net claims and benefits (including changes in technical provisions) in the first nine months decreased from PLN 11,252 million to PLN 10,984 million, ie PLN 268 million (-2.4%) compared to the corresponding period previous year. The reduction in net claims and benefits was mainly due to a decline in life insurance (negative result from investing activities in most unit-linked product portfolios vs. positive, high results achieved in the previous year, and lower customer payments to accounts in individual unit-linked products in the bancassurance channel) and in insurance against fire and other property damage (lower level of damage caused by atmospheric phenomena). In turn, an increase in the category of net claims and benefits was recorded in the motor insurance segment in the corporate and mass client segment due to the revaluation of the reserve (in Q1 2018) for compensations paid for pain caused by the vegetative state of a person injured in an accident.

The condensed interim consolidated financial statements for the 9 months ended 30 September 2018 are available on the Group's website here

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