PZU Group results after the third quarter of 2019 at record breaking level

14 November 2019 — Daniela GHETU
The PZU Group saw in 3Q 2019 record-breaking sales, with GWP amounting to PLN 17.5 billion (EUR 4 billion). At the same time, the net result on insurance activity reached PLN 1.99 billion (EUR 455 million), the best in five years.

In the third quarter of 2019, PZU Zdrowie made a strategic acquisition in the area of health, taking over the nationwide network of Tomma diagnostic facilities. Thanks to this acquisition, patients throughout Poland will have easier access to diagnostic tests and prevention.

"The results for the third quarter of 2019 are proof of the excellent financial condition of the PZU Group and dynamic development in the most important strategic areas. We achieve what we assumed, despite the difficult market, price pressure and regulatory burden," says the President of PZU, Pawel SUROWKA.

According to Tomasz KULIK, member of the management board of PZU and financial director, "the Group achieved high profitability due to maintaining a very good condition of the main business lines and high cost discipline. The net result of the parent company after 9 months of 2019 amounted to PLN 2.36 billion, made possible thanks to achieving positive dynamics of net profit on insurance activity, despite the persistent price pressure in motor insurance."

Compared to the first half of this year, the growth rate of written premiums and earned premiums accelerated despite unfavourable market conditions in the third quarter. Premiums from non-motor insurance brought an increase of 21% y-o-y, and premiums from individual life insurance - by 32%.

At the same time, the PZU Group is increasingly benefiting from the development of banking activities and its synergies with insurance activities. The contribution of banking activity to the quarterly consolidated results of the PZU Group amounted to PLN 179 million. Sales of life insurance in the banking channel increased 2.5-fold. The PZU Group has also become one of the market leaders in Employee Capital Plans. The management contracts of PPK have been concluded with the PZU Group by over one thousand largest employers in Poland, employing a total of over half a million employees.

As emphasized by the president of PZU Pawel SUROWKA, confirmation of PZU's attractiveness and potential is the S&P Global Ratings agency maintaining a positive PZU rating outlook in October while maintaining its financial strength rating at the highest A- level among Polish companies.

The PZU Group is the largest financial institution in Central and Eastern Europe. The value of its consolidated assets is almost PLN 340 billion. Has 22 million customers in five countries.

Key data and facts illustrating the development of the PZU Group after the third quarter of 2019

  • The best three quarters in PZU's history in terms of insurance sales: PLN 17.5 billion
  • The highest result on the basic activity for 5 years
  • High return on equity: 23.7% in Q3 2019 and 20.8% cumulatively since the beginning of the year
  • Acceleration of growth dynamics of written premium and premium earned in Q3 2019 compared to the first half of the year
  • Increase in non-motor insurance premium, reflecting PZU's strong competitive position: 21% y-o-y in Q3 2019
  • Increase in written premium in life insurance despite adverse market conditions for UFK
  • Individual life insurance premiums increase in Poland: 32% y-o-y in 2019 Q3 - significantly stronger compared to the first half of the year
  • Further development of the PZU Zdrowie network of branches : finalization of the acquisition of the nationwide network of Tomma diagnostic centres (effect in the fourth quarter)
  • 2.5-fold increase in new life insurance sales in the banking channel and the highest contribution of banking activity this year to quarterly consolidated results (PLN 179 million)
  • Maintaining the high PZU rating outlook by S&P Global Rating.

PLN 2.4 billion of net profit for the parent after three quarters of 2019

  • Cumulative result PLN 2.4 billion - at a similar level y-o-y despite incomparable conditions compared to the previous year (increasing price pressure, BGF costs, legislative changes, significantly worse weather conditions)
  • The mixed ratio in the non-life segment in Poland at a low level of 89.6% in cumulative terms and 90.2% in Q3 2019 - in both cases at levels better than those assumed in the strategy despite higher claims levels.
  • Operating margin in group and IK insurance 21.3% in 2019 and 23.9% in Q3 2019 - above strategic levels
  • Very good investment outperforming strategic ambitions - return on the main portfolio 2.3 pp above RFR from the beginning of the year and 2.3 pp in Q3 2019 , while maintaining a safe portfolio structure
  • Costs under strict control despite pressure on wages, the cost ratio of 6.2% in Q3 2019
  • High return on equity: 23.7% in Q3 2019 and 20.8% cumulatively since the beginning of the year.

222% Solvency II - stability and security of operations

  • Confirmation by S&P Global Ratings of the PZU Group rating at A- and positive outlook with capital rating at AAA
  • Dividend paid by the General Meeting of Shareholders at PLN 2.80 per share
    (75% of consolidated net profit, 89% of individual profit, dividend rate of 7.0% )
  • Capital adequacy at a stable level, despite the increase in the scale of operations, the WII ratio at the end of Q2 2019 was 222%
  • Decrease in the share of debt in the financing structure - repayment of EUR 850 million bonds during Q3 2019
  • Change of investment portfolio management strategy from short-term to long-term; more conservative portfolio structure; greater share of treasury bonds, greater diversification of corporate exposures, lower share of MTM instruments.

The report for the period of 9 months ended on 30 September 2019 of the PZU Group is available on the PZU website in the Investor Relations tab in the Periodic Reports section: https://www.pzu.pl/relacje-inwestorskie/raporty

Share |