PZU Group’s income

Premiums 

In 2020, the PZU Group collected gross premiums of PLN 23,866 million, i.e. 1.3% less (PLN 325 million) than in 2019. The change in gross written premium (net of intersegment premiums) was affected chiefly by:

• increase by PLN 131 million (+8.3% y/y, to PLN 1,712 million) of the written premium in the individual insurance segment, driven mainly by growing sales of unit-linked products offered in collaboration with the banks and the persisting upward trend in written premium in equity and term protection products offered in the Group’s own channels;
• increase by PLN 41 million (+0.6% y/y, to PLN 7,007 million) of sales of the group and individually continued insurance, in particular the health insurance in group or continued form and active up-selling of other insurance riders in individually continued products;
• decline by PLN 132 million (-1.3% y/y, to PLN 10,200 million) of sales in the mass client segment in Poland - this was reported mostly in the motor insurance segment, and was partly counterweighed by an increase in written premium in ADD and other insurance, primarily as a result of the growing sales of insurance offered in cooperation with the Group’s banks, and providing insurance cover to physicians and medical personnel against a COVID-19 infection;
• decrease by PLN 302 million (-9.3%, to PLN 2,962 million) of the written premium in the corporate client segment, primarily in motor insurance offered to both lease firms and in fleet insurance; this was caused by the lower number of insurance contracts coupled with a drop in the average price resulting not only from the impact of the COVID-19 pandemic, but also from the persisting market price pressure;
• decline by PLN 63 million (-3.1% y/y, to PLN 1,985 million) of sales of the foreign companies driven mainly by the poorer sales of motor and tourist insurance policies both in the Baltic States and in Ukraine due to the restrictions imposed in connection with the COVID-19 pandemic.

Structure of gross written premium in the PZU Group (in %)

Insurance segments (in PLN million), local GAAP

Net revenues from commissions and fees 

In 2020, net revenues from commissions and fees amounted to PLN 3,166 million, i.e. PLN 113 million or 3.4% less than in the previous year. This was due mainly to higher commission costs in the banking segment.

The revenues included primarily:

• net revenues from commissions and fees in the banking business of PLN 2,522 million, i.e. PLN 81 million (3.1%) less than in the previous year, consisting mainly of brokers’ commissions, revenues and expenses related to the service of bank accounts, payment and credit cards, as well as fees charged for intermediation in insurance sales;
• income on OFE asset management – in the amount of PLN 130 million were PLN 13 million (9.1%) lower than in the previous year; the decline was caused by the absence of income on the reserve account and lower income on the management fees;
• revenues and fees received from funds and mutual fund management companies in the amount of PLN 509 million, or PLN 19 million (i.e. 3.6%) less than in 2019.

Net investment result and interest expenses

In 2020, the net investment result including interest expenses, excluding Bank Pekao and Alior Bank, was PLN 2,044 million, i.e. increased by PLN 49 million (or 2.5%) in comparison to the previous year. This was driven mainly by the following:

• higher result on listed equities, mainly due to the increase in valuation of the logistics company;
• sale of a portion of the Polish fixed-coupon bonds held in the portfolio of assets measured at fair value through other comprehensive income and transfer to the results of valuation disclosed so far in equity;
• positive foreign exchange differences on portfolios measured in EUR and covering insurance liabilities, the valuation of which is shown by the movement in net insurance claims and benefits.

The increases were partially offset by the poorer performance of the variable coupon debt portfolios resulting from the declines in interest rates and prepayments, as well as the lower net investment results on the portfolio of assets covering the investment products. The investment result of the portfolio of assets held to cover the investment products alone does not affect the PZU Group’s overall net result because it is offset by the movement in net insurance claims and benefits.

Result on other operating income and expenses

In 2020, the balance of other operating income and expenses was negative and stood at PLN 3,990 million. In 2019, this balance was also negative and amounted to PLN 2,790 million. This was caused by the following:

• non-recurring impairment loss on goodwill arising from the acquisition of Alior Bank in the amount of PLN 746 million and Bank Pekao in the amount of PLN 555 million;
• non-recurring impairment loss on assets arising from the acquisition of Alior Bank (i.e. trademark and relations with clients) in the amount of PLN 161 million;
• lower amount of BFG fees – decline from PLN 611 million in 2019 to PLN 541 million in 2020 due to the lower premium on bank restructuring fund;
• higher levy on financial institutions, which in the case of PZU Group (insurance and banking activity) increased from PLN 1,134 million in 2019 to PLN 1,203 million in 2020 owing to the higher burden to banking activity resulting from the increase in value of assets forming the taxable base (the rate of the levy did not change);
• reversal of the 2019 provision of PLN 89 million in connection with the reduction of tax risk of PZU Finance AB;
• decrease by PLN 60 million of the costs of amortization of intangible assets acquired in company acquisition transactions;
• reversal of the PLN 57 million provision for the fine imposed on PZU by the President of the Office of Competition and Consumer Protection (UOKiK) on 30 December 2011.