Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : Financial statement of the PZU Group and PZU SA (Q1 2024)

Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Group

Condensed Interim

Consolidated Financial Statements for the 3 months ended

31 March 2024

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024
Table of contents
Financial highlights	4
1.	Selected consolidated financial data of 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 performance	5
Interim consolidated profit and loss account	6
Interim consolidated statement of comprehensive income	7
Interim consolidated statement of financial position	8
Interim consolidated statement of changes in equity	10
Interim consolidated cash flow statement	12
Notes to the condensed interim consolidated financial statements	14
1.	Introduction	14
2.	Information on PZU and PZU Group	18
3.	Shareholder structure	30
4.	Key management personnel - Management Board of the parent company and Directors of PZU Group	31
5.	Parent Company's Supervisory Board	33
6.	Key accounting policies, key estimates and judgments	34
7.	Major events that have a significant impact on the structure of items of the financial statements	39
8.	Corrections of errors from previous years	39
9.	Significant events after the end of the reporting period	39
10.	Notes to the condensed interim consolidated financial statements	40
11.	Financial assets pledged as collateral for liabilities and contingent liabilities	82
12.	Contingent assets and liabilities	82
13.	Commentary to the condensed interim consolidated financial statements	83
14.	Equity management	86
15.	Segment reporting	87
16.	Note on reporting by segment	94
17.	Impact of non-recurring events on operating results	100
18.	Information on changes in economic circumstances and business conditions which have a material impact
	on the fair value of financial assets and liabilities	100
19.	Management Board's position on previously published forecasts	105
20.	Issues, redemptions and repayments of debt securities and equity securities	105
21.	Payment default or violation of material regulations of the loan agreement	105
22.	Distribution of the parent company's profit and dividends	105
23.	Disputes	106
24.	Evaluation of the PZU Group companies' standing by rating agencies	109
25.	Related party transactions	110
26.	Other information	111

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024
PZU's quarterly standalone financial information (in compliance with PAS)	117
1.	Interim balance sheet	117
2.	Interim statement of off-balance sheet line items	119
3.	Interim revenue account of non-life insurance	120
4.	Interim general profit and loss account	121
5.	Interim statement of changes in equity	122
6.	Interim cash flow statement	125
7.	Introduction	127
8.	Key accounting principles (accounting policy)	127
9.	Changes in accounting policies	127

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Financial highlights

1. Selected consolidated financial data of 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 -
	31 March		31 March		31 March		31 March
		2024		2023	2024		2023
	Insurance service result		787	856		182			182
Fees and commissions result	912	909	211		193
	Net investment result		7,184	6,721		1,663			1,430
Profit before tax	3,773	3,416	873		727
	Net profit, including:		2,885	2,572		668			547
	- profit attributable to the equity holders of the Parent Company	1,254	1,150	291		245
	- profit attributable to holders of non-controlling interests		1,631	1,422		377			302
Basic and diluted weighted average number of common shares	863,343,165	863,390,463	863,343,165		863,390,463
	Basic and diluted earnings per common share (in PLN/EUR)		1.45	1.33		0.34			0.28
			m PLN			m PLN		m EUR			m EUR
Data from the consolidated statement of financial position		31 March		31 December		31 March			31 December
		2024		2023		2024		2023
	Assets		482,969		467,893		112,295			107,611
Share capital	86		86		20		20
	Equity attributable to equity holders of the Parent		31,312		30,022		7,280			6,905
Non-controlling interests	31,943		30,457		7,427		7,005
	Total equity		63,255		60,479		14,707			13,910
Basic and diluted number of common shares	863,378,570		863,381,846		863,378,570		863,381,846
	Book value per common share (in PLN/EUR)		36.27		34.77		8.43			8.00
			m PLN		m PLN		m EUR		m EUR
Data from the consolidated cash flow statement		1 January -		1 January -		1 January -		1 January -
	31 March		31 March		31 March		31 March
		2024		2023	2024			2023
	Net cash flows from operating activities		5,364		17,780		1,241			3,783
Net cash flows from investing activities	(4,274)	(13,323)	(989)			(2,834)
	Net cash flows from financing activities		1,073		322		248			69
Total net cash flows	2,163	4,779	501			1,017

2. Selected standalone financial data of PZU (PAS)

			m PLN		m PLN		m EUR		m EUR
Data from the balance sheet		31 March		31 December		31 March		31 December
		2024	2023	2024	2023
	Assets		55,009		52,965		12,790		12,181
Share capital	86	86	20	20
	Total equity		22,190		20,884		5,159		4,803
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)		25.70		24.18		5.98		5.56

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (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	31 March	31 March	31 March	31 March
	2024	2023	2024	2023
Gross written premiums	4,904	4,443	1,135	945
Technical result of non-life insurance	375	268	87	57
Net profit or loss on investing activities1)	185	940	43	200
Net profit or loss	301	962	70	205
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)	0.35	1.11	0.08	0.24

1. Including the item "Share of the net profit (loss) of related parties accounted for using 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	31 March		31 December	31 March	31 December
		2024		2023	2024	2023
	Assets	30,305		29,545	7,046	6,795
Total equity	5,254		4,867	1,222	1,119
		m PLN		m PLN	m EUR		m EUR
Data from the technical life insurance account and from the general profit	1 January -		1 January -	1 January -		1 January -
and loss account	31 March		31 March	31 March		31 March
		2024		2023	2024	2023
	Gross written premiums	2,407		2,217	557		472
Technical life insurance result	502	445	116	95
	Net investment result	451		531	104		113
Net profit	371	311	86	66

4. Summary of consolidated quarterly performance

The net profit of PZU Group for the 3-month period ended 31 March 2024 was PLN 2,885 million and was higher by 12.2% than the net profit for the corresponding period of the preceding year. The net profit attributable to the parent company's shareholders was PLN 1,254 million compared to PLN 1,150 million in 2023 (an increase by PLN 104 million).

The aROE attributable to the parent company (PZU) for the period from 1 January to 31 March 2024 was 17.1%, which constitutes an decrease by 1.7 percentage points in comparison to that for the corresponding period of the preceding year.

The following factors affected the PZU Group's operations in the 3-month period ended 31 March 2024, as compared to the corresponding period of the preceding year:

• higher performance in the banking business segment, in particular due to an increase in the interest income as a result of higher loan volumes consuming the negative impact of falling interest rates;
• higher profitability on the operating activities of the corporate non-life insurance business, mainly as a result of an improved y/y insurance service result (with rising sales of non-motor insurance and MOD);
• higher operating result in the group and individually continued life insurance segment, in particular as a result of the increase in the result from insurance services as well as the result from investments allocated to the segment;
• an increase in operating profit in the investment segment due to higher revenues from capital market instruments and higher income from the bond portfolio measured at fair value through profit or loss;
• lower profitability of mass non-life insurance business - deterioration in the result from insurance services mainly related to higher claims, with a simultaneous deterioration in the result from investments allocated to the segment.

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Interim consolidated profit and loss account

					1 January -		1 January -
Consolidated profit and loss account		Note			31 March 2023
		31 March 2024
						(restated) 1)
	Insurance service result before reinsurance				1,178		(123)
	Insurance revenue	10.1.2	7,012	6,399
	10.1.4
	Insurance service expenses	10.1.4		(5,834)		(6,522)
Net income or expenses from reinsurance contracts held			(391)	979
	Reinsurance premium allocation	10.1.3		(425)		(365)
	Amounts recoverable from reinsurers	10.1.5	34	1,344
	Insurance service result				787		856
	Insurance finance income or expenses				(484)		(477)
Financial income and expenses from reinsurance			45	13
	Interest income calculated using the effective interest rate	10.2		6,953		6,568
Other net investment income	10.3	53	173
	Result on derecognition of financial instruments and investments	10.4		406		171
Movement in allowances for expected credit losses and impairment losses on financial	10.5	(206)	(351)
instruments
	Net movement in fair value of assets and liabilities measured at fair value	10.6		(22)		160
	Revenue from commissions and fees	10.7		1,345		1,285
Fee and commission expenses	10.8	(433)	(376)
	Operating costs of banks	10.9		(1,651)		(1,498)
Interest expenses	10.10	(2,049)	(2,196)
	Other operating income	10.11		462		409
Other operating expenses	10.12	(1,436)	(1,323)
Operating profit			3,770	3,414
	Share of the net financial results of entities accounted for using the equity method				3		2
Profit before tax			3,773	3,416
	Income tax	10.13		(888)		(844)
Net profit, including:			2,885	2,572
	- profit attributable to the equity holders of the Parent Company				1,254		1,150
- profit attributable to holders of non-controlling interests			1,631	1,422
	Weighted average basic and diluted number of common shares		10.14		863,343,165		863,390,463
Basic and diluted profit (loss) per common share (in PLN)	10.14		1.45		1.33

1) Information on restatement of data for the period from 1 January to 31 March 2023 is presented in section 6.2.

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Interim consolidated statement of comprehensive income

					1 January -		1 January -
Consolidated statement of comprehensive income		Note			31 March 2023
		31 March 2024
						(restated) 1)
	Net profit				2,885		2,572
Net other comprehensive income			(106)	929
	Subject to subsequent transfer to profit or loss				(49)		984
	Valuation of debt instruments			115	832
	Reclassification of debt instruments valuation for the profit and loss account				5		6
	Measurement of loan receivables from clients			(1)	(1)
	Insurance finance income or expenses				160		(709)
	Financial income and expenses from reinsurance			(16)	(13)
	Foreign exchange translation differences				(24)		(6)
	Cash flow hedging			(297)	1,104
	Income tax		10.13		9		(229)
	Not to be reclassified to profit or loss in the future			(57)	(55)
	Valuation of equity instruments				(71)		(75)
	Reclassification of real property from property, plant and equipment to investment			-	7
	property
	Income tax		10.13		14		13
Total net comprehensive income			2,779	3,501
	- comprehensive income attributable to equity holders of the Parent Company				1,291		1,082
- comprehensive income attributable to holders of non-controlling interest			1,488	2,419

1) Information on restatement of data for the period from 1 January to 31 March 2023 is presented in section 6.2.

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Interim consolidated statement of financial position

Assets	Note	31 March 2024	31 December 2023	1 January 2023
Goodwill	10.15	2,795	2,801	2,808
Intangible assets	10.16	3,389	3,404	3,282
Deferred tax assets		2,246	2,207	3,103
Other assets	10.17	721	483	462
Property, plant and equipment	10.18	4,450	4,445	4,304
Investment property		3,097	3,098	3,021
Entities accounted for using the equity method	10.19	65	62	52
Insurance contract assets	10.1.4	110	111	68
Reinsurance contract assets	10.1.5	3,836	3,469	2,336
Assets pledged as collateral for liabilities	10.23	1,446	1,708	972
Assets held for sale	10.20	618	621	654
Loan receivables from clients	10.21	223,220	218,808	212,693
Financial derivatives	10.22	9,913	11,396	16,197
Investment financial assets	10.24	202,199	192,332	153,861
Measured at amortized cost		139,033	135,875	106,013
Measured at fair value through other comprehensive income		51,836	44,366	39,725
Measured at fair value through profit or loss		11,330	12,091	8,123
Current income tax receivables		152	19	305
Other receivables	10.25	4,890	5,227	9,108
Cash and cash equivalents		19,822	17,702	15,960
Total assets		482,969	467,893	429,186

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Interim consolidated statement of financial position (continued)

Equity and liabilities		Note		31 March 2024		31 December 2023		1 January 2023
	Equity
Equity attributable to equity holders of the parent company			31,312	30,022	26,162
	Share capital		10.29		86		86		86
	Other capital			18,281	18,225	17,205
	Retained earnings				12,945		11,711		8,871
	Retained profit or loss			11,691	5,945	5,090
	Net profit				1,254		5,766		3,781
Non-controlling interests			31,943	30,457	22,263
	Total equity				63,255		60,479		48,425
	Liabilities
Insurance contract liabilities	10.1.4	43,213	42,328	37,518
	Reinsurance contract liabilities		10.1.5		15		35		31
Subordinated liabilities	10.31	5,878	6,166	6,184
	Liabilities on the issue of own debt securities		10.32		13,722		12,003		11,090
Liabilities to banks	10.33	6,567	7,047	7,720
	Liabilities to clients under deposits		10.34		315,706		303,781		278,058
Financial derivatives	10.22	10,954	11,656	20,956
	Current income tax liabilities				1,934		1,991		328
Other liabilities	10.35	15,954	16,980	14,301
	Provisions		10.36		2,280		2,307		1,711
Deferred tax liabilities			3,462	3,088	2,831
	Liabilities directly associated with assets classified as held for		10.20		29		32		33
	sale
Total liabilities			419,714	407,414	380,761
	Total equity and liabilities				482,969		467,893		429,186

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Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Condensed Interim Consolidated Financial Statements for the 3 months ended 31 March 2024 (in millions of PLN)

Interim consolidated statement of changes in equity

									Equity attributable to equity holders of the parent company
													Other capital
	Consolidated statement of												Accumulated other comprehensive income								Non-		Total
		Share						Other												Retained				controlling
	changes in equity			Treasury		Supplemen-					Insurance		Reinsurance		Actuarial gains and		Foreign			Total			equity
														interest
			capital				reserve								earnings
				shares		tary capital			Revaluation		finance		finance		losses related to		exchange
							capital
										reserve		income or		income or		provisions for		translation
													expenses		expenses		employee benefits		differences
	Note	10.29																					2.4
	As at 1 January 2024		86		(4)		15,804		2,218		(948)		1,258		(48)		(8)		(47)		11,711		30,022		30,457		60,479
	Total comprehensive income		-		-		-		-		(59)		131		(13)		-		(22)		1,254		1,291		1,488		2,779
	Net profit (loss)	-	-	-	-	-	-	-	-	-	1,254	1,254	1,631	2,885
	Net other comprehensive		-		-		-		-		(59)		131		(13)		-		(22)		-		37		(143)		(106)
	income
	Transactions with the
	shareholders - distribution	-	-	1	19	-	-	-	-	-	(20)	-	-	-
	of financial result
	Other changes		-		-		23		-		(24)		-		-		-		-		-		(1)		(2)		(3)
	Sales of equity instruments
	designated	-	-	24	-	(24)	-	-	-	-	-	-	-	-
	at fair value through other
	comprehensive income
	Transactions with holders		-		-		(1)		-		-		-		-		-		-		-		(1)		(2)		(3)
	of non-controlling interests
	As at 31 March 2024	86	(4)	15,828	2,237	(1,031)	1,389	(61)	(8)	(69)	12,945	31,312	31,943	63,255

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