Ministry of Treasury
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PZU and Polish insurance market –
summary of 2011 financial
performance and development
prospects
Published: 02.04.2012
2011 was mixed for insurers – with premiums growing but profits declining
In 2011, the Polish insurance market grew faster in the property insurance segment than in life
insurance, thus continuing the trend seen already in 2010. Gross written premiums for the entire
insurance industry increased by 5.5% y/y to PLN 57.1 bln, with property insurance segment
growing by 11.3% to PLN 25.3 bln and the life insurance segment increasing by a luclaster 1.3% to
PLN 31.8 bln, data from the Polish Financial Supervision Authority (KNF) show. According to
business daily Parkiet, the considerable growth of the property insurance market resulted mainly
from price hikes in the key vehicle insurance segment.
Polish insurance industry results for 2011
[in thousand PLN]
2010
2011
Gross written premiums
54 148 108
57 149 649
5.50%
Claims incurred
35 645 012
38 715 449
8.60%
Net operating expenses
11 489 058
12 244 351
6.60%
- Acquisition costs
8 494 670
9 367 320
10.3%
- Administrative costs
3 476 464
3 567 770
2.6%
Balance on techincal account
2 324 624
3 773 900
62.3%
Investment income
5 227 546
4 301 307
-17.7%
Operating result
7 550 842
7 134 485
-5.5%
Gross result
7 550 856
7 134 498
-5.5%
Net result
6 747 971
6 130 347
-9.2%
source: KNF; Quarterly Bulletin. Insurance market 4/2011
At the same time, the entire insurance sector’s net profit declined by 9.2% y/y to 6.13 bln. The
drop was certainly connected with the increase of net operating expenses (by 6.6% y/y to PLN 12.2
bln), the increase of claims (by 8.6% y/y to PLN 38.7 bln) and a significant decline in investment
income (down by 17.7% y/y to PLN 4.3 bln).
PZU group results seen against backdrop of insurance industry: similar trends, different scale of
changes
The results of the capital group of Powszechny Zakład Ubezpieczeń SA (PZU), Poland’s largest
insurer, in the major lines reflect the trends observed on the entire insurance market in Poland in
2011, but with some differences concerning the scale of changes.
Gross written premiums in PZU group amounted to PLN 15.28 bln in 2011, on a 5.1% y/y increase
(the entire market’s growth: 5.5%). Premiums in the group’s property insurance segment,
represented by the company PZU, increased y/y by 5.95% to PLN 8.24 bln, which is a slower
growth than that of the entire market, whereas the premiums in the life insurance segment,
represented by the company PZU Życie, grew faster than the broad market, gaining 5.44% to PLN
9.8 bln.
Insurance group PZU’s financial results for 2011 – selected lines
PZU SA
PZU SA
PZU Życie PZU Życie
[in thousand PLN]
2010
2011
(%
change)
2010
Claims incurred
5 562
341
5 340
771
-3.98
7 435 344 7 793 086 4.81
Gross claims paid
5 394
257
5 052
935
-6.33
7 460 613 7 789 628 4.41
Earned premiums net of reinsurance
7 490
079
7 906
271
5.56
9 301 782 9 807 280 5.43
Gross written
premium
7 783
936
8 247
241
5.95
9 300 199 9 806 121 5.44
2011
(%
change)
source: KNF; Quarterly Bulletin. Insurance market 4/2011
As far as the net result is concerned, PZU group recorded 2011 FY net profit of PLN 2.34 bln, on a
y/y decline by 3.9%, which is a change more limited than the one experienced by the entire
market (a decline by 9.2%).
Contrary to the entire insurance industry, which in 2011 experienced an increase of administrative
costs by 2.6%, PZU managed to lower those costs – by 8.1 %. It was achieved by means of
restructuring of PZU group’s companies, which involved both the headquarters and the local
branches, and were connected by cutting employment, by some 1,050 jobs, the group said in its
financial report.
PZU increased its share in life insurance market, yet decreased one in property insurance
PZU remains the dominating player in both segments of the insurance market in Poland,
accounting for 30.8% of written premiums in life insurance segment (the second and the third
largest players, Europa and Warta, had market shares of 8% and 7.8% respectively) and for 32.6%
of property insurance segment (followed by Ergo Hestia and Warta with a 10.4% and 9% market
shares respectively), according to PAP calculations based on KNF data.
Leaders of the Polish life insurance market in 2011 (gross written premiums in PLN bln and
percentage share in the market)
source: KNF; Quarterly Bulletin. Insurance market 4/2011; data processed by Parkiet and PAP
Once we compare the data with the figures for 2010, we can see that PZU group increased its
market share in the life insurance segment by 1.2 pps, at the same time losing 1.6 pps of its share
in the property insurance segment.
Leaders of the Polish property insurance market in 2011 (gross written premiums in PLN bln
and percentage share in the market)
source: KNF; Quarterly Bulletin. Insurance market 4/2011; data processed by Parkiet and PAP
PZU’s development plans
PZU, in its strategy for 2012-2014 attached to the group’s Q4 2011 financial report, announced
that it planned to increase the scale of its operation through an international expansion on Central
and Easter European markets, introduction of changes to investment policy as well as re-branding.
According to the group’s plans, its operation model will be subject to transformation from one
based on the division between product lines to one based on client segments.
PZU announced that, within the mass client segment, it will aim at maintaining its market share in
the vehicle insurance segment, quickly develop savings and investment products, particularly
long-term saving products and develop its basic channels of distribution.
In the group client segment PZU will focus on, among other things, maintaining its profitable
position of the leader in the life insurance segment and creating health insurance market in order
to increase PZU scale of operations in this field.
In the corporate client segment, PZU will try to maintain its market position in the vehicle
insurance segment and increase its market share in the non-vehicle insurance segment.
How will this strategy translate into the group’s actual results? PZU CEO Andrzej Klesyk, at the
press conference following the publication of the insurer’s Q4 2011 results, announced that his
group plans to increase its gross written premiums by PLN 2 bln between the end of 2011 and the
end of 2014. “PLN 2 bln is our maximal planned increase of written premiums without health
insurance,” Klesyk said. As for the health insurance segment, the CEO expects that its written
premium may increase by PLN 5 bln within 5 years.
Looking shorter-term, PZU CEO expects that the insurer may match its 2011 financial results in
2012. „It seems to me that if the market does not experience any disastrous events, … there will
not be any price war, the results should be similar to those recorded in 2011,” Klesyk said in Radio
PIN on the day of PZU Q4 2011 results’ presentation.
Source - Polish Press Agency, Economic Service
Published by: Agnieszka Steindl
Last change: 02.04.2012 Agnieszka Steindl
Author: Investor Relations Department
Register of changes