PZU: EUR 400 million, record net profit in 1H2012

4 September 2012 — Daniela GHETU
pzuGross premiums written by PZU Group in the first half of 2012 amounted PLN 8.25 billion (~ EUR 1.93 billion), 7.5% up y-o-y. Net income from investment activities increased by more than 41.2%, yielding the first half of 2012 a record 10.6% higher net profit of PLN 1.72 billion (~ EUR 400 million). PZU remains leader of the Polish insurance market, also in terms of profitability, with a return on equity (ROE) was in this period reaching close to 26.8%, up by 2pp y-o-y.

The main sources of the GWP increase were life insurance and endowment with a single premium of investment in the bancassurance channel, for the individual insurance segment, as well as group insurance protection (premiums and the increase in the average number of insured, including the rapid development of new sales). Also, liability insurance, both on the individual and corporate segment, had a significant contribution to the overall gwoth of sales.

A positive impact on the group's profitability had the improved technical results in the motor insurance and other property insurance with the exception of insurance guarantees (due to the deteriorating condition of the companies in the construction industry), as well as the significant increase in income from investment activities resulting in particular from the higher valuation of debt instruments and the introduction of a new investment strategy, the effect of which was to increase profitability while reducing the variability of results from investing activities (41.2%). These factors were partially offset by higher compensation and benefits, PLN 496 million net, and the higher administrative costs, as a result of the business project aimed at including optimization of operating processes, creating a positive image of the PZU Group.

At the date of the interim Report on the activities of the PZU Group, both PZU SA and PZU Life had a long-term credit rating and financial strength rating (assigned by Standard & Poor's Ratings Services on July 16, 2009) at the A rating, with a stable outlook. On July 23, 2012, Standard & Poor's Ratings Services reaffirmed these ratings.

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