45. Technical provisions

User Kit

Technical provisions	31 December 2014	31 December 2013
Technical provisions – non-life insurance	18,410,647	16,242,254
Unearned premiums reserve	5,133,390	4,428,845
Unexpired risks reserve	19,257	8,770
Outstanding claims provisions	7,258,764	6,041,030
Provisions for the capitalized value of annuities	5,997,595	5,761,332
Provisions for bonuses and rebates for the insured	1,641	2,277
Technical provisions – life insurance	21,756,238	21,082,162
Unearned premiums reserve	97,456	102,396
Life insurance provision	16,281,625	16,048,191
Outstanding claims provisions	511,587	545,751
Provisions for bonuses and rebates for the insured	650	616
Other technical provisions	439,364	477,987
Unit-linked reserve	4,425,556	3,907,221
Total technical provisions	40,166,885	37,324,416

45._technical_provisions_pzu_2014.xlsx

The table above presents also the amounts of provisions recognized for the old portfolio (as described in Note 5.17.2.2), which are as follows:

Technical provisions for old portfolio	31 December 2014	31 December 2013
Life insurance provisions	471,174	485,757
Other technical provisions	194,623	199,699
- provisions for low interest rates	123,273	127,149
- provisions for litigations	71,350	72,550
IBNR and RBNP reserve	2,298	2,873
Total technical provisions – old portfolio	668,095	688,329

45._technical_provisions_for_old_portfolio_pzu_2014.xlsx

45.1 Technical provisions – non-life insurance

Gross technical provisions by classes specified in section II of the appendix to the Act on insurance activity	31 December 2014	31 December 2013
Accident and sickness insurance (group 1 and 2)	406,557	383,967
Motor third-party liability insurance (group 10)	11,620,451	10,452,238
Other motor insurance (group 3)	1,865,335	1,664,589
Sea, aircraft and transport insurance (groups 4, 5, 6, 7)	113,307	70,633
Insurance against fire and other damage to property (groups 8, 9)	1,681,882	1,377,179
Third-party liability insurance (groups 11, 12, 13)	2,252,799	1,947,727
Credit insurance and suretyship (groups 14, 15)	162,080	135,806
Assistance (group 18)	151,905	121,669
Legal protection (group 17)	2,782	2,627
Other (group 16)	153,549	85,819
Total technical provisions	18,410,647	16,242,254

45.1_technical_provisions_-_non-life_insurance_pzu_2014.xlsx

Technical provisions, net of reinsurance, by classes specified in section II of the appendix to the Act on insurance activity	31 December 2014	31 December 2013
Accident and sickness insurance (group 1 and 2)	405,573	383,795
Motor third-party liability insurance (group 10)	11,366,417	10,246,315
Other motor insurance (group 3)	1,829,788	1,635,612
Sea, aircraft and transport insurance (groups 4, 5, 6, 7)	87,795	59,173
Insurance against fire and other damage to property (groups 8, 9)	1,501,794	1,230,550
Third-party liability insurance (groups 11, 12, 13)	2,172,237	1,896,918
Credit insurance and suretyship (groups 14, 15)	94,747	86,202
Assistance (group 18)	147,603	121,126
Legal protection (group 17)	2,781	2,627
Other (group 16)	48,852	53,417
Total technical provisions	17,657,587	15,715,735

45.1_technical_provisions_-_non-life_insurance-1_pzu_2014.xlsx

Technical provisions – non-life insurance	31 December 2014	31 December 2013
Short-term	4,411,180	3,245,725
Long-term	13,999,467	12,996,529
Total technical provisions	18,410,647	16,242,254

45.1_technical_provisions_-_non-life_insurance-2_pzu_2014.xlsx

Provisions are classified as long-term if the related cash flows are expected to occur after more than 12 months from the end of the reporting period.

Change in provisions

Change in unearned premiums reserve in non-life insurance	1 January - 31 December 2014			1 January - 31 December 2013
Change in unearned premiums reserve in non-life insurance	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance	4,428,845	-209,940	4,218,905	4,435,516	-190,865	4,244,651
Increase (decrease) in provisions for policies concluded in the current year	4,335,362	-258,368	4,076,994	4,220,358	-160,456	4,059,902
Increase (decrease) in provisions for policies concluded in previous years	-4,157,746	174,566	-3,983,180	-4,225,756	140,844	-4,084,912
Exchange differences during the period	-18,556	5,948	-12,608	-1,290	537	-753
Change in group composition	642,510	-19,282	623,228	17	-	17
Transfers to assets held for sale in accordance with IFRS 5 ¹⁾	-97,025	4,958	-92,067	-	-	-
Closing balance	5,133,390	-302,118	4,831,272	4,428,845	-209,940	4,218,905

1) Transfer of PZU Lietuva's provisions to liabilities held for sale due to the transaction described in Note 59.9.1. The decrease of reserves was translated at average rate presented in Note 5.3.

45.1_change_in_unearned_premiums_reserve_in_non-life_insurance_pzu_2014.xlsx

Change in unexpired risk reserve in non-life insurance	1 January - 31 December 2014			1 January - 31 December 2013
Change in unexpired risk reserve in non-life insurance	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance	8,770	-16	8,754	8,202	-5	8,197
Increase (decrease) in provisions for policies concluded in the current year	17,077	12	17,089	5,546	-	5,546
Increase (decrease) in provisions for policies concluded in previous years	-5,316	-	-5,316	-5,016	-12	-5,028
Exchange differences during the period	-561	4	-557	38	1	39
Change in group composition	12,739	-	12,739	-	-	-
Transfers to assets held for sale in accordance with IFRS 5	-13,452	-	-13,452	-	-	-
Closing balance	19,257	-	19,257	8,770	-16	8,754

1) Transfer of PZU Lietuva's provisions to liabilities held for sale due to the transaction described in Note 59.9.1. The decrease of reserves was translated at average rate presented in Note 5.3.

45.1_change_in_unexpired_risk_reserve_in_non-life_insurance_pzu_2014.xlsx

Change in outstanding claims provisions in non-life insurance	1 January - 31 December 2014			1 January - 31 December 2013
	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance, including:	6,041,030	-170,375	5,870,655	5,362,089	-304,051	5,058,038
- for claims reported	2,072,193	-121,826	1,950,367	1,970,611	-234,276	1,736,335
- for claims incurred but not reported (IBNR)	2,615,113	-29,989	2,585,124	2,413,008	-55,337	2,357,671
- for claims handling expenses	1,353,724	-18,560	1,335,164	978,470	-14,438	964,032
Paid benefits concerning claims incurred in previous years, including:	-1,575,921	54,322	-1,521,599	-1,506,275	265,311	-1,240,964
- paid claims and benefits	-1,313,456	50,481	-1,262,975	-1,276,357	261,990	-1,014,367
- claims handling costs	-262,465	3,841	-258,624	-229,918	3,321	-226,597
Increase (decrease) in provisions, including:	2,450,810	-167,606	2,283,204	2,185,105	-130,145	2,054,960
- for losses incurred in the current year	2,041,127	-44,022	1,997,105	1,895,793	-35,684	1,860,109
- for losses incurred in previous years	409,683	-123,584	286,099	289,312	-94,461	194,851
Other changes	2	8,789	8,791	-	-1,834	-1,834
Exchange differences during the period	-10,665	6,304	-4,361	111	344	455
Change in group composition	454,412	-42,844	411,568	-	-	-
Transfers to assets held for sale in accordance with IFRS 5	-100,904	14,510	-86,394	-	-	-
Closing balance	7,258,764	-296,900	6,961,864	6,041,030	-170,375	5,870,655
- for claims reported	2,704,345	-228,795	2,475,550	2,072,193	-121,826	1,950,367
- for claims incurred but not reported (IBNR)	2,868,611	-46,259	2,822,352	2,615,113	-29,989	2,585,124
- for claims handling expenses	1,685,808	-21,846	1,663,962	1,353,724	-18,560	1,335,164

45.1_change_in_outstanding_claims_provisions_in_non-life_insurance_pzu_2014.xlsx

Change in provisions for the capitalized value of annuities– non-life insurance	1 January - 31 December 2014			1 January - 31 December 2013
	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance	5,761,332	-146,180	5,615,152	5,660,281	-254,413	5,405,868
Paid claims concerning losses incurred in previous years	-182,358	15,853	-166,505	-179,944	3,839	-176,105
Increase (decrease) in provisions for losses incurred in the previous years	76,457	-17,444	59,013	23,321	104,997	128,318
Changes in assumptions resulting from technical interest rate changes	-17,284	446	-16,838	-16,981	775	-16,206
Increase in provisions for losses incurred in the current year	278,344	-587	277,757	274,655	-	274,655
Other changes	-	3,916	3,916	-	-1,378	-1,378
Exchange differences during the period	-8	40	32	-	-	-
Change in group composition	81,112	-10,086	71,026	-	-	-
Closing balance	5,997,595	-154,042	5,843,553	5,761,332	-146,180	5,615,152

45.1_change_in_provisions_for_the_capitalized_value_of_annuities-_non-life_insurance_pzu_2014.xlsx

45.2 Life insurance technical provisions

Change in life insurance provision – insurance contracts	1 January - 31 December 2014			1 January - 31 December 2013
Change in life insurance provision – insurance contracts	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance	16,526,794	-	16,526,794	16,208,275	-	16,208,275
Increase (decrease) in provisions related to current year policies	490,085	-	490,085	564,859	-	564,859
Increase (decrease) in provisions related to prior year policies	-306,608	-	-306,608	-260,234	-	-260,234
Changes in assumptions resulting from technical interest rate changes	45,395	-	45,395	17,701	-	17,701
Exchange differences	-34,027	-	-34,027	-3,807	-3,807
Closing balance	16,721,639	-	16,721,639	16,526,794	-	16,526,794

45.2.change_in_life_insurance_provision_-_insurance_contracts_pzu_2014.xlsx

Change in life unit-linked insurance provision, gross	1 January - 31 December 2014			1 January - 31 December 2013
Change in life unit-linked insurance provision, gross	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
Opening balance	3,907,221	-	3,907,221	3,113,798	-	3,113,798
Increases in the fund due to premiums	1,045,805	-	1,045,805	1,082,943	-	1,082,943
Payments deducted from the fund for risk, administration and other	-90,026	-	-90,026	-71,333	-	-71,333
Revenue from the fund’s investments	147,597	-	147,597	123,774	-	123,774
Decreases in the fund due to claims, redemptions, etc.	-547,991	-	-547,991	-354,088	-	-354,088
Other decreases	-60,274	-	-60,274	-43,826	-	-43,826
Other increases	23,224	-	23,224	55,953	-	55,953
Closing balance	4,425,556	-	4,425,556	3,907,221	-	3,907,221

45.2.change_in_life_unit-linked_insurance_provision_gross_pzu_2014.xlsx

Change in provisions for outstanding claims, gross	1 January - 31 December 2014			1 January - 31 December 2013
Change in provisions for outstanding claims, gross	gross	reinsurers' share	net of reinsurance	gross	reinsurers' share	net of reinsurance
RBNP at the beginning of the period	138,366	-	138,366	115,394	-	115,394
IBNR at the beginning of the period	407,385	-	407,385	400,962	-	400,962
Total RBNP and IBNR at the beginning of the period	545,751	-	545,751	516,356	-	516,356
Provisions for claims applied during the year	-523,413	-	-523,413	-516,356	-	-516,356
Provisions for claims created during the year	489,249	-	489,249	545,751	-	545,751
Total RBNP and IBNR at the end of the period	511,587	-	511,587	545,751	-	545,751
RBNP at the end of the period	112,728	-	112,728	138,366	-	138,366
IBNR at the end of the period	398,859	-	398,859	407,385	-	407,385

45.2.change_in_provisions_for_outstanding_claims_gross_pzu_2014.xlsx