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CEO Statement

Andrzej Klesyk

Dear All,

On behalf of the Management Boards of PZU Group companies, I hereby present the Management’s Report of PZU Capital Group for the year 2014.

The period for the realisation of PZU Group’s strategy for the years 2012-1014 focusing around PZU 2.0 concept is now over. The strategy defined the vision of PZU development.

Thanks to its strong customer-orientation and high operational efficiency, PZU Group will continue to be the largest and the most profitable insurance group in the region. The year 2014 concluded the realisation of these goals with a strong accent.

PZU Group expanded internationally and became a leader in Central and Eastern Europe through the acquisitions of considerable assets of RSA Insurance Group. The acquisitions included among others Link4 and the largest insurance entities on the Lithuanian and Latvian markets.

The year 2014 also saw the development of several procustomer solutions. In April, PZU Group introduced the direct claims handling service, a breakthorugh in the Polish market.

In early July, the next stage of Everest project was concluded and, in October, PZU opened Poland’s first own fleet of hybrid replacement cars and thus revoultionising their market.

Another noteworthy event was the record-setting issue of bonds valued at EUR 500 million. This operation was an important element of PZU Group’s asset and liability management strategy.

However, numbers and results are equally as important as the realised projects, and the ones we achieved in 2014 and in the previous years place PZU Group among the most profitable institutions in the country and in Europe.

Last year, PZU Group’s net income reached PLN 2,968 million despite the unfavourable economic and regulatory conditions which led to the increase in claims and benefits and certain provisions. Other factors with considerable impact on result during the year were the increase in the net investment result and slightly declined profitability of the insurance business.

However, the level of the collected gross written premium grew in 2014 by 2.5% from the previous year to PLN 16,884.6 million. This was another consecutive year which saw the rise of the PZU insurance sales.

The net investment result is also consequently growing. In 2014, it amounted to PLN 2,733.5 million and was 8.7% higher than in 2013. Moreover, revenues from fees and commissions grew by 17.2%.

The high return on PZU Group’s equity continues to provide reason for satisfaction. The 2014 ROE amounted to 22.6% and was only 1.5 p.p. lower than in the record-setting year of 2013.

In the upcoming years 2015-2020 we will focus on the realisation of PZU 3.0 strategy. Its main goals include taking PZU Group to the leadership in all of its key businesses: insurance, investments and private health care. I believe that the foundations built over the recent years will make this period a success.

At this point, I would like to thank our employees and agents for their efforts in building PZU value.

Yours faithfully,                                                                                                     

Andrzej Klesyk