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Effects of the PZU 2.0 strategy

When the PZU 2.0 Strategy (2012-2014) was in effect, PZU Group considerably strengthened its position on the financial market

2014 was the last year of implementation adopted in December 2011 PZU 2.0 Strategy. When the Strategy was in effect PZU Group considerably strengthened its position on the financial market as a result of the following:

  • slowdown of the declining share in the non-life insurance market. In 2014, the share of PZU Group in the gross written premium of non-life insurance companies in Poland was established at 33.1%. This result was achieved in the conditions of the corporate insurance portfolio restructuring program aimed to ensure the profitability of such products;
     
  • maintaining the position on the life insurance market. In 2014, PZU Życie held a 42.8% share in the regular premium of insurance companies. The reasons for the 8.1% growth of the regular premium in 2014 compared to 2011 included the development of product innovations;
     
  • dynamic development of asset management. In 2014, PZU Group recorded a 162.5% growth in the assets of third party customers managed by TFI PZU compared with 2011. TFI PZU ranked the first on the market in terms of the fund-managed net asset value in 2014 with the share of 12.2%. TFI PZU was also the leader in the segment of Employee Pension Programmes among domestic investment funds;
     
  • achievement of above-average profitability. During the years 2012-2014, the average return on equity (ROE) amounted to almost 24%, whereas the ROE of the biggest and leading global insurance companies is around 10-15%.

Today, some things seem obvious to us. But we could only dream about them just a couple of years ago.

The PZU Strategy 2.0 also provided solid background for further organisational development, including:

  • innovative IT tools – The first functions of one of the world’s most advanced policy systems – the Everest system – were released in November 2013. This new system is used to offer motor, household and some property products. Almost 2.4 million policies were issued in the Everest system by the end of 2014.
     
  • revitalisation of the branch network. – The renovated PZU branches, which no longer have architectural barriers, not only received a new visualization but also began to offer products of PZU Group’s entities;
     
  • cost optimisation – Thanks to the organisational changes (including the centralisation of certain functions), automation of numerous processes, employment restructure, new distribution channels, and a new policy administration system, PZU Group was able to achieve benchmark cost effectiveness. The administrative expenses index dropped from 10.6% in 2010 to 9.3% in 2014.

  • refreshing the brand – PZU Group underwent a big business transformation and started to establish the market standards, especially in scope of service. Meanwhile, the previous brand was associated with the traditional PZU operating model, which was appreciated mainly by the current clients. The refreshed PZU brand is a symbol of a company, which offers new products and uses modern technologies to communicate with Customers. In 2014, in scope of implementing innovative solutions, PZU Group introduced direct claims handling for motor insurance and Poland’s first fleet of replacement cars. The new PZU is also an institution that successfully manages its customers’ funds using the competencies of the largest asset management company in Poland. Today, PZU is seen as a peer of the leading cuttingedge financial institutions;
     
  • strengthening the market position in Central and Eastern Europe – When the PZU 2.0 Strategy was in effect, PZU considerably strengthened its presence in international markets. In 2012-2013 PZU Group used its subsidiary in Lithuania to enter the insurance markets of Latvia and Estonia. In 2014, PZU acquired Link4 (the Polish market leader of direct insurance), the Lithuanian Lietuvos Draudimas AB, the Latvian AAS Balta, and the business of the Estonian Codan Forsikring A/S. Today PZU is not only the biggest insurance company in Poland but is also the number one on the insurance markets of Latvia and Lithuania.

Rate of return on equity confirms the legitimacy of the directions of development for PZU Group assumed in the PZU 2.0 strategy. The TSR index from the IPO (i.e. 12th May 2010) until the end of 2014 was 101.3%.