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Reinsurance operations

Reinsurance coverage in PZU Group secures the insurance activity, reducing the consequences of the occurrence of catastrophic events which could adversely affect the financial situation of insurance companies. This task was performed through treaty reinsurance supplemented with facultative reinsurance.

Reinsurance contracts – PZU

PZU uses the reinsurance contracts it concludes to mitigate its exposure to catastrophic losses (e.g. flood, hurricane) among other things through a catastrophic non-proportional excess of loss contract and to the consequences of large one-off losses by non-proportional excess of losscontracts protecting property, technical, marine, aviation, TPL and MTPL portfolios.

PZU’s risk is also mitigated through reinsurance of the financial insurance portfolio. In 2014, the main partners providing treaty reinsurance coverage to PZU were Swiss Re, Hannover Re, Munich Re, Scor and Lloyd’s. PZU’s reinsurance partners have high S&P/AM Best ratings, which gives the Company the certainty of the reinsurer’s good financial standing.

PZU’s activity in the area of inward reinsurance includes foreign companies of PZU Group. As a result of the new acquisitions, in 2014 years the commitment to the protection of subsidiaries increased, and so did the related written premium. In addition, PZU obtains a gross written premium from inward reinsurance from activity on the domestic and foreign market, mainly through facultative reinsurance.

  Sensitivity of reservesEffect of changes in assumptions on:
net financial profit/lossequity
31 December
2014
31 December
2013
31 December
2014
31 December
2013
Changes in the assumptions to the net capitalized annuities in non-life insurance (PLN million)
Technical rate - increase by 0.5 p.p. 415 411 415 411
Technical rate - decrease by 1.0 p.p. -1,074 -1,064 -1,074 -1,064
Mortality at 110% of the currently
assumed rate
129 126 129 126
Mortality at 90% of the currently
assumed rate
-144 -141 -144 -141
Changes in the assumptions for annuities in life insurance (PLN million) Technical rate
Technical rate - decrease by 1 p.p. -34 -36 -34 -36
Mortality at 90% of the currently
assumed rate
-12 -13 -12 -13
Changes in the assumptions for reserves for insurance contracts and investment contracts with DPF in life insurance,
excluding annuity insurance (PLN million)
Technical rate - decrease by 1 p.p. -2,194 -2,221 -2,194 -2,221
Mortality at 110% of the currently
assumed rate
-923 -937 -923 -937
110% morbidity and accident rate -187 -195 -187 -195

Reinsurance contracts - PZU Życie

Outward reinsurance contracts concluded by PZU Życie protect PZU Życie’s portfolio against the accumulation of risks (catastrophic treaty), protect individual policies with higher sums insured and protect the child’s serious illness group insurance portfolio.

RGA, Partner Re and Arch Re are the partners which provide reinsurance coverage to PZU Życie. Reinsurance partners have high S&P ratings, which gives PZU Życie the certainty of the reinsurer’s good financial standing.

Reinsurance contracts of foreign companies of PZU Group and Link4

Other insurance companies of PZU Group, which are PZU Lietuva, PZU Ukraina and the companies acquired in the course of the year (Lietuvos Draudimas, AAS Balta, the Estonian branch of Codan and Link4), have reinsurance coverage that matches their business profile. Every significant insurance portfolio is secured by an treaty contract, usually non-proportional. PZU coordinates the cover of the Group’s companies and in 2015 it will become the main reinsurer of the subsidiaries.

Reinsurance premium from PZU obligatory contracts as per Standard & Poor’s rating