PZU Presentation for Rochester_v9

Warsaw
Riga
Vilnius
PZU Group Presentation
The Executive MBA program at Rochester Institute of Technology
Warsaw, October 6th, 2015
Kiev
Tallinn
Who we are
33.1%
share
Ranked
1st
(non life
insurance)
42.8%
42.8%
share
share
in Poland in
terms of GWP
11.3
thous.
FTE’s
Dividend
Yield (2014)
7%
in Poland among
mutual funds
TSR
(2010-14)
101.3%
Ranked
1st
(open-end
pension
13.1%
fund)
share
in Poland among
open-end pension funds
25.9%
profit
margin
PLN 3.0 bn
22.6%
ROE
95.7%
COR
Group net profit
in 2014
return on equity
in 2014
combined ratio
(COR) in non-life
insurance
group insurance
profit margin
Cap
42 bn
P/BV
3.19
P/E
14.14
EPS (PLN)
34.37
9.1
thous.
agents
in PZU Group
in Poland
Rating
A /stable/
in Poland in
terms of GWP
Ranked
1st
(mutual
fund)
3 thous.
multiagencies
16 m
customers
414
branches
Ranked
1st
(life
insurance)
12.2%
share
1
What we do
Protection of
property and against
third party property
damage
Accident
cover
Security of the
future of the
family
Savings for
retirement
Health
care
Asset
management
MTPL and MOD Insurance
Accident
Insurance
Group and individually
continued
protection products
Pillar II of the
pension system:
open-ended pension
Funds
Health insurance
Managing of assets for
PZU and third party
Customers
Other non-life Insurance
(Home, Commercial)
Financial Insurance
Assistance
services
Individual life policies
Pillar III of the
pension system
(EPP, IKE, IKZE)
Medicine insurance
Healthcare services:
general health
care and additional
services packages
Participation units
in investment Funds
Structured products
Banks, brokers and
other corporate
partners
We provide peace of mind and a sense of safety for
~16 m Customers in Poland
2
PZU at a glance
● Leading position in Poland and one of the largest
insurance companies in Central and Eastern Europe
Polish market share (%)
43.3%
43.1%
● Largest distribution network and customer base
in Poland
32.2%
31.1%
42.8%
33.1%
● Industry-leading, stable profitability
2012
● Unrivalled capital strength
Non-life
● Long-term, committed shareholder
Strategy 3.0
(2015-2020)
2014
Life (regular premium)
Gross Written Premium (PLNm)
16 243
● Insurance activity: Increase market share in Poland
(raise market share in non-life products to min. 35% and
retain life insurance market share of over 43%) and
expand in Baltic states and Ukraine
16 885
14 541
● Asset Management: Leading the investment fund
market in Central and Eastern Europe
● Health Care: Becoming the leading Polish health care
provider with annual revenue of at least PLN 650 million in
this sector by 2020
2013
2010
2012
2014
Net income (PLNm) / RoE (%)
24.0%
24.1%
5000
22.6%
25,00%
23,00%
4500
21,00%
4000
3 254
3 295
3500
19,00%
2 968
17,00%
15,00%
3000
● PZU will maintain a competitive RoE in a low interest rate
environment no lower than 20%
13,00%
11,00%
2500
9,00%
2000
7,00%
1500
5,00%
2012
2013
Net income
2014
ROE
3
Source: KNF, company data
From "state owned monopoly"...
4
... to the leading insurer in CEE
5
PZU Management Board Structure
6
Our history and milestones
1803
1991
2001
2009
2012
• First insurance
company in Poland is
established
• Transformation of PZU
into a joint-stock
company, wholly owned
by the State Treasury
• Eureko and the State
Treasury dispute
regarding the
privatization process
of PZU starts
• The State Treasury, Eureko,
PZU and Kappa conclude the
Settlement and Divestment
Agreement and resolve the
conflict between the
shareholders
• Publication of strategy
for years 2012-2014
• PZU, Polski Bank
Rozwoju and Bank
Handlowy w Warszawie
establish
PZU Życie
1927
• Transformation of
Polish Mutual
Insurance Directorate
into Public Mutual
Insurance Company –
establishment of PZU
brand
1952
• Transformation of
Public Mutual
Insurance Company
into State Insurance
Institution – a stateowned and operated
institution
• Rebranding
• Kappa created as an SPV to
facilitate the IPO
1998
2002
2010
2014
• PTE PZU, the pension
company of PZU
Group,
is established
• PZU acquires shares
in UAB DK “Lindra”
(presently PZU
Lithuania),
commencing activities
on the Lithuanian
insurance market
• IPO
- value: PLN8.1bn ($2.7bn)
- 15.2% growth on first day
of trading
- PLN 5.1bn on the first day
trading volume
- the first company included
in blue chips index from
the first day of listing
• Acquisition of insurance
companies in Baltics
and direct insurance
company Link 4 in
Poland
1999
• Polish government
approves the
privatization plan of
PZU
• Eureko and BIG Bank
Gdański (Bank
Millennium) acquire a
20% and 10% stake,
respectively
2005
• PZU acquires shares
in OJSC “Skide-West”
(presently
PZU Ukraine),
commencing activities
in the Ukrainian
insurance market
2015
• Publication of the
strategy for years
2015-2020
7
Poland is a growing market
Growth forecasts
Cumulative real GDP growth(a)
24%
Strong
GDP
growth
0%
0%
2%
2%
3% 4%
4%
4%
4%
1.8%
1.5%
5%
2015F
(1)% (2)%
(9)%
(7)% (7)%
(5)% (5)% (5)%
3.6%
3.5%
11% 13%
3.4%
2.0%
1.7%
1.9%
1.5%
2016F
2017F
(4)%
Poland was the only economy in the European Union to avoid
recession in 2009. The cumulative GDP growth in Poland
from 2008 to 2014 was ca 24%, one of the best results not
only in EU member states but also in the OECD
The near term economic outlook remains
favourable with an expected GDP growth
rate of 3.5% – strong fiscal position is well
reflected in the investment grade ratings
(26)%
GR
IT
PT
CY
ES
FI
LV
SL Euro EE
Area
NL
HU
IE
FR
CZ
AT
Life insurance density (€ per capita)
BE
UK
LT
DE
LU
SK
PL
Poland
∆ 597
1,124
81
Poland 2004
195
Poland 2013
Euro Area
Non-life insurance density (€ per capita)
∆ 929
Underpenetrated
insurance
market
EU
759
96
Europe 2013
Poland 2004
162
Poland 2013
Europe 2013
(a) Based on 2007-2014 period
Source: Eurostat, KNF, European Insurance in Figures (2014)
8
PZU has a leading position in Poland and top CEE & Baltics
Poland: #1 in life and non-life contributing
92.5%(a) of gross written premium
Expansion into CEE & Baltics
through acquisition of local market leaders (a) (e)
Life market share in Poland(b)
42.8%
4 x higher than the
nearest competitor
9.5%
7.5%
5.8%
5.8%
4.7%
4.5%
Non-Life market share in Poland(c)
33.1%
(d)
2 x higher than the
nearest competitor
16.2%
13.1%
8.9%
7.9%
4.1%
(a)
(b)
(c)
(d)
(e)
GPW as of H1, 2015
Life insurance (regular premium), 2014
Non-life insurance, 2014
PZU SA: 31.5% + Link 4: 1.6%
As of Q1, 2015
Source: KNF
9
We are the profitability leader in the Polish non-life insurance
market …
Gross written premium (PLNm)
● Reversion to growth trend in
Poland after slight deceleration in
2013
3.7%
22,739
14,955
25,291
26,250
26,603
26,253
17,044
17,797
18,329
17,574
● Good growth momentum in
non-motor insurance
33.1% of market
premium in
2014
7,191
7,784
8,247
8,453
8,274
8,679
4,829
2,362
2010
2011
2012
2013
2014
03.2015
● Significant deceleration and price
pressure observed in motor
insurance
Technical result (PLNm)
● Market profitability suffered
significantly in 2010 due to
floods, strong winter and pricing
pressure in motor insurance
1,265
299
332
(33)
(252)
(1,024)
665
640
203 752
25
1,062
211
541
388
341
47
71.9% share of
market profitability
in 2014
(1,276)
2010
2011
2012
2013
2014
● Since 2010, market profitability
has recovered and PZU captured
almost entire benefit of this
trend
03.2015
Market excl PZU
Source: KNF
10
… and hold a dominant position in the profitable regular
premium life insurance segment
Regular gross written premium(a) (PLNm)
● Regular premium is steadily growing
with market share at a stable level
2.8%
14,759
15,040
15,806
16,037
16,488
8,396
8,510
8,988
9,089
9,435
● Growth in single premium business
mainly from unit-linked products
4,226
6,363
6,530
6,818
6,948
7,053
2,420
1,806
2010
2011
2012
2013
2014
03.2015
42.8% of market
premium in
2014
● Group insurance is the main driver of
growth in the segment
● The segment is key focus for PZU in
life
Technical result(a)(b) (PLNm)
3,601
1,456
2,145
2010
3,342
3,140
3,006
1,327
1,312
1,183
2,015
2011
(a) Refers to PZU Życie only
(b) Total life insurance
Source: KNF
1,828
2012
1,823
● PZU’s share of profitability in life
insurance is significantly higher than
its market share measured by
premiums
3,280
1,139
2,141
2013
2014
Market excl PZU
65.3% share of
market profitability
242
in 2014
377
619
03.2015
● Decline in overall market in Q1 2015
from diminished profitability in all
groups, especially unit-linked products
● PZU Życie's technical result to gross
written premiums in 2014 was 26.2%
which compares to 5.6% achieved by
all other Polish life insurer
11
Our resilient business model is based on unique
fundamentals …
Largest,
multichannel
distribution
network
One of the most
valuable brands
in Poland
16 million
customers
#1 in non-life
insurance with
33.1%(a) market
share
(a) Based on gross written premium in 2014
Low cost ratio and
efficient operations
#1 in life insurance
regular premium
with 42.8%(a) of
market share
12
… and our business mix is balanced
GWP and investment contracts (H1 2015)
Operating profit (H1 2015)
International
International
(a)
Life
Non-life
Non-life
Life
(a) Consists of Investment Segment, Pension Segment and Others
13
CSR is our commitment towards stakeholders but also an
obligation for us as a leader insurer in Poland and the region
PZU’s share performance vs. RESPECT Index (socially responsible companies index)
170
160
PLN 423
150
140
130
120
110
100
90
2012
2013
2014
to 28.09.2015
%
PZU
WIG20
RESPECT index
14
We are known by investors in Europe, US, Asia and
Australia
State Treasury
35.19%
International
27.91%
Poland
72.09%
Institutional
investors
30.69%
Ind. inv. 6.21%
Share performance
%
PZU TSR (%)
220
D
dividend
payout
190
PLN 596.04
PZU (%)
D
D
WIG20 (%)
160
D
PLN 423
WIG
130
D
D
WIG BANKI (%)
D
173.04
D
143.04
D
109.04
100
10.91
59.34
36.91
70
since IPO –
2011
2012
2013
2014
28.09.2015
12.05.2010
Cumulative gross dividend per share (PLN)
15
Summary of our key strengths
1
Leading position in
Poland, CEE & Baltics
● Leader on the stable and attractive Polish insurance market as well as top position in the CEE &
Baltics
● Strongest brand in the Polish insurance sector with high brand awareness
● Loyal base of 16m customers in Poland, including 12m group and individually continued life
insurance customers(a)
2
Resilient business model
and scale
● Large and diversified distribution platform with 413 own sales outlets, 9.1k agents, Group’s
employees, as well as banks and electronic distribution channels(a)
● Unique position in group life with high barriers to entry
● Balanced business mix with focus on group in life and mass clients in non-life
3
Superior financial
performance
● Unparalleled and very stable profitability with RoE in excess of 20% (2012-2014)
● Strong cash generation across all business units
● Superior underwriting performance with average combined ratio in non-life business of 92%
over the last 3 years (2012-2014), and >20% profit margin in life(b)
● Strong capital position and very strong solvency margin of 251.6%(c)
4
Sound capital position
and low risk profile
● Solvency II is not expected to have a negative impact on PZU’s solvency ratios or capital needs
● Credit rating of A with stable outlook from S&P
● Conservative investment portfolio and reinsurance policy
5
6
Management team with
a track record of
delivering results
Stable and committed
shareholder (Polish
State Treasury)
● Consistent delivery of strategic objectives
● Acquisitions with strong strategic rationale
● Restructuring and modernisation of the business already completed
● Long term, stable and committed shareholder
● Listed on the WSE since May 2010
(a) As of H1 2015
(b) Calculated as operating income over gross written premiums
(c) PZU Group consolidated solvency ratio (H1 2015)
16
We have a clear strategy till 2020
Insurance
2020
Market share:
Non-life market(1) > 35%
Life market(2) > 43%
Asset Management
(PZU Investments)
2020
TFI market share(3) > 11.5%
Medical Care
(PZU Health)
2020
ROE
20%
Revenues > 650 m PLN
The PZU Group will become the market leader in asset management
and private health care by 2020
(1)
(2)
(3)
PZU SA and Link4 jointly
Share of regular premium
Share of PZU’s third party Customers’ assets in the TFI (mutual funds) market’s assets net of private assets
17
Contact details
Piotr Wiśniewski
Head of Investor Relations
+48 22 582 26 23
[email protected]
Michał Witkowski
Spokesman
+48 22 582 58 07
[email protected]
PZU
Al. Jana Pawła II 24
00-133 Warsaw, Poland
www.pzu.pl/ir
http://media.pzu.pl/