Powszechny Zaklad Ubezpieczen S.A.

PZU Group results for the third quarter 2025 presentation. It will be led by our CEO, PZU CEO Bogdan Benczak and Tomasz Kulik, CFO of PZU Group and management board member of other PZU companies. Good afternoon. I'm extremely pleased to welcome you at the presentation of the PZU group results after nine months. That's my lifetime and first time opportunity for me to manage this presentation. So please understand my unwanted mistakes Let me start with the key achievements and plans as you have already seen in our press release. and in our stock exchange communication after nine months we've reached 23.1 billion sales with the consolidated profit of PLM 5.2 billion capital position 234% of solvability and 246% of standalone solvability The dividend yield for the dividend paid in October is at around 8%. AROE is at the level above 20%. That's a very good position, sort of a head start for me as the acting CEO of the EZU group. Let me stress that the growth that you've seen in insurance refers mainly to non-life insurance and in particular non-motor insurance. I'm extremely happy with this result because this is close to my heart. We've had a major growth in foreign markets where we are present in Lithuania, Latvia, Estonia, and Ukraine. We've had a growth in life insurance segment, especially in individual life insurance segment, and we've managed to substantially improve the results after three quarters. our capital position is very strong, it's robust and the figures are really, really good. The results after three quarters and parameters, profitability and capital adequacy parameters, will allow us to pay an attractive dividend in the next year. And about the level of a dividend, well, the details of the dividend, if the trajectory is kept, could be discussed the next year after the recommendations and the approval. of the management board and the supervisory board. Income and net profit more than 5.2 million zlotys with a share of 3.6 from insurance services and 2.2 from investment portfolio. We are proud with the results in insurance service, an increase of 73%. We do know, however, that the last year was truly exceptional and that we had some additional compensations, 222 million zlotys paid because of the flooding. I believe it's even more. Last year, we reported 275 million zlotys, more than a half billion gros of compensations paid. The third quarter, 1.5 billion and 127% year-to-year growth in insurance service and 85.8%. of combined ratio. This shows our diversification. We've got a pillar of insurance services, we've got a pillar of banking activities, and we are working to consolidate further our health pillar. So 3.6 billion result in insurance services, 2.2 on investment portfolio, And combined ratio, as I said, 85.8%. This is a very good result. And we are also happy with our high operating margin in life insurance. And with this, we are able to get to an AROE at 22.1%. After three quarters, we have a two-digit dynamics in non-motor insurance. Two-digit is a success and it's a source of pride for us. We've managed to have a growth in this segment. This is a core activity, 77%, extremely important. for us especially that a number of initiatives have been launched and actions campaigns for this segment and now we see a tangible result of our efforts. Individual insurances segment has also seen improvements in efficiency in our sales network. We've also launched a new product and here we also have a two-digit dynamics in individual protection insurance segment. This shows that when you focus well and define your priorities clearly, you can be really effective and this is our case and we truly deliver. Again, two-digit dynamics. We are particularly pleased. with a number of results. We do see the room for improvements, but quarter to quarter and quarter after quarter, we are able to improve in this. Pilar Tomek will give you some more details how referrals to our network of branches, own branches, have improved. He will tell you what kind of tools are used and what tools are actually the best to improve the referral rate. Indeed, as I said, we see the room for improvement, but we've been consistent. And we've been implementing a recovery program, and as you can see, the results are there. We are also happy to see a two-digit growth in external customers number in our two investment fund companies, TFI. pillar is on the rise and we look into the future with optimistic perspective. This is yet another source of diversification for our revenues within the group. We've managed to increase the value of assets within the group by 20 billion zlotys year to year. When you have revenue, you have better solvability ratios. Our credit rating is A- and positive outlook, granted by Standard & Poor's global ratings. They've kept the Polish rating as well, so you see that the situation is stable. Group solvency ratio is at 234%. We are above the EU average for European insurers. 81% of our investment portfolio is made of bonds, including 65% represented by sovereign bonds. We are aware that our investment portfolio is conservative, but it produces stable and predictable yield on deposits. One more item, effective reinsurance protection. Reinsurance program was launched some years ago. It turned out to be effective when we were struck by catastrophic events on the territory of our country. 45% of our reinsurers have AA rating and the remaining 55% have A rating. I presented briefly the financial results and now let me move to the priorities of the PZU group for 2026-2027. This is a sort of an opening statement as a person appointed the CEO of the group. We have a very strong financial position thanks to our scale, to our profitability and our diversification. We have a solid market share. We are leaders in non-life insurance and in life insurance segments. with 30 and 44% of share respectively for both of them. We are growing in terms of scale. After nine months, we have 23 billion of zlotys in insurance services. We have profitability, we are profitable and we are better than our competitors in terms of technical profitability for non-life insurance and technical profitability for life insurance according to the data from the six months. We are then positioned among the top European insurers And let me point out that the PZU group is a financial conglomerate, but we are diversified. We are number one in Poland for non-life and life insurances. We are in top three for health. We are among banking in number three in terms of investment funds. And our Baltic country companies are leaders in their respective local markets and contribute to our consolidated financial results.

I hope I am not committing a blunder by showing you this chart, but this is a moment when we can be proud of our achievements. I don't know what the cost of PESA2 is right now, but as we announced our results, the price of shares has skyrocketed 61, so it has gone down a bit. But since 2024, we were growing by 71% versus 46% of the week 20. So this is very good news. And if you have a look at our European peers and their evaluation, there is room for growth for us. And this is precisely our ambition, the ambition of the management board to improve our position respectively versus our peers. So the group is likely to grow and it will grow. But we are also aware of some negative trends on the market. That's why we're focusing on opportunities. So this means demographic and social changes and also the fact that the forecasts for the Polish economy are positive. We would like to tap into the growth of the Polish GDP and take advantage of it. because I think that economic growth will have a positive impact on the capabilities of customers who will be able to take out more insurance policies and now the demographic and social changes. So the purchase power of society is growing Therefore, we think that both investments and life insurance will grow. And so will be the value of the property to be insured. And this will also mean some benefits for us through the amount of the premium. And now the aging society. Let me address that. We think that this means a higher demand for health and protection products, meaning life insurance. There is also a pressure related to the negative market trends, namely the TPL market is changing, it's moving more rapidly. towards what we call the soft cycle. We are now nearing the soft cycle. But we can see that there is a huge competitive pressure in segments that continue to be profitable, like the MOD and non-motor. So this is a trend we have to face because this is a threat but at the same time this is an opportunity, namely the fact that intermediaries are growing. 50% of distribution is now done through brokers and multi-agencies and this is a challenge the group has to face. Also, interest rates will be going down and this will have an effect on the investment result and this will also affect the contribution of our banking pillar to our consolidated result. And also, higher corporate income tax for banks will have an effect on us as well. Now, these are our plans and I would like to highlight some things as CEO. Namely, over the last two months, the group has done the following. We have set priorities for our initiatives and strategies. We have assigned responsibility for specific projects to specific people and also we have grouped initiatives. This will help us reverse trends in some market segments. But it will also help us stay the leader of the insurance market in Poland. And we will be the leader in terms of profitability and the market share because we already got there, but we will be also creating new solutions and products in the market. So from my point of view, the most important thing for us is non-life and mass insurance. We have to improve our pricing here. And there are also other initiatives leading to an improvement in the effectiveness of our sales network. And I'm referring to our agents who are our edge, our advantage. And I believe that they will make a contribution to our results. But at the same time, I think that... developing our collaboration with multi-agencies would be an interesting opportunity for the group because traditionally speaking in this segment the group was not strong and unlike our peers, our competitors, but I think and I believe that if we make some moves in terms of pricing and tariff setting, if we modify our distribution and develop the right skills and if we have the right tools at the front end, we will be able to increase sales in this channel as well, keeping our profitability at the same time. Also, now let me address the implementation of the new system of claims handling. And this covers both the non-life and the life insurance company. Obviously, the non-life company is a priority here. Because I can see that in this company, in particular, there is a huge technical, technological debt, which is something I realized when I came back to the company. And I think that here there's a lot of room for improvement of our profitability. And now, I personally would like to focus on health. I would like us to carry out the strategy which would lead us to the results, the target figures that have been provided for our strategy and this could be a strong pillar that has a positive effect on our operations. I can see a room here for organic growth, so green fields, but also we have an opportunistic approach here because we are looking for acquisitions. And we are doing this to improve the take up, the utilization of our health business in our own clinics, facilities, and also to address and eliminate the white spots in Poland. And I'm referring to the coverage of the territory of Poland with our health facilities. So speaking about the investment activity, increasing interest rates are a negative trend. We would like to manage our own portfolio in an effective way, but at the same time we want to develop a product offer for our external customers and partners. so that the investment pillar can increase its role and share in the positive use group's revenue. Now, speaking about motor insurance, we are relatively happy with this segment because it has a positive contribution to our P&L account. But we would like to grow outside through inward reinsurance. We have proven partners through the MG model, and we believe that this will lead us to positive results. Individual life insurance is what we do. New products, activating the sales network. to reach our target customers. So we would like to focus on individual continued products and we would like to reach the silver and the middle-aged generations as well. Now group insurance. So traditionally as a stronger segment for the company Currently the margin is very satisfactory. It goes beyond our strategic expectations. but we would like to be more swift here and respond faster to the changing market and we'd like to gradually transform here to change the group insurance into a employee's benefit made up of the insurance component, health component and also other elements to be used as a benefit for employees. Bank assurance. We are focusing strongly on the collaboration with PECA OSA and Alior, but we are active on the market. We collaborate also with other companies from outside the group. Now, with the national business, we would like to take advantage of the synergy. We've had some successful projects in our foreign companies. We are also looking into how to make the most of our companies, let's say, in Ukraine for future projects like the recovery of Ukraine. Obviously, hopefully, the war ends as soon as possible so that we can take advantage of the reconstruction. But for the time being, the contribution of our international companies is at the satisfactory levels of the Baltic countries. Combined ratio is at the level of the parent company. So we are very happy with that. Now, the group is transformation and the growth of the organization. Let me stress one thing. According to current strategy of PZU, The solvency, the new solvency two regime was to take effect. This was the assumption of the strategy according to our estimates. So new regulations and a new way of appraisal of our assets, banking assets. This would lead to a drop in our liquidity of 190% to this level. And we were expecting this. And even at this level we have a permanent contribution of the same dividend policy of the group. And this is our starting point. We are also undergoing the reorganization of the PZU group. We have signed a memorandum with PECA and now the group, the PZU group is getting ready for the baseline scenario. And this scenario has been described in the term sheet.

There are factors we cannot... have impact on, I mean by that legislative changes. Without any amendments to the legal framework, we will be unable to do the reorganization and revamping as described in the document signed with PECA or SA. We are awaiting further steps, but we do see risks that these regulatory changes will come into effect at a later date than the date defined in the term sheet. And we work together with the PECA OSR on how to react and to see if we are going to sign a new memorandum or not. And I think that we will know that in December once we've known the exact deadlines. But we do stay in close contact with all stakeholders. So that will be for our Copenhagen project. We do follow up the developments on the market. And in the media coverage, what happens in the media coverage, the Minister of State Assets announced that securing state interests in this project is a key priority for him. We are preparing the deployment of a new organizational model. The design works are underway and we stay in close contact with the supervision authority to know if we will have the endorsement. But we do realize that the challenge is huge. When I joined the PZU group, one of my first tasks was to stabilize the situation within the organization. We had two collective bargainings and we managed, we had collective bargainings and we managed to close two, to settle two disputes and we are now in a dialogue with social partners. I do hope that by the end of the year we will be able to find settlements in other disputes. We focus on transparent and open communication with social partners in these collective bargainings. And I do hope we will be successful. We are preparing for the cultural transition. We want to transform our governance and culture. We want to be more agile and we want to shift from silo thinking to a tribal thinking. It's a huge challenge ahead. But within the group, together with the other leadership team members, we believe that we are on the right track for technology. Well, in our previous meeting, we already said that we had a serious technology debt within the group. The management board and especially Michal Koppert has been working on that. We've designed a plan to replace the key IT systems and we want to have low-code platforms because we want to act swiftly and in an agile way or respond to any market developments. I've already said that we will have some new claims handling processes. We estimate that by the end of the first semester of 2026, we will already have all the analysis at hand and the provider will be selected and that we will be able to trigger the deployment. We've been implementing our corporate social responsibility policy. We want to build a society resilient to ongoing and current challenges. I'm sure you know our campaign champion Slow Down. That's a road safety campaign. I'm sure you know the visualization. And look at me. Moustache only in November because we have another health awareness raising campaign. I wear moustache this month because that's how I see my role as a leader, as the CEO of the leader, of the market leader. It's high profitability and yield, but it's also a major key player and participant of the social life. Just don't forget, we have people to live for. Talk to your family members about health, about prevention, about screening. Just go do screening tests. And my colleague does not wear a moustache. I encourage him to do the same. That will be the overview. of our achievements efforts behind these achievements and plans for the future my personal ambitions as the CEO acting CEO for now of the PZU and now I will move to Tomek who will give some more detailed brief of our business in the third quarter 2025. Thank you very much. I tried to be brief to get some time for the sum up by segment and to have a question and answer session. Let me start with some important factors impacting our results We will start with non-life insurance in walls. However, over the same period, we had some major rises on revenues from insurance services. There is a stratification among corporate clients, a drop of 9%, but the revenue grew by 7%. Why? Well, it's long-term business. The long-term business is still in our portfolio. We do provide our services, and that's an element of our exposure, and there is a different format used for the reporting to the supervisory authority. Our competitors would report that as a written premium, especially that there was no change in coverage over the and we could not reprice that part of business. This is an element of our exposure, as I've said, and we've had some major rises in corporate and mass segments. Under the previous standard, we had a different measurement, premium earned, And that value reflects better what happens on the revenue side. Now, motor insurance continued drop, especially linked for portfolio mass insurances. MRT agency non-profitable channel there has been a reduction the channel was not among the top profitable entities last year in 2025 for the whole group and for link for In 2025 we focus mainly on profitability and yield where such yield is achievable and and we skip any formats that historically are no longer attractive to us. There has been a slight adjustment, therefore, but just have a look at the difference between written premium and revenue on insurance, which are, the difference is the source of this adjustment. Here, in this segment, we have a growth of 3%. That's for health, either the tarification of the existing portfolio or new contracts, new protection, insurances. This is a result of consistent work on the portfolio and we added some new products which help us improve our insurance margin. We had an 8% increase in individual health insurances. It was quite high, especially that the last year the starting point was also quite solid. And we had a major share of investment products, including life and endowment insurance products. quasi-investment products sold through different channels, including through banks. And despite that, we still have a rise of 8% for individual health insurances, and regular protection insurance products register a 20% dynamics. For the segment of non-life insurance, we've opened and stand-alone products in Bank Assurance, Alior Bank and Education. We've already launched what was announced upon the publication of our strategy. We started go beyond Poland in active reassurance format. We want to be present in foreign markets outside Poland. We are in the stage of studying these markets together with our reassurance partners. And because the balance sheet is good, we have enough space to take on some more risk. And we want to limit anti-selection at the very start of that journey. So we had a fresh start. There is a strong team. And I do hope that in the incoming quarters, we will be able to give you some more details on revenues in this specific channel. We still focus on building and expanding skills in underwriting and bank assurance. We wanted to improve analytical skills of our teams. Let us move to life insurance. We have some additional products, serious diseases, treatment abroad. These are elements that are now covered. We are an aging society and we have ailments typical of mature and aging societies. So health insurance is a topic of focus for us. We have an attractive offer with very, very high premiums, and this offer really resonates among customers, attracts a lot of customers. In group insurance, we offer a new product based on the... insurance sum and the insurance sum is calculated based on the remuneration level this is a pilot project we've been testing that solution and we have also products in bank assurance health area the ceo have already has already given you the details we have had growth In both subscriptions and insurances, 15% year to year, and the same applies to medical facilities, whether it's occupational medicine or fee-for-service model, we have two digits, it's more than 12% always. We are growing thanks to our partners. We have partner medical facilities. We want to be present everywhere and to attract more and more customers. We act as an advisor. We can suggest our own facilities or partner facilities simply to streamline the cost, the average cost of medical procedures. We also increased the number of online visits and there is a rechanneling of patients' inflows. to our medical facilities, 40% of all patients in the third quarter. Assets under management, whether it's TFE, PZU, or our group banks, we have TFE, PZU as a leader, 3.5 billion zlotys A large share in banks and growing scales of assets in ECS. And now for product.