In 2013, the PZU Group’s net result on investments amounted to PLN 2,488.1 m compared with PLN 3,704.7 m in 2012 (a decline of 32.8%). The following factors had the greatest impact on the decline in this income:
- an increase of bond yields. For example, the 5-year Treasury bond yield increased by 42 basis points year-on-year, while the 10-year bond yield increased by 61 basis points year-on-year, while the yields dropped by 211 and 215 basis points respectively in 2012. In effect, the Group earned income of PLN 1,970.6 m on interest-bearing financial assets, which was PLN 1,109.8 m less than in the prior year;
- worse conditions on the capital markets than in 2012 – in 2013 the WIG index increased by 8.1%, whereas, in the previous year, it increased by 26.2%. In effect, in 2013, the Group’s income on investing activities on the capital markets amounted to PLN 592.8 m and was PLN 253.2 m lower than in the previous year;
- the decline in the result on derivatives, purchased mainly to manage market risk, of PLN 25.0 m;
- a drop in the value of investment properties.
Investment income in the context of macroeconomic factors
In December 2013 the value of the PZU Group’s investments portfolio(1) amounted to PLN 50,801.6 m compared with PLN 50,017.6 m as at the end of 2012. Investing activities of the PZU Group are conducted in compliance with the statutory requirements, ensuring an appropriate degree of safety, liquidity and profitability.
Structure of investments portfolio (in %)
During 2013, the value of quoted equity instruments and non-Treasury bonds and borrowings increased as a result of the Group’s new investment strategy involving, among other things, the further diversification of the investment portfolio.
In December 2013, the value of quoted equity instruments amounted to 6.7%, while non-Treasury debt securities and borrowings amounted to 8.9% of the Group’s whole investment portfolio compared with 4.8% and 6.9% respectively in 2012.
As at the end of 2013, the PZU Group had made significant commitments to debt and equity instruments of such companies as: Polkomtel, Azoty Group, EMC Instytut Medyczny, Armatura Group and Empik Media & Fashion. PZU plans to increase its debt portfolio to approximately 30 investments. According to the strategy, PZU plans to increase its non-Treasury debt securities portfolio to approximately 16% of the investment portfolio at its own risk.
In 2013, PZU participated in the privatization of Croatia Osiguranje. The Croatian Ministry of Finance announced the process of selling its shares in the largest Croatian insurer. After the non-binding offers were placed, PZU was one of two bidders admitted to the second stage of the proceedings. In December 2013, the Croatian Ministry of Finance published information on the acceptance of the Adris bid.
(1) The investment portfolio covers financial assets (including investment contracts), investment properties and financial liabilities (negative valuation of derivative instruments and reverse repo liabilities).