In 2013, the corporate insurance segment earned an operating profit of PLN 391.5 m, which is 80.0% more than in the prior year. Additionally, in 2012, one-off factors in the form of changes in technical rates had a negative impact on the result. After the effect of this change has been eliminated, in 2012 operating profit in the corporate segment was PLN 238.9 m.
The following factors primarily had a key impact on this segment result in 2013:
- a drop in gross written premium. It amounted to PLN 1,740.2 m, i.e. it was 5.4% lower than in the prior year. In particular, the average policy value dropped (by approximately 11%), which led to a decline in the value of motor insurance (of PLN 86.1 m). In the last quarter of 2013, thanks to of renouncement of the application of an uniform policy to all companies, meant that PZU recorded a positive trend due to the closer cooperation with lease companies in motor insurance. The value of accident and health insurance also dropped (by PLN 65.6 m). In the first half of 2012, hospitals and medical entities were obliged to take out insurance on behalf of patients to cover medical events; as a result of legislative changes, this obligation was deferred to 2016. As a result of renewing the three-year premium for the fuel and energy sector, premiums increased in the fire and other non-life insurance cover (by PLN 49.0 m);
- the drop in claims and benefits. The total amount of claims and benefits was PLN 854.1 m and was PLN 319.9 m lower than in the prior year. In particular, claims in non-life insurance dropped (by 37.9% year-on-year). This was the result of a smaller number of large one-off claims, a change in the approach to individual risk assessment and new pricing policies, taking into consideration customer risk and a more stringent financial insurance risk policy. A significant drop in claims and benefits in motor insurance was also recorded, as a result of the verification of the insurance portfolio and the reduction in the number of unprofitable customers, as well as the smaller frequency of claims (more favorable road conditions and lower traffic intensity). Moreover, in 2012 PZU paid substantial claims as a result of a large number of bankruptcies in the construction industry, including those relating to contract guarantees. Furthermore, the value of claims and benefits included the one-off effect of the reduction in the technical rate in the form of an increase in the value of capitalized annuities provisions of PLN 21.4 m. In 2013, the loss ratio in corporate insurance amounted to 54.9% compared with 66.5% in the prior year;
- an increase in investment income allocated to the segment at transfer prices. This income amounted to PLN 140.0 m and was 10.0% higher than in the previous year. The increase resulted mainly from an increase in the prices of the insurance liability hedging portfolios denominated in foreign currencies;
- a drop in acquisition expenses. The drop mainly arose from lower sales and indirect costs which amounted to PLN 300.3 m; they decreased by 10.7% compared with the prior year;
- an increase in administrative expenses. They amounted to PLN 115.8 m, i.e. they increased by 7.6% compared with the prior year. They included a portion of the costs related to the implementation of the new product system.
Operating profit of the corporate insurance segment (in PLN million)
Source: PZU data.