The operating profit of the group and individually continued insurance amounted to PLN 1,603.4 m and was 16.8% higher than in the previous year. This was a result of:
- a gross written premium of PLN 6,415.2 m, which was 0.8% higher than in 2012. Because of the discontinuation of the short-term endowment insurance offering with a single premium, this almost entirely represented the premiums paid regularly. In 2013, a stable growth trend was maintained in regular premiums as a result of the development of group protection insurance (an increase in the average premium and in the number of insured, including new sales), sales of riders and an increase in the sum insured in individually continued products, the acquisition of premiums in group health insurance (new customers in outpatient insurance and introduction of a new drug product into the range), as well as the continuation of the cooperation with bank intermediaries in sales of protection insurance.
- income from investing activities – comprising income allocated according to transfer prices and income from investment-type products – amounted to PLN 735.2 m, i.e. it declined by 23.0%. This was the effect of unfavorable financial market conditions and, specifically, the increase in instrument yields and a drop in risk-free rates (for allocated income);
- Net insurance claims and benefits amounted to PLN 4,299.5 m (a 3.8% increase). In addition to the increase in the group and individually continued protection portfolio, the increase in the frequency of events also contributed to this increase;
- the increase in other net technical provisions amounted to PLN 271.0 m. The increase in technical provisions was PLN 577.7 m lower than in the prior year, when one-off additional provisions of PLN 408.5 m were established as a result of a decrease in technical rates. Moreover, the following factors had an impact on the amount level the provisions: a smaller increase in technical provisions in unit-linked products (as a result of significantly lower results on investing activities than in 2012) and in continued protection cover (the effect of modification of the product affecting the amount of provisions established at the time of transfer of the insured to the individually continued cover) and a decline in technical provisions in short-term endowment products as a result of a drop in their sales through the bancassurance channel. The lower rate of conversion of long-term contracts into annual renewable contracts in type P group cover also affected the level of these provisions. As a result, provisions of PLN 127.1 m were released, i.e. PLN 93.3 m less than in 2012;
- acquisition expenses were PLN 322.8 m, increasing by 1.6%. The main factors for their increase were the higher direct and indirect acquisition expenses in type P group protection insurance as a result of increased sales of policies (of which an increasingly larger portion was acquired through brokers and agency channel), as well as the increase in commissions in group protection insurance in the bancassurance channel, as a result of an increase in sales of policies;
- administrative expenses in the segment amounted to PLN 545.7 m. Their almost 6.0% decline was mainly the result of lower personnel costs, as a result of reorganization and employment restructuring, as well as the decline in advertising expenses (a rebranding campaign was conducted in 2012);
- other operating expenses amounted to PLN 108.4 m which represented an increase of PLN 49.3 m, mainly as a result of an additional prevention fund write-off.
Operating profit of the group and individually continued insurance segment (in PLN million)
Source: PZU data.
After accounting for the one-off effects related to the drop in technical rates in 2012 and the lower effect of conversion of long-term contracts into renewable contracts in type P group insurance in the segment’s results, the segment’s operating profit amounted to PLN 1,476.3 m in 2013, compared with PLN 1,561.2 m in 2012 (a 5.4% decline).