Investment contracts

Investment contracts are accounted for under the deposit method. Consequently, the transaction volumes from investment contracts do not constitute revenues according to IFRS.

Operating profit of the Investment contracts segment (in PLN million)

Source: PZU data.

The PZU Group earned PLN 11.3 m of operating profit compared with PLN 1.1 m in the prior year (increase of 953.9%) on investment contracts, i.e. PZU Życie’s products which do not generate a material insurance risk and which do not meet the definition of an insurance contract (such as some products with a guaranteed rate of return and some unit-linked products).

The following had an impact on the results of the segment in 2013:

  • a drop in gross written premium. This amounted to PLN 1,098.0 m, i.e. was 41.0% lower than in the prior year. In particular, sales of short-term endowment products dropped (the effect of the strategy consisting of withdrawing from this type of policy). At the same time, the written premium on the Individual Pension Insurance Accounts (Indywidualne Konta Zabezpieczenia Emerytalnego – IKZE), which were launched in 2012, increased;
  • deterioration in the result on investing activities. This amounted to PLN 89.1 m, i.e. was 53.4% lower than in 2012;
  • a lower amount of net insurance claims and benefits, because of the lower level of payments of short-term endowment contracts of an investment nature through the bancassurance channel. They amounted to PLN 1,329.7 m, i.e. they were 58.3% lower than in the prior year;
  • a lower positive balance of net technical provisions. This amounted to PLN 172.3 m compared with PLN 1,171.5 m in the prior year. This difference arose from the changes in the cover portfolio of short-term endowments of an investment nature, mainly through the bancassurance channel, i.e. lower sales, endowment disbursements and income from investing activities;
  • lower acquisition expenses. These amounted to PLN 18.3 m, i.e. they were 41.3% lower than in the prior year. This was the effect of a decline in the sales volume. Additionally, in 2012, costs were incurred on the launch of individual pension security accounts (IKZE) on the market;
  • lower administrative expenses. These amounted to PLN 11.4 m and declined by 28.8% compared with 2012.