Capital management

The PZU Group has a solid capital base, which is much higher than the capital requirements and the average values for the insurance sector in Poland.

In accordance with the Act on Insurance Activity, an insurance company with its registered office on the territory of Poland is obliged to maintain its own funds at an amount of no less than the solvency margin and no less than the guarantee capital. Because of the lack of regulations defining the calculation of the solvency margin and the amount of own funds for the group, PZU applies a ratio calculated on the basis of the unit solvency margins and own funds (using Solvency I rules) of insurance companies, taking into account consolidation adjustments.

PZU and PZU Życie’s unit solvency margins and own funds were calculated on the basis of Polish GAAP and the requirements of the Regulation of 28 November 2003 on the method of calculating the solvency margin and the minimum amount of guarantee capital for insurance categories and groups (Journal of Laws no. 211 of 2003, item 2060 as amended).

The capital requirement calculation model will be changed when Solvency II enters into force.

PZU also maintains assets for covering technical reserves in excess of the required level. As at the end of 2013, the assets to technical reserves ratio amounted to 115.5% for PZU and 115.8% for PZU Życie. Details are presented in the Appendix.

Calculation of own funds for solvency margin coverage

31 December
31 December
31 December
31 December
31 December
Amount of the PZU Group’s own funds of (in PLN millions) 11,377 12,756 10,959 11,336 9,947
PZU Group’s solvency margin (in PLN millions) 3,234 3,144 3,106 3,081 3,024
PZU Group’s guarantee capital (in PLN millions) 1,078 1,048 1,035 1,027 1,008
PZU Group’s solvency margin coverage with own funds 351.8% 405.8% 352.9% 367.9% 328.9%
PZU Group’s guarantee capital coverage with own funds 1,055.5% 1,217.3% 1,058.6% 1,103.7% 986.8%
Amount of PZU’s own funds (in PLN millions) 9,505 10,956 9,192 9,593 8,262
PZU’s solvency margin coverage with own funds 697.7% 815.3% 686.6% 716.6% 617.1%
Amount of PZU Życie’s own funds (in PLN millions) 4,185 6,551 5,704 6,233 7,224
PZU Życie’s solvency margin coverage with own funds 235.5% 376.0% 332.5% 367.0% 440.8%

Source: PZU data.