EN
PL
On 3 October 2016, the Supervisory Board of PZU adopted a resolution concerning the approval of the capital and dividend policy of PZU Group for the years 2016–2020 ("Policy").
The introduction of the Policy is the effect of the 1 January 2016 implementation of the Act on Insurance and Reinsurance Activity implementing Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance ("Solvency II”), as amended, and the end of the "Capital Structure and Dividend Policy of PZU Group for the years 2013–2015", which was updated in May of 2014.
According to the Policy, PZU Group is aiming towards:
- effective capital management through optimization of capital use from the perspective of PZU Group;
- maximizing the rate of return for the shareholders of the parent entity, especially with ensuring a steady safety level and maintaining capital funds for strategic development through acquisitions;
- ensuring enough funds to cover PZU Group’s liabilities towards the clients.
The capital management policy bases on the following rules:
- managing the PZU Group’s capital (including surplus capital) at the level of PZU as the parent entity;
- maintaining target solvency ratios at the level of 200% for PZU Group, PZU, and PZU Życie (in accordance with Solvency II);
- maintaining PZU Group’s leverage ratio at a level no higher than 0.35;
- providing funds for development and acquisitions in the upcoming years;
- no share issues by PZU in the period of the Policy being in effect.
PZU’s and PZU Group’s dividend policy assumes that:
- dividend amount proposed by the Management Board of PZU for the given financial year is established based on the consolidated financial result of PZU Group assigned to the parent entity, where:
- no more than 20% will raise the profits detained for purposes of organic development, innovation, and realization of growth initiatives (supplementary capital);
- no more than 50% is subject to payout in scope of annual dividend;
- the remaining part will be paid out as annual dividend or raise detained profits (supplementary capital) if the given year includes realization of important expenditures associated with performance of the premises in PZU Group’s Strategy, specifically concerning mergers and acquisition transactions;
with reservation of the points below;
- according to the plans of the Management Board of PZU and own evaluation of risks and solvency of the parent entity, the own funds of the parent entity and PZU Group following declaration or payout of the dividend remain at a level ensuring fulfillment of the conditions specified in the capital policy;
- recommendations of the authority supervising the dividend are taken into consideration for dividend determination.
External capital requirements
On 1 January 2016, a new act on insurance activity implementing Solvency II to the Polish legal system came into force. Under the new regulations, the calculation of capital requirements is based on market risk, underwriting (insurance) risk, counterparty risk, catastrophic risk, and operational risk. Assets, liabilities and, consequently, own funds covering the capital requirement are measured at fair value.
Pursuant to Article 412. 1 and Article 489. 3 point 1 of the Act on Insurance Activity, PZU Group is bound to draw up and publish annual financial statements concerning solvency and financial standing at the group level prepared in accordance with the rules of Solvency II. For the report for the year 2016, the date of publication falls no later than 26 weeks from the end of the year, i.e. until 1 July 2017. Pursuant to Article 290. 1 of the Act on Insurance Activity, the financial statements concerning solvency and financial standing of insurance company is subject to examination performed by the entity authorized to audit financial statements.
Regardless the above, some PZU Group entities are obliged to follow their own capital requirements, imposed by relevant legal regulations.
