In 2024, net profit attributable to the shareholders of the PZU Group’s parent company was PLN 5,342 million, compared to PLN 5,780 million in 2023 (down 7.6%). Net profit reached PLN 12,221 million, i.e. PLN 2,4% lower than in 2023, and profit before tax stood at PLN 15,705 million, compared to PLN 16,145 million the year before.
Net of non-recurring events,1 net result rose by 3.4% compared to last year.
Operating profit in 2024 was PLN 15,697 million, down 2.7% compared to the result in 2023.
- lower result in the mass non-life insurance segment (-PLN 862 million), mainly as a result of a decline in the result from insurance services. The lower result stems from higher claims liabilities in the current year, especially in non-motor insurance, due to an above-normal number of claims caused by weather events. Deterioration was also noted in motor insurance as a result of claims inflation and higher claims frequency. The impact of the increase in liabilities was partially offset by an increase in revenues due to higher sales growth – mainly non-motor insurance and MOD;
- decline in operating profit in the corporate nin-life insurance segment (PLN -115 million), as a result of higher year-on-year net claims liabilities of the current year, while revenues increased as a result of higher sales growth in non-motor insurance and MOD;
- decline in operating profit in the investment segment (PLN -131 million), in particular as a result of lower investment profit on free funds including on the commercial real estate portfolio, with a simultaneous decrease in the level of interest expenses following the lower level of Polish money market rates;
- higher operating profit in the group and individually continued life insurance segment (+PLN 362 million), mainly due to higher income from insurance contracts significantly exceeding the increase in insurance costs. Revenue growth as a result of higher level of premiums to cover expected claims and benefits due largely to high utilization of health insurance benefits;
- higher result in the Baltics segment (+PLN 98 million) due to higher income from insurance contracts caused by an increase in sales in property and other personal insurance (mainly due to an increase in sales of non-motor insurance and MOD insurance), with a simultaneous increase in the cost of claims and benefits as a result of an increase in the value of the portfolio;
- higher results in the banking operations segment (+PLN 50 million), in particular due to an increase in interest income as a result of higher loan volumes at Bank Pekao and an improvement in the quality of the loan portfolio translating into a decrease in the allowance for expected loan losses, as well as a lower cost of hedging interest rate risk at Alior Bank, partially offset by higher costs of legal risk of foreign currency mortgage loans mainly at Bank Pekao and higher operating expenses;
- higher operating profit in the individual protection life insurance segment (+PLN 73 million), mainly as a result of higher insurance revenues thanks to releasing contractual margins including in bancassurance and term insurance;
- higher operating profit in the pension insurance segment (+PLN 43 million), mainly due to an increase in fund management fees;
- one-off effect of release of impairment loss on assets arising from the acquisition of Alior Bank (i.e. trademark and relations with clients) of PLN 115 million.
- insurance revenue growth of 9.5% – to PLN 29,423 million, (PLN +2,187 million after reinsurance premium allocation), including an increase in the amortization of liabilities for remaining coverage (LRC) as a consequence of higher sales of mainly non-motor insurance and MOD in both non-life insurance segments (an increase in average premiums resulting from the growing value of vehicles, and thus sums insured, and the number of insurance contracts). Higher revenues were recorded in the group and individual continued insurance segments as a result of higher premiums needed to cover expected claims and benefits following high utilization of health insurance benefits, mainly outpatient and paramedical benefits. Higher revenue was also noted in the Baltic countries segment as a result of higher sales in non-life insurance segment, including MTPL and MOD insurance products (due to higher fees in the region), as well as health and non-life insurance products. The higher level of insurance revenue is also triggered by a higher level of premiums allocated to recovery of insurance acquisition cash flows as a consequence of growing sales and a simultaneous increase in commission costs (resulting from changes in the sales distribution channels, mostly in the segment of mass non-life insurance);
- the higher level of insurance service expenses, which amounted to PLN 25,116 million, i.e. 10.4% more than in 2023. Expenses adjusted for the amounts recoverable from reinsurers increased by PLN 2,691 million, and this resulted from:
- higher claims liabilities for the current year including, in particular, in the mass non-life insurance segment in both the non-motor insurance group as a result of the occurrence of mass claims caused by weather events (mainly flooding), and in motor insurance as a result of claims inflation and higher claims frequency;
- higher claims and benefits in the group and individual continued life insurance segment with the development of the loss reserve from previous years, as a result of the continued high utilization of health insurance benefits as well as the higher cost of claims in other group insurance (impact of portfolio development);
- higher administrative costs attributable to insurance operations due to increased personnel costs (impact of salary increases), higher IT costs due to the development of the IT area and building competencies in the area of systems maintenance and rental services;
- higher amortization of acquisition cash flow, including in particular in the mass non-life insurance segment as a consequence of growing sales while commission expenses increased (impact of change in distribution of sales by channel).
- 0.3% higher investment income, exclusive of interest expenses, and 3.8% higher income after factoring in the interest expenses2 (increase from PLN 19,235 million to PLN 19,965 million). The increase was related to investment results generated on banking activities and was associated in particular with an increase in banks’ interest income. At Bank Pekao, the increase in interest income was attributable to higher loan volumes and stable interest margins, despite the recognition of credit holidays expenses of PLN 153 million. At Alior Bank, the increase in net interest income is a consequence of a significant decrease in interest expense associated with lower interest rate hedging transaction costs and a reduction in the cost of funding, partially offset by the creation of a provision for the credit holidays expenses in the amount of PLN 62 million, and a relatively smaller decrease in interest income associated with the reduction in interest rates in 2023. At the same time, a decline in investment income was posted in investment activity, net of banking activity.3 They were lower than in 2023 mainly as a result of:
- decrease in the results generated in the investment activity on the asset portfolio that constitute investment insurance coverage, which has no impact on the PZU Group’s total net result, as it is offset by insurance finance Change income or expenses change;
- lower performance of the commercial real estate portfolio due to the negative impact of portfolio valuation in the office segment in particular, and lower swap point income on foreign currency hedging instruments, as well as the recognition of impairment charges on exposures from the corporate debt portfolio.
- improved earnings from the Private Equity portfolio mainly due to an increase in valuations of USD-denominated funds, which were supported by the cycle of interest rate cuts that began in 2024;
- an increase in income from the portfolio of Polish government bonds measured at fair value through other comprehensive income as a result of, among other things, the purchase into the portfolio of instruments at high market yields partially offset by the realization of a negative result from the sale of some of the bonds in the portfolio;
- an increase in net commissions and fees to PLN 3,842 million, compared with PLN 3,786 million in 2023, mainly related to an increase in revenues from funds and investment fund companies, as a result of improved gross sales as well as due to the higher level of assets under management. There was also a higher result from brokerage commissions at banks, an effect partially offset by a decline in margins on foreign currency transactions with customers;
- higher provision for legal risk related to foreign currency mortgages amounted to PLN 729 million versus PLN 369 million in 2023. The increase affected Bank Pekao in particular, and was mainly due to an updated forecast of a future influx of lawsuits from borrowers;
- an increase in the level of the Group’s operating expenses from not related to insurance services PLN 9,701 million in 2023 to PLN 10,514 million in 2024, particularly as a result of higher employee costs, including in particular at Bank Pekao and Alior Bank. In addition, there was a PLN 30 million higher charge for payments to the Bank Guarantee Fund in 2024, while the charge for the tax on financial institutions increased in total from PLN 1,496 million in 2023 to PLN 1,566 million in 2024 (this is the result of an increase in taxable assets, not the tax rate);
- movement in the balance of other operating income and expenses – to PLN 1,043 million, compared with PLN 913 million in 2023. The change was mainly due to the reversal of the impairment loss on assets arising from the acquisition of Alior Bank and the increase in revenue from the sale of medical services.
| Basic amounts of the consolidated profit and loss account | 1 January – 31 December 2022 PLN million |
1 January – 31 December 2023** PLN million |
1 January – 31 December 2024 PLN million |
|---|---|---|---|
| Insurance service result before reinsurance | 3.600 | 4.122 | 4.307 |
| Insurance revenue | 24.745 | 26.868 | 29.423 |
| Insurance service expenses | (21.145) | (22.746) | (25.116) |
| Net income or expenses from reinsurance contracts held | 63 | (103) | (792) |
| Reinsurance premium allocation | (1.126) | (1.514) | (1.882) |
| Amounts recoverable from reinsurers | 1.189 | 1.411 | 1.090 |
| Insurance service result | 3.663 | 4.019 | 3.515 |
| Financial income and expenses from insurance | (408) | (1.786) | (1.565) |
| Finance income or expenses from reinsurance | 30 | 38 | 140 |
| Fee and commission result | 3.687 | 3.786 | 3.842 |
| Net investment result* | 15.353 | 28.125 | 28.208 |
| Operating costs of banks | (5.450) | nd. | nd. |
| PZU Group operating expenses not related to insurance services | nd. | (9.701) | (10.514) |
| Legal risk costs of foreign currency mortgage loans | nd. | (369) | (729) |
| Interest expenses | (4.767) | (8.890) | (8.243) |
| Other operating income and expenses | (3.946) | 913 | 1.043 |
| Operating profit (loss) | 8.162 | 16.135 | 15.697 |
| Share of the net financial results of entities accounted for using the equity method | (25) | 10 | 8 |
| Profit (loss) before tax | 8.137 | 16.145 | 15.705 |
| Income tax | (2.471) | (3.626) | (3.484) |
| Net profit (loss) | 5.666 | 12.519 | 12.221 |
|
Net profit (loss) attributable to the equity holders of the parent company |
3.781 | 5.780 | 5.342 |
*) Including: interest income calculated using the effective interest rate, other net investment income, result on derecognition of financial instruments and investments, movement in allowances for expected credit losses and impairment losses on financial instruments and net movement in fair value of assets and liabilities measured at fair value
**) Restated data.
**) Restated data.
1. One-time events in 2024 include:
– revaluation of the provision for risk associated with foreign currency mortgage loans at Bank Pekao;
– costs related to the modification of agreements for PLN mortgage loans granted to consumers due to their suspension of loan repayments (the so-called moratorium periods);
– effect related to the aforementioned number of mass damage caused by atmospheric events, mainly flooding;
– release of an impairment loss on assets arising from the acquisition of Alior Bank.
One-time events in 2023 include:
– updating the provision for risk related to foreign currency mortgage loans at Bank Pekao S.A.
– interest income at Bank Pekao S.A. related to the settlement of the government program to modify contracts of PLN mortgage loans granted to clients due to their suspension of loan repayments so called “credit holidays”), which began in 2022.
2. including: interest income calculated using the effective interest rate and equalized, other net investment income, result on discontinued recognition of financial instruments and investments not measured at fair value through profit or loss, result from impairment allowances for expected credit losses, net movement in fair value of assets and liabilities measured at fair value, and interest expenses.
3. Banking activity: data of Bank Pekao and Alior Bank.