Insurance revenue
- an increase of PLN 603 million (+14.7% y/y, to PLN 4,704 million) in insurance revenues in the corporate non-life insurance segment – including amortization of liabilities for remaining coverage (LRC) (PLN +557 million), mainly as a result of higher sales growth in non-motor insurance (the result of securing large contracts in H2 2023, reinforced by high sales in 2024 in the strategic customer area) and, to a lesser extent, in MOD (increase in average premiums as well as growth in the number of contracts). After reinsurance premium allocations, revenues increased by PLN 275 million;
- higher insurance revenues in the Group and individual continued life insurance segment (by PLN 478 million y/y) as a result of a higher level of premiums needed to cover expected claims and benefits (+ PLN 276 million) following the high utilization of health insurance benefits, mainly outpatient and paramedical benefits, and a higher level of revenues to cover expected costs and rising acquisition costs;
- higher insurance revenues in the Baltic countries segment (gross revenue growth of PLN 194 million y/y, revenue growth after reinsurance premium allocation of PLN 185 million) 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;
- higher insurance revenues in the individual protective insurance segment (up PLN 107 million y/y) as a result of higher contractual service margin release in main product groups, including bancassurance (impact of higher year-on-year sales of insurance to mortgages).
Fee and commission result
- pension insurance revenues – at PLN 184 million, higher by PLN 37 million (+25.2% y/y), mainly due to an increase in fund management fees as well as a positive impact from the overpayment of funds in the Guarantee Fund at the KDPW;
- revenues and fees from funds and mutual fund companies – amounting to PLN 606 million, higher by PLN 108 million (+ 21.7% y/y), including as a result of achieving high rates of improved gross sales as well as due to a higher level of assets under management.
Investment result and interest expense
In 2024, investment result including interest expense excluding Pekao Bank and Alior Bank amounted to PLN 2,659 million compared to PLN 3,112 million in the comparable period of the previous year.
The lower result on investment activities excluding banking activities was particularly related to:
- decrease by PLN 437 million in the results generated 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;
- 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;
- recognition of impairment losses on exposures from the corporate debt portfolio;
- reduced income from the liquidity portfolio due to a lower average asset balance and a lower level of money market rates.
The impact of the aforementioned drivers was partly offset by:
- 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;
- higher income from the Polish government bonds portfolio measured at fair value through other comprehensive income as a result of purchasing high-yield instruments for the portfolio, offset by the realization of a negative result from the sale of some of the bonds in the portfolio.
PZU Group operating expenses not related to insurance services
The PZU Group’s operating expenses not related to insurance services amounted to PLN 10,514 million in 2024, compared to PLN 9,701 million in 2023. The balance change was caused by the following factors:
- higher personnel costs, including in particular on banking operations, mainly Bank Pekao (salary indexation);
- higher fees to the Bank Guarantee Fund by PLN 30 million, the total burden on banks in 2024 increased to PLN 279 million;
- higher charge of the tax levy on financial institutions (insurance and banking activities combined) increased from PLN 1,496 million in 2023 to PLN 1,566 million in 2024, due to higher charges on the banking activities resulting from the higher balance of taxable assets (the rate of the bank levy did not change).
| Insurance revenue | |||
| Insurance segments (PLN million) | 1 January – 31 December 2022 PLN million |
1 January – 31 December 2023 PLN million |
1 January – 31 December 2024 PLN million |
| TOTAL | 24.745 | 26.868 | 29.423 |
| Total Non-life insurance – Poland | 14.429 | 16.067 | 17.810 |
| Mass insurance – Poland | 10.981 | 11.966 | 13.106 |
| MTPL insurance | 4.139 | 4.303 | 4.558 |
| MOD | 2.866 | 3.308 | 3.685 |
| Other products | 3.976 | 4.355 | 4.863 |
| Corporate insurance – Poland | 3.448 | 4.101 | 4.704 |
| MTPL insurance | 638 | 651 | 642 |
| MOD | 788 | 930 | 1,012 |
| Other products | 2.022 | 2.520 | 3.050 |
| Total life insurance – Poland | 7.986 | 8.092 | 8.688 |
| Group and individually continued insurance – Poland | 7.316 | 7.362 | 7.840 |
| Individual insurance – Poland | 581 | 637 | 744 |
| Investment insurance – Poland | 89 | 93 | 104 |
| Total Non-life insurance – Ukraine and the Baltic Countries | 2.238 | 2.629 | 2.852 |
| Ukraine – non-life insurance | 198 | 184 | 215 |
| Baltic Countries – non-life insurance | 2.040 | 2.445 | 2.637 |
| Total life insurance – Ukraine and Baltic Countries | 92 | 80 | 73 |
| Ukraine – life insurance | 50 | 36 | 27 |
| Baltic Countries – life insurance | 42 | 44 | 46 |
Result on other operating income and expenses
In 2024, the balance of other operating income and expenses stood at PLN 1,043 million, compared to the balance of PLN 913 million in 2023. The balance change was caused by the following factors:
- higher revenue thanks to the release of impairment loss on assets arising from the acquisition of Alior Bank (i.e. trademark and relations with clients) of PLN 115 million;
- an increase in revenue from the sale of medical services, higher profit on the disposal of property, plant and equipment, lower donation costs, higher claims costs and expenses from preventive activities.
Insurance service expenses (PZU Group)
Insurance service expenses were PLN 25,116 million, i.e. increased by PLN 2,370 million, i.e. by 10.4%, as compared to 2023. Expenses adjusted for the amounts recoverable from reinsurers increased by PLN 2,691 million, and this resulted from:
- in the mass non-life insurance segment, higher claims liabilities of the current year, both of the motor insurance portfolio (the impact of claims inflation and a significantly higher frequency of claims) and nonmotor insurance (the effect of mass claims caused by weather events, including flooding). In addition, higher costs are the result of increased acquisition expenses amortization (the impact of the growing share of the multiagency channel in the portfolio), the recognition of a loss component including on the motor third-party insurance portfolio;
- in corporate non-life insurance segment – release of a lower net excess of prior years’ claims reserves over the current projected value (in the same period of 2023, the impact of the release of the reserve without the payment in the contract guarantee in the amount of PLN 60.3 million), higher liabilities for the current year’s claims including non-motor insurance and MOD), and higher amortization of acquisition costs;
- higher claims and benefits with the development of the loss reserve from previous years in the group and individual continued life insurance segments, as a result of continued high utilization of health insurance benefits as well as higher claims cost in other group insurance, and higher amortization of acquisition costs;
- higher liabilities for the current year’s claims in the Baltic countries segment as a result of the increase in the value of the portfolio, administrative expenses attributable to the insurance business mainly due to higher personnel and IT costs and amortization of insurance acquisition cash flows;
- higher liabilities for current year claims, costs including amortization of insurance acquisition cash flows in the individual protection life insurance segment;
- higher administrative costs attributable to insurance operations due to increased personnel costs, higher IT costs due to the development of the IT area, and building competence in the area of systems maintenance. This effect was partially offset by the lower dimension of advertising activities.
Finance income or expenses from PZU Group insurance
Costs of legal risk of mortgage loans in foreign currencies
The cost of legal risk of foreign currency mortgages increased from PLN 369 million in 2023 to PLN 729 million in 2024, and the change in their balance was mainly related to Pekao and resulted from updating the parameters of the calculation of the provision for the loans in question (the probability of losing litigation and the distribution of possible verdicts).
Drivers and atypical events affecting the results
In 2024, the PZU Group’s result was burdened by a one-time effect related to an above-normal number of mass damage caused by atmospheric events, mainly flooding, with a total impact on result from operating activities in the amount of -PLN 259 million.
Moreover, in the same period, the PZU Business Group’s result was burdened by non-recurring effects related to banking activities:
- legal risk costs of foreign currency mortgage loans at Bank Pekao of PLN 669 million;
- costs related to the modification of agreements for PLN mortgage loans granted to consumers due to their suspension of loan repayments so called “credit holidays”), of PLN 153 million at Pekao Bank and PLN 62 million at Alior Bank;
- release of impairment loss on assets arising from the acquisition of Alior Bank (i.e. trademark and relations with clients) of PLN 115 million.
In 2023, the PZU Group’s result was burdened by legal risk costs of foreign currency mortgage loans at Bank Pekao of PLN 315 million. In addition, an amount of PLN 103 million was also included in Pekao Bank’s interest income, representing the unrealized portion of the government’s program to modify the contracts of PLN mortgage loans granted to consumers due to their suspension of loan repayments (so called moratorium periods).