Management Board Committees of PZU and PZU Życie

Purpose

To set out the pricing policy in line with the PZU strategy

Tasks

• determining pricing strategy and tactics by preparing guidelines for the PZU Central Office’s organizational units responsible for pricing product groups or insurance products in terms of price rates and product profitability assumptions;
• monitoring pricing actions taken by the directors authorized by the Management Board;
• monitoring main indicators of key insurance products, including profitability and claims ratio.
• adopting a position on other key issues that influence product profitability and tariff mechanisms.

Purpose

To coordinate Data Governance processes at PZU and PZU Życie

Tasks

• supervising the implementation of Guideline 8 specified in the “Guidelines on the Management of Information Technology and ICT Environment Security for Insurance and Reinsurance Undertakings” dated 16 December 2014, issued by the Polish Financial Supervision Authority;
• setting a Data Governance Strategy;
• approving draft Data Governance Policy and recommending its adoption by the Management Board;
• approving the draft Solvency II Data Quality Management Policy and recommending its adoption by the Management Board;
• controlling and enforcing the rules laid down in the Data Governance Policy and the Solvency II Data Quality Management Policy; monitoring the level of data quality and the effectiveness of data quality process on the basis of annual reports by the Data Quality Coordinator;
• issuing recommendations on the implementation of significant data quality improvement initiatives on the basis of the Data Governance Coordinator’s recommendations; prioritizing them and specifying the source of funding;
• deciding disputes over data quality, as presented by the Data Governance Coordinator;
• accepting the assignment of departments and organizational units of PZU and PZU Życie to the function of Data Owner;
• deciding whether to deviate from the rules set forth in the Data Governance Policy and the Solvency II Data Quality Management Policy.

Purpose

To coordinate and manage overall innovation at PZU and PZU Życie

Tasks

• reviewing and providing guidance for the PZU Group Innovation Strategy;
• identifying areas of innovation exploration;
• managing the portfolio of potential and ongoing innovations, in particular making decisions recognizing the subject of purchases as innovation and approving purchases in accordance with internal acts applicable at PZU and PZU Życie;
• approving rules and regulations of competitions and choosing winners of innovation competitions.

Tasks

• making investment decisions:
  1. on individual transactions to the extent specified in the Annex to the Investment Rules and Regulations;
  2. on individual transactions, regardless of the amount limits set forth in the Annex to the Investment Rules and Regulations, within the scope of its competence provided that the opinion of the Risk Department is negative.
  3. on the size of assets denominated in foreign currencies and on the foreign currency position;
• reviewing investment decisions:
  1. opiniowanie transakcji powyżej 50 mln zł realizowanych w ramach funduszy TFI PZU , których PZU lub PZU Życie są jedynymi o reviewing transactions above PLN 50 million carried out within TFI PZU funds where PZU and/or PZU Życie are the only participants – upon the request of TFI PZU;
  2. reviewing investment decisions upon the request of the Management Board Member supervising the Investment Division;
• setting exposure limits by specifying credit limits and limits of concentration on a single entity or a group of entities up to and including PLN 600 million;
• deciding on risk acceptance in the area of financial insurance – within the scope as specified in the Resolution of the PZU Management Board determining authorizations to accept risk in the area of financial insurance;
• deciding how to vote at a meeting of the investment fund participants or investors if the subject of such a meeting is the fund’s investment decision, issuance of new investment certificates, issuance of bonds, establishment of additional investment limits, liquidation of the fund, merger of funds, or acquisition of the investment fund management by another company;
• reviewing voting instructions for meetings of shareholders, partners, bondholders, participants or investors of investment funds if the subject of such meetings is different than matters specified in the preceding point – upon request of the President of the Management Board or the Management Board Member supervising the Head Office’s organizational unit that exercises corporate governance over the entity in question.

Purpose

To coordinate efforts to reduce PZU’s and PZU Życie’s costs, in particular fixed costs of insurance business, in line with PZU Group strategy.

Tasks

• identifying areas of PZU’s and PZU Życie’s operations where cost reduction and savings can be achieved, in particular with regard to fixed costs;
• setting out the cost strategy by preparing guidelines for departments and organizational units;
• monitoring the level of costs in each area of PZU’s and PZU Życie’s operations;
• adopting a position on key cost reduction issues;
• cyclical monitoring of the effects of the cost optimization solutions as implemented and evaluating the achievement of goals set for the working teams;
• deciding whether to apply for special awards to members of working teams.

Scope

Taking actions in the area of actuarial, operational and model risk (the latter applies to the models covered by the Model Risk Management Policy at PZU and PZU Życie) as regards:

• acceptable sizes of risks;
• risk management principles and methodologies;
• management activities in the risk monitoring process.

Tasks

• reviewing draft internal rules, regulations or decisions submitted to the Management Board;
• approving the model validation plan;
• accepting model validation results and validation recommendations;
• approving key operational risk indicators;
• approving the operational risk self-assessment study report;
• issuing recommendations for the relevant departments and organizational units of PZU and PZU Życie regarding management activities in the following areas: model risk, significant operational risk incidents, actuarial risk, and return on actuarial risk capital;
• recommending relevant departments and organizational units of PZU and PZU Życie to take actions with regard to product profitability if it is below certain thresholds;
• approving key actuarial risk indicators;
• recommending reinsurance program assumptions to the Management Board;
• monitoring the implementation of the Management Board’s decisions and the Committee’s decisions regarding the scope of the Committee’s activities, in particular through:
  1. monitoring mitigation activities for operational risks which have been rated at increased or higher level in the self-assessment study;
  2. being informed about the results of operational risk scenario analyses and monitoring risk mitigation activities as planned;
  3. being informed about the return on actuarial risk capital (Return on Risk Capital Report);
  4. being informed about PZU’s and PZU Życie’s product profitability.

Purpose

To coordinate activities and supervise the risk management system and processes present in PZU, PZU Życie and PZU Group, in particular at the level of the financial conglomerate of the PZU Group (hereinafter “financial conglomerate”).

Tasks

Scope of tasks:

• • monitoring the level of capital adequacy of the PZU Group or its entities;
• • supervising the risk management system of the PZU Group or its entities;
• • supervising the management system and processes for the following risks:
  1. actuarial risk,
  2. market risk,
  3. credit risk,
  4. operational risk, with a focus on IT and security risk,
  5. compliance risk,
  6. other risks that may affect the solvency or reputation of the PZU Group or its entities in terms of monitoring and assessing these risks as well as deciding whether they should be accepted or mitigated;
• • exercising supervision in the context of the PZU Group functioning as a financial conglomerate, in particular supervising:
  1. capital adequacy of the financial conglomerate and the strategy in this respect;
  2. area of intragroup transactions;
  3. area of risk concentration in the financial conglomerate;
  4. area of risk management and internal control;
• • supervising the preparation of reports for regulatory authorities or other reports as stipulated by applicable laws and related to the scope of the Committee’s tasks – this supervision is exercised, in particular, through:
  1. providing the Management Board with opinions and recommendations on the risk strategies, policies and procedures;
  2. monitoring the size of risk appetite, and providing the Management Board with recommendations on the size of risk appetite, including on its changes;
  3. setting limits and recommending actions to mitigate risks;
  4. accepting quarterly risk reports;
  5. accepting the report on the intragroup transactions in the financial conglomerate before it is submitted to the regulatory authority;
  6. reviewing transactions and business initiatives that can affect the level of risk or solvency of the PZU Group or its entities;
  7. accepting the report on the significant risk concentration at the level of the financial conglomerate before it is submitted to the regulatory authority;
  8. Providing the Management Board with the opinion and recommendations on the following: – regulations ensuring the effectiveness of risk management and covering, in particular, necessary actions to be taken in regulated entities to measure, analyze and control risk at the financial conglomerate level, – rules of conduct regarding the preparation and development of relevant recovery and restructuring plans and arrangements, as the need may be, – capital adequacy procedures to determine and measure the risk level and identify the level of own funds or own resources appropriate for that risk, – information and accounting procedures to effectively identify and control intragroup transactions in the financial conglomerate and cases of significant risk concentration, – internal control procedures to ensure the effective acquisition and transmission of all data and information that may be relevant for the purposes of supplementary supervision, – PZU Group’s corrective measures plan;
  9. reviewing corrective measures plans of the PZU Group’s entities;
  10. accepting the ORSA report of the PZU Group, PZU and PZU Życie;
  11. accepting tress testing scenarios for purposes of ORSA or the PZU Group’s corrective measures plan;
  12. ccepting the capital adequacy report of the PZU Group, PZU and PZU Życie;
  13. monitoring and recommending the size of risk appetite (including its changes) for the PZU Group or its entities;
  14. reviewing action proposals in the area of capital management in the PZU Group or its entities;
  15. monitoring the risk level in the PZU Group’s entities, taking into account stress tests and BION assessments;
  16. providing the PZU Group’s entities with recommendations on risks and risk concentration.

Scope

Taking actions in the area of market risk, credit risk and concentrations regarding:

• acceptable sizes of risks,
• risk management principles and methodologies, taking management actions in the process of risk management at the level of individual exposures, investment portfolios and financial insurance where the credit risk is present.

Tasks

• reviewing draft resolutions or communications to be submitted to the Management Board;
• determining the distribution of the maximum allocation of the tolerance for the above risks among organizational structures
  and investment managing entities;
• approving documents regarding risk management principles and methodologies;
• deciding on the application of individual deviations from management principles and methodologies for the above risks;
• establishing rules for cyclical reporting and monitoring of credit and market risks of each PZU’s and PZU Życie’s portfolios;
• approving investment targets and guidelines or investment restrictions with regard to risk limits for PZU’s and PZU Życie’s
  organizational units and investment managing entities;
• specifying credit limits and limits of concentration on a single entity or a group of entities above PLN 600 million;
• setting limits and restrictions on exposure to each type of financial insurance;
• setting limits on exposure to the portfolios of loans and credits granted to bank clients as a result of cooperation in the field
  of bank credit insurance;
• setting limits on the concentration of exposures to countries, sectors or industries and other aggregate exposures;
• monitoring the implementation of the Management Board’s decisions and the Committee’s decisions regarding the scope of the Committee’s activities, in particular through endorsing reports on:
  1. risks of PZU’s and PZU Życie’s exposures to foreign countries and to sectors and industries,
  2. risks of each PZU’s and PZU Życie’s investment portfolio,
• financial insurance portfolios where the credit risk is present.

Purpose

To ensure that PZU and PZU Życie properly conduct sponsorship, prevention and CSR activities, as well as to supervise these areas and ensure consistency of the activities.

Tasks

• processing applications for sponsorship or prevention actions in accordance with the PZU’s and PZU Życie’s Sponsorship or Prevention Rules and Regulations;
• specifying the substantive unit whose budget is used for a sponsorship or prevention action in question;
• accepting reports on sponsorship or prevention actions completed in a given year by PZU and PZU Życie;
• monitoring sponsorship and prevention actions, in particular those of the value equal to and exceeding PLN 1,000,000 gross separately for PZU or PZU Życie;
• deciding whether to deviate from the rules set forth in the Sponsorship or Prevention Rules and Regulations;
• laying down detailed rules and guidelines for the performance of prevention actions;
• setting out a model prevention clause to be applied in the insurance offering and accepting a prevention clause that deviates from the model one;
• supervising the performance of CSR tasks.

Purpose

To ensure proper implementation of the sales process of real property of PZU and PZU Życie

Tasks

• to issue recommendations and take decisions regarding the sale of real property within the scope provided for in the “Sales process of real property” adopted under a resolution of the Management Board;
• to take other decisions connected with the real property sales process.

Purpose

To facilitate the goods and services supplier selection procedure and monitor cooperation with suppliers following the PZU Group’s strategy

Tasks

• to take decisions regarding handling procurement demands or the final shape of the description of the subject matter of the procurement, upon the request of the Purchasing Department, in the event that such description may not be agreed upon between the Purchasing Department and the ordering unit or project;
• to recommend additional activities or provide additional information by the ordering unit, project of the Purchasing Department, within the specified time limit, provided that such activities are required to take the decision on the final form of the demand;
• to decide whether to initiate the renegotiation process regarding terms and conditions of a contract which is in force at that time or whether to terminate a contract, upon a justified request of the Purchasing Department, in the absence of an agreement between the Purchasing Department and a business owner of a given matter;
• to control certain purchasing projects implemented without the Purchasing Department, or to order the Purchasing Department to conduct such a control;
• to decide not to invite a tenderer to join the purchasing procedure, or to suspend or limit cooperation with a supplier;
• to decide to exclude a tenderer in the course of the process of selecting suppliers in the event referred to in the Goods and Services Supplier Selection Procedure or the Goods and Services Supplier Selection Procedure under the New Procurement Model.

Tasks

• to issue opinions on decisions regarding the strategic structure of deposits to ensure that PZU and PZU Życie have an appropriate level of security, financial liquidity, profitability and investment portfolio quality, and to provide recommendations for management boards or organizational structures of PZU and PZU Życie, including:
  1. issuing opinions on and recommending an investment strategy,
  2. recommending levels of technical rates,
  3. recommending actions aimed at increasing own funds or securing liquidity;
• • taking decisions on:
  1. principles of managing the Company’s financial liquidity,
  2. investment objectives and guidelines or investment limits and benchmarks for organizational units of PZU and PZU Życie and entities managing deposits within the PZU Group,
  3. matching assets to liabilities and the binding asset structure,
  4. regulations on sustainable development in terms of investment activities, including:
     • approving model asset allocation for a given year and deviation limits under the investment strategy approved by the Management Board,
     • approving investment objectives and guidelines or investment limits and benchmarks of organizational structures of PZU and PZU Życie and entities managing deposits,
     • imposing limitations on decisions taken by the Management Board member supervising the Investment Division,
     • approving methodologies, rules or policies pertaining to liquidity management,
     • approving rules for matching assets to liabilities, and methodologies for matching assets to liabilities,
     • approving methodologies and rules or politics pertaining to sustainable development in terms of investment activities.

Purpose

to supervise and determine directions of action in terms of managing initiatives within the PZU and PZU Życie

Tasks

In particular:

• approving the distribution of the budget allocated for projects in the main business areas;
• approving the allocation of IT capacity, allocated for the implementation of Initiatives for a given fiscal year, for project activities and ongoing operations of PZU and PZU Życie, taking into consideration dedicate areas and Business Architect Councils (BAC – teams determining priorities of operations, who implement initiatives within dedicated areas and allocated IT capacity);

Other tasks:

• approving rules for initiative prioritization;
• approving rules for cooperation within IT capacity management;
• prioritization of implemented projects and taking deciding on IT capacity allocation in terms of the determined priorities;
• taking directed decisions related to IT capacity and division of IT capacity within the ongoing operations of PZU and PZU Życie;
• taking directed decisions related to amending the budget distribution allocated to projects;
• deciding on the creation, change and liquidation of dedicated areas and BACs together with their allocated IT capacity;
• taking directed decision on the implementation of new projects – in the event that this implementation impacts the adopted IT capacity distribution, time schedule of the initiative or the adopted project budget distribution;
• receiving information on the use of the budget allocated for projects and taking directed decisions in this regard;
• receiving information on the use of IT capacity allocated for initiatives in a given financial year.

Purpose

• to supervise the operation of the business continuity management system of PZU and PZU Życie;
• to manage the crisis situation at PZU and PZU Życie

Tasks

The tasks within the supervision of the business continuity management system:

• ongoing supervision over the business continuity management system at PZU and PZU Życie, and issuing recommendations pertaining to tasks and directions of development in this regard;
• accepting tasks and directions for development of the business continuity management system during regular meetings of the Team, or in the circulation mode by way of a written decision of acceptance provided by e-mail by Team members. Tasks within crisis management:
• assessing, analyzing and forecasting results of occurring events, in particular financial losses, non-financial losses or the impact on the operation of PZU and PZU Życie;
• monitoring the external and internal environment of PZU and PZU Życie, taking decisions to manage the crisis situation, and supervising and coordinating works related to implementation of such decisions;
• ensuring resources and funds, including financial ones, to implemented the developed solutions;
• cooperating or providing assistance in measures aimed at limiting consequences of undesirable events in other PZU Group entities, having consulted their managing bodies;
• maintaining ongoing communication within PZU and PZU Życie, including the Management Board, other PZU Group entities, and the PZU Group spokesperson, in terms of external information campaigns.