Supplementary information and notes

Supplementary information and notes

1. Introduction

2. Composition of PZU Group

2.1 Key information on the PZU Group

2.2 PZU Group companies and associates

2.3 Changes in the scope of consolidation and structure of the PZU Group

2.3.1 Acquisitions of companies

2.3.1.1 Acquisition of Aura Medic Południe sp. z o.o. and its merger with Bonus-Diagnosta sp. z o.o.

2.3.1.2 Acquisition of TFI Energia

2.3.1.3 Acquisition of Centrum Medycznego Nowa 5 sp. z o.o.

2.3.1.4 Settlement of acquisitions

2.3.2 Sales of companies

2.3.3 Completed liquidation of companies

2.4 Non-controlling interests

2.4.1 Accounting policy

2.4.2 Quantitative data

3. Shareholder structure

4. Key management – Management Board and Group Directors

4.1 Management Board of the Parent Company

4.2 PZU Group Directors

5. Parent Company’s Supervisory Board

6. Key accounting policies and significant estimates and judgments

6.1 Changes in accounting policies and estimates, errors from previous years

6.2 Amendments to the applied IFRS

6.2.1. Standards, interpretations and amended standards effective from 1 January 2022

6.2.2. Standards, interpretations and amended standards not yet effective

6.3 Implementation of IFRS 17 in PZU Group

6.3.1. The estimated effect of IFRS 17 implementation on consolidated equity of the PZU Group

6.3.2. Insurance contracts and reinsurance contracts

6.3.2.1. Identification and aggregation of insurance contracts

6.3.2.2. Contract boundaries

6.3.2.3. Measurement methods

6.3.2.4. Significant judgements and processes for estimation

6.3.2.5. Consolidated profit and loss account and consolidated statement of other comprehensive income

6.3.2.6. Reinsurance contracts

6.3.3. Transition date

6.3.3.1. Full retrospective approach

6.3.3.2. Simplified approaches

6.3.3.3. Discounting of cash flows

6.4 Consolidation rules

6.4.1. Judgments in exercising control

6.4.2. Rules of consolidation of mutual funds

6.5 Acquisition method

6.6 Measurement of transactions and balances denominated in foreign currencies and FX rates used

6.7 Classification of insurance contracts in accordance with IFRS 4

6.7.1. Classification of non-life insurance contracts

6.7.2. Classification of life insurance contracts

6.8 Reform of interest rate benchmarks

6.8.1. WIBOR (Warsaw Inter Bank Offered Rate)

6.8.2. CHF LIBOR

6.8.3. GBP LIBOR

6.8.4. USD LIBOR

6.8.5. Impact of the IBOR reform on hedge accounting

7. Segment reporting

7.1 Reportable segments

7.1.1. Key classification criterion

7.1.2. Information relating to geographical areas

7.2 Inter-segment settlements

7.3 Segment’s measure of profit

7.4 Accounting policies applied according to PAS

7.4.2 PZU Życie

7.5 Simplifications in the segmental note

7.6 Quantitative data

7.7 Information on key customers

8. Risk management

8.1 Introduction

8.2 Split of duties and tasks

8.3 Risk appetite, risk profile and risk tolerance

8.4 Risk identification, measurement, assessment, monitoring and reporting methods

8.5 Risk profile

8.5.1. Credit risk and concentration risk

8.5.1.1. Concentration risk arising out of lending activity

8.5.1.2. Credit risk in banking activity

8.5.1.3. Restructured exposures

8.5.1.4. Credit risk arising out of investing activity

8.5.1.5 Reinsurer’s credit risk in insurance activity

8.5.1.6 Risk concentration in credit risk

8.5.2 Actuarial risk (non-life and life insurance)

8.5.2.1 Exposure to actuarial risk – non-life and life insurance

8.5.2.2 Exposure to insurance risk – life insurance

8.5.3 Market risk

8.5.3.1 Interest rate risk

8.5.3.2 Currency risk

8.5.3.3 Equity risk

8.5.4 Liquidity risk

8.5.5 Operational risk

8.5.6 Compliance risk

8.5.7 Model risk

9. Equity management

10.1 Description of valuation techniques

10.1.1. Debt securities and loans

10.1.2. Equity-based financial assets

10.1.3. Participation units and investment certificates of mutual funds

10.1.4. Derivatives

10.1.5. Loan receivables from clients

10.1.6. Properties measured at fair value

10.1.7. Liabilities on the issue of own debt securities and subordinated liabilities

10.1.8. Liabilities under deposits

10.1.9. Other liabilities

10.1.9.1. Liabilities under investment contracts for the client’s account and risk

10.1.9.2. Liabilities to members of consolidated mutual funds

10.1.9.3. Liabilities on borrowed securities

10.2 Fair value hierarchy

10.2.1. Assets and liabilities measured at fair value

10.2.1.1. Change in the fair value measurement methodology for financial instruments measured at fair value

10.2.1.2. Investment property classified as level III fair value

10.2.2. Assets and liabilities not measured at fair value

10.3 Reclassification between fair value hierarchy levels

11. Gross written premiums

11.1 Accounting policy

11.1.1. Non-life insurance

11.1.2. Life insurance

11.2 Quantitative data

12. Revenue from commissions and fees

12.1 Accounting policy

12.2 Quantitative data

13. Interest income calculated using the effective interest rate

13.1 Accounting policy

13.2 Estimates and assumptions

13.3 Quantitative data

14. Other net investment income

14.1 Accounting policy

14.2 Quantitative data

15. Result on derecognition of financial instruments and investments

15.1 Accounting policy

15.2 Quantitative data

16. Movement in allowances for expected credit losses and impairment losses on financial instruments

16.1 Accounting policy

16.2 Quantitative data

17. Net movement in fair value of assets and liabilities measured at fair value

17.1 Accounting policy

17.2 Quantitative data

18. Other operating income

19. Claims, benefits and movement in technical provisions

19.1 Accounting policy

19.1.1. Non-life insurance

19.1.2. Life insurance

19.2 Quantitative data

20. Fee and commission expenses

21. Interest expense

21.1 Accounting policy

21.2 Quantitative data

22. Acquisition expenses

22.1 Accounting policy

22.2 Quantitative data

23. Administrative expenses

23.1 Accounting policy

23.2 Quantitative data

24. Employee expenses

25. Other operating expenses

26.1 Accounting policy

26.2 Quantitative data

27. Earnings per share

27.1 Accounting policy

27.2 Quantitative data

28.1 Accounting policy

28.2 Quantitative data

28.3 Testing for impairment

29. Intangible assets

29.1 Accounting policy

29.2 Quantitative data

30. Other assets

31. Deferred acquisition expenses

31.1 Accounting policy

31.1.2. Life insurance

31.1.1. Non-life insurance

31.2 Quantitative data

32. Property, plant and equipment

32.2 Quantitative data

32.1 Accounting policy

33. Investment property

33.1 Accounting policy

33.2 Estimates and assumptions

33.3 Quantitative data

34. Entities measured by the equity method

34.1 Accounting policy

34.2 Quantitative data

35. Loan receivables from clients

35.1 Accounting policy

35.2 Quantitative data

36. Financial derivatives

36.1 Accounting policy

36.2 Types of hedging strategies

36.2.1. Fair value hedges

36.2.2. Cash flow hedges

36.2.2.1. Hedging of the portfolio of loan receivables from clients and variable-interest securities denominated in PLN

36.2.2.2. Hedging of the deposit portfolio in PLN

36.2.2.3. Hedging for the variable interest rate loan portfolio in Swiss francs, the portfolio of loans and lease receivables with variable interest rates in EUR and the portfolio of deposits in PLN

36.2.2.4. Hedging of a portfolio of variable interest rate loans in EUR and term and negotiated deposits in USD

36.2.2.5. Hedging of a portfolio of variable interest rate loans and subordinated bonds

36.2.2.6. Hedging of a portfolio of fixed-rate bonds denominated in EUR, USD or GBP

36.2.2.7. Movement in the revaluation reserve and non-controlling interests resulting from the measurement of the hedging derivatives in hedge accounting

36.3 Quantitative data

37. Investment financial assets, including assets securing liabilities

37.1 Accounting policy

37.1.1. Recognition and classification

37.1.2. Principles of measurement

37.1.3. Derecognition from statement of financial position

37.2 Quantitative data

38. Receivables

39.Expected credit losses and impairment of financial assets

39.1 Accounting policies and significant estimates and judgments

39.1.1. Calculation of PD and LGD parameters

39.1.2. Change in credit risk since initial recognition

39.1.3. Identified impaired financial assets (basket 3)

39.1.4. Financial assets impaired due to credit risk (POCI)

39.1.5. Receivables from policyholders

39.2 Quantitative data

40. Cash and cash equivalents

40.2 Restricted cash

40.1 Accounting policy

40.3 Quantitative data

41. Equity attributable to the equity holders of the parent company

41.1 Share capital

41.2 Distribution of the parent company’s profit

41.2.1.1. Distribution of the 2021 profit

41.2.1.2. Distribution of the 2022 profit

41.3 Other capital

41.3.1. Accounting policy

41.3.2. Quantitative data

42. Technical provisions

42.1 Accounting policy

42.1.1. Non-life insurance

42.1.2. Life insurance

42.1.3. Reinsurers’ share

42.2 Estimates and assumptions

42.2.1. Non-life insurance

42.2.2. Life insurance

42.3 Quantitative data

42.3.1. Technical provisions in non-life insurance

42.3.2. Technical provisions in life insurance

43. Subordinated liabilities

43.1 Accounting policy

43.2 Quantitative data

44. Liabilities on the issue of own debt securities

44.1 Accounting policy

44.2 Quantitative data

45. Liabilities to banks

45.1 Accounting policy

45.2 Quantitative data

46. Liabilities to clients under deposits

46.1 Accounting policy

46.2 Quantitative data

47. Other liabilities

47.1. Accounting policy

47.2 Quantitative data

48.1. Accounting policy

48.2. Estimates and assumptions

48.3. Quantitative data

49. Deferred tax

49.1. Accounting policy

49.2. Estimates and assumptions

49.3 Quantitative data

49.3.1. Deferred tax assets

49.3.2. Deferred tax liability

50. Assets and liabilities held for sale

50.1. Accounting policy

50.2. Quantitative data

51.1. Accounting policy

51.1.1. PZU Group as the lessee

51.1.2. PZU Group as the lessor

51.2 Quantitative data

51.2.1. PZU Group as the lessor

51.2.1.1. Finance lease

51.2.1.2. Operating leases

51.2.2. PZU Group as the lessee

52. Assets securing receivables, liabilities and contingent liabilities

53. Contingent assets and liabilities

54. Offsetting financial assets and financial liabilities

54.1. Accounting policy

54.2 Quantitative data

55. Notes to the consolidated cash flow statement

56.1 Resolutions of the Ordinary Shareholder Meeting of PZU to distribute the profit earned in the financial year 2006

56.2 Notification of PZU’s claim to the bankruptcy estate of companies of the PBG Group

56.3 Lawsuits against Alior Bank

56.4 KNF’s proceedings to impose a fine on Alior Bank

57. Related party transactions

57.1 Key management

57.2. The PZU Supervisory Board

57.3 Related party transactions concluded by PZU or subsidiaries on non-arm’s length conditions

57.4 Other related party transactions

57.5 Transactions with State Treasury’s related parties

59. Other information

59.1 Audit fee payable to the audit firm auditing the financial statements

59.2 Granting of sureties or guarantees for loans or borrowings by PZU or its subsidiaries

59.3 Inspections by the KNF Office

59.3.2. PZU Życie

59.4 Tax liability in Sweden

59.5 Pekao and Alior Bank joining the protection scheme

59.6 UOKiK proceedings against Alior Bank

59.7 Cases involving Alior Leasing sp. z o.o

59.8 PZU's planned bond issue

59.9 Conflict in Ukraine

59.10 Subsequent events

59.10.1. Opinion of the Advocate General of the CJEU dated 16 February 2023

59.10.2. Issue of senior unsecured bonds by Pekao

Consolidated cash flow statement

Key factors affecting the financial results achieved