PZU Group’s income

In 2019 the net investment result² including interest expenses was PLN 9,211 million compared to PLN 7,849 million in 2018. Disregarding the impact of banking activity, in 2019 the net investment result including interest expenses was PLN 1,995 million, up PLN 1,091 million over last year.

The following factors affected the income:

• higher result earned on listed equity instruments in particular due to improved market conditions on the Warsaw Stock Exchange – with the WIG index up 0.3% in 2019 in contrast to a 9.5% decline in the previous year;
• high performance of real estate funds due to the settlement of property developers’ earnings in Q4;
• curtailment of volatility in the earnings of the PZU Global Macro EUR portfolio in connection with the purchase of bonds aligned to the portfolio’s investment horizon constituting above all coverage of the liabilities taken under the issue of own bonds in EUR falling due in the middle of 2019;
• better investment results in the portfolio of assets used as coverage for investment products that do not, however, exert any influence on the PZU Group’s total net result as they are offset by higher net insurance claims and benefits paid.

In 2019 the value of the PZU Group’s investment portfolio, net of banking activity,³ was PLN 49,689 million compared with PLN 50,270 million at yearend 2018.

The decrease in the value of the investment portfolio was associated with the repayment of EUR-denominated own bonds and the disbursement of a dividend by the Group. These factors were offset by the inflow of premiums and investment performance. The increase in the percentage of non-treasury debt market instruments is the result of the consistently implemented investment policy to ensure greater diversification of the investment portfolio and curtailment of volatility in results.

² Net investment result includes: net investment income, net result on realization 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.

³ The investment portfolio contains investment financial assets (including investment products), investment properties (including the part presented in the category of assets held for sale) financial derivatives along with the negative valuation derivatives and liabilities arising from repurchase transactions presented in financial liabilities.

Structure of the portfolio of investments net of the impact of banking activity (in %)

* Interest rate, foreign exchange and equity price derivatives duly presented in the categories of debt market instruments – treasuries, money market instruments and listed and unlisted equity instruments.