Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group Condensed interim consolidated financial statements for the 9 months ended 30 September 2019 Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group Condensed interim consolidated financial statements for the 9 months ended 30 September 2019 Table of contents Introduction ........................................................................................................................................ 4 Financial highlights ............................................................................................................................. 7 1. Selected consolidated financial data of the PZU Group ............................................................................................ 7 2. Selected standalone financial data of PZU (PAS) ...................................................................................................... 8 3. Summary of consolidated quarterly results .............................................................................................................. 9 Interim consolidated financial statements ...................................................................................... 10 1. Interim consolidated profit and loss account .......................................................................................................... 10 2. Interim consolidated statement of comprehensive income ................................................................................... 12 3. Interim consolidated statement of financial position ............................................................................................. 13 4. Interim consolidated statement of changes in equity ............................................................................................. 14 5. Interim consolidated cash flow statement .............................................................................................................. 17 Supplementary notes to the condensed interim consolidated financial statements ................... 19 1. Information on PZU and the PZU Group .................................................................................................................. 19 2. Shareholder structure ............................................................................................................................................... 32 3. Composition of the Management Board, Supervisory Board and PZU Group Directors ........................................ 32 4. Key accounting policies, key estimates and judgments .......................................................................................... 34 5. Information about major events that materially influence the structure of financial statement items ............... 42 6. Corrections of errors from previous years ............................................................................................................... 42 7. Material events after the end of the reporting period ............................................................................................. 42 8. Supplementary notes to the condensed interim consolidated financial statements ............................................ 43 9. Financial assets securing receivables, liabilities and contingent liabilities ............................................................ 71 10. Contingent assets and liabilities .............................................................................................................................. 72 11. Commentary to the condensed interim consolidated financial statements .......................................................... 73 12. Equity management ................................................................................................................................................. 75 13. Segment reporting .................................................................................................................................................... 76 14. Commentary to segment reporting and investing activity ..................................................................................... 86 15. Impact of non-recurring events on operating results .............................................................................................. 96 16. Macroeconomic environment .................................................................................................................................. 96 17. Management Board’s position on previously published result forecasts ............................................................... 98 18. Risk factors which may affect the financial results in the subsequent quarters .................................................... 98 19. Issues, redemptions and repayments of debt securities and equity securities.................................................... 100 20. Default or breach of material provisions of loan agreements ............................................................................... 100 21. Granting of sureties or guarantees for loans or borrowings by PZU or its subsidiaries ....................................... 100 22. Dividends ................................................................................................................................................................. 100 23. Disputes ................................................................................................................................................................... 101 24. Other information ................................................................................................................................................... 104 2 Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group Condensed interim consolidated financial statements for the 9 months ended 30 September 2019 PZU’s quarterly standalone financial information (in compliance with PAS) ............................. 109 1. Interim balance sheet ............................................................................................................................................. 109 2. Interim statement of off-balance sheet line items ................................................................................................ 111 3. Interim revenue account of non-life insurance ...................................................................................................... 112 4. Interim general profit and loss account ................................................................................................................. 113 5. Interim statement of changes in equity ................................................................................................................. 114 6. Interim cash flow statement ................................................................................................................................... 117 7. Introduction ............................................................................................................................................................ 119 8. Key accounting principles (accounting policy) ...................................................................................................... 119 9. Changes in accounting policies .............................................................................................................................. 119 10. Explanation of differences between previously published quarterly financial information and data presented in the interim periodic report ..................................................................................................................................... 120 3 Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group Condensed interim consolidated financial statements for the 9 months ended 30 September 2019 (in millions of PLN) Introduction Compliance statement These condensed interim consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group (“condensed interim consolidated financial statements” and “PZU Group”, respectively) have been prepared in line with the requirements of International Accounting Standard 34 “Interim Financial Reporting”, as endorsed by the Commission of European Communities, and the requirements set forth in the Regulation on Current and Periodic Information. These condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the PZU Group for 2018. Parent company’s quarterly standalone financial information Pursuant to Article 62 Section 1 of the Regulation on Current and Periodic Information, quarterly standalone financial information of the PZU Group’s parent company, i.e. PZU, forms part of these condensed interim consolidated financial statements. According to article 45 section 1a of the Accounting Act, the financial statements of issuers of securities admitted to trading on one of the regulated markets of the European Economic Area countries may be prepared in accordance with IFRS. As the PZU Shareholder Meeting has not made the decision referred to in Article 45 Section 1c of the Accounting Act in the matter of preparation of financial statements pursuant to IFRS, PZU’s standalone statements are prepared in accordance with the Polish Accounting Standards (PAS) defined in the Accounting Act and in the executive regulations issued on its basis, among others: Finance Minister’s Regulation of 12 April 2016 on the special accounting principles for insurance and reinsurance