1. Introduction

Compliance statement

These consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group (“consolidated financial statements” and “PZU Group”, respectively) have been prepared in line with International Financial Reporting Standards as endorsed by the European Commission (“IFRS”), published and in force as at 31 December 2019.

Period covered by the statements

These consolidated financial statements cover the period of 12 months from 1 January to 31 December 2019.

Approval of the statements

These consolidated financial statements were signed and authorized for publication by the Management Board of Powszechny Zakład Ubezpieczeń Spółka Akcyjna (“PZU”, “parent company”) on 11 March 2020 and will be subject to approval by the shareholder meeting of Powszechny Zakład Ubezpieczeń Spółka Akcyjna.

Functional and presentation currency

PZU’s functional and presentation currency is the Polish zloty. Unless noted otherwise, all amounts presented in these consolidated financial statements are stated in millions of Polish zloty.

The functional currency of the companies domiciled in Ukraine is the Ukrainian hryvnia, the euro is the functional currency of the companies domiciled in Lithuania, Latvia and Sweden and pound sterling – of the company domiciled in the United Kingdom.

Going concern assumption

These consolidated financial statements have been drawn up under the assumption that PZU Group companies remain a going concern in the foreseeable future, i.e. in the period of at least 12 months after the end of the reporting period. As at the date of signing these consolidated financial statements, there are no facts or circumstances that would indicate a threat to the ability of PZU Group companies to continue their activity in the period of 12 months after the end of the reporting period as a result of an intentional or an induced discontinuation or a material curtailment of their hitherto activity.

Discontinued operations

Both in 2019 and 2018, the PZU Group companies did not discontinue any material type of activity.

Glossary

The most important terms, abbreviations and acronyms used in the consolidated financial statements are explained below.

Company names

AAS Balta – Apdrošināšanas Akciju Sabiedrība Balta.
Alior Bank – Alior Bank SA.
CDM – Centralny Dom Maklerski Pekao SA.
Elvita – Przedsiębiorstwo Świadczeń Zdrowotnych i Promocji Zdrowia ELVITA – Jaworzno III sp. z o.o.
FCM – FCM Zdrowie sp. z o.o. (formerly Falck Centra Medyczne sp. z o.o.)
Alior Bank Group – Alior Bank with its subsidiaries listed in section 2.2.
Pekao Group – Pekao with its subsidiaries listed in section 2.2.
Link4 – Link4 Towarzystwo Ubezpieczeń SA.
Pekao – Bank Pekao SA.
PFR – Polski Fundusz Rozwoju SA.
PIM – Pekao Investment Management SA.
PZU, parent company, parent – Powszechny Zakład Ubezpieczeń Spółka Akcyjna.
PZU CO – PZU Centrum Operacji SA.
PZU Ukraine – PrJSC IC PZU Ukraine.
PZU Ukraine Life – PrJSC IC PZU Ukraine Life Insurance.
PZU Życie – Powszechny Zakład Ubezpieczeń na Życie Spółka Akcyjna.
Tomma – Tomma Diagnostyka Obrazowa SA.
TFI PZU – Towarzystwo Funduszy Inwestycyjnych PZU SA.
TUW PZUW – Towarzystwo Ubezpieczeń Wzajemnych Polski Zakład Ubezpieczeń Wzajemnych.

Other definitions

BFG – Bank Guarantee Fund
CGU – cash generating unit.
Forbearance – tools used to restructure debt, most frequently taking the form of arrangements provided to the debtor by the creditor.
CODM – chief operating decision maker within the meaning of IFRS 8 Operating Segments.
IRRBB – Interest rate risk in banking book.
IBNR – Incurred But Not Reported or 2nd provision – provision for losses and accidents incurred but not reported.
PZU standalone financial statements for 2019 – annual standalone financial statements of Powszechny Zakład Ubezpieczeń Spółka Akcyjna for 2019 prepared in accordance with PAS, signed by the PZU Management Board on 11 March 2020.
KNF – Polish Financial Supervision Authority.
Commercial Company Code – Act of 15 September 2000 entitled Commercial Company Code (consolidated text: Journal of Laws of 2019, Item 505).
IFRS – International Financial Reporting Standards, as endorsed by the European Commission, published and in force as at 31 December 2019.
NBP – National Bank of Poland;
POCI – Purchased or originated credit-impaired financial assets.
Tax Group – Tax Group established by the power of the agreement signed on 20 September 2017 between 13 PZU Group companies: PZU, PZU Życie, Link4, PZU CO, PZU Pomoc SA, Ogrodowa-Inwestycje, PZU Zdrowie SA, Tulare Investments sp. z o.o., PZU CASH SA, Ipsilon sp. z o.o., PZU Finanse sp. z o.o., PZU LAB SA (formerly Omicron SA), Omicron Bis SA. The Tax Group was established for a period of 3 years – from 1 January 2018 to 31 December 2020. PZU is the parent company representing the Tax Group.
PAS – Accounting Act of 29 September 1994 (consolidated text: Journal of Laws of 2019 Item 351) and regulations issued thereunder.
PLET – Polish Life Expectancy Tables published annually by the Central Statistical Office of Poland.
RBNP – Reported But Not Paid, or 1st provision – provision for losses reported but not handled and handled but not paid.
IASB – International Accounting Standards Board.
Capital Requirements Regulation, CRR – Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012.
Consolidated financial statements – consolidated financial statements of the PZU Group prepared in accordance with IFRS for the year ended 31 December 2019.
CJEU – Court of Justice of the European Union.
IIF – Insurance Indemnity Fund.
KNF Office – Office of the Polish Financial Supervision Authority.
Insurance Activity Act – Act of 11 September 2015 on Insurance and Reinsurance Activity) (consolidated text: Journal of Laws of 2019, Item 381, as amended).
Act on Rules for Terminating Employment Relationships – Act of 13 March 2003 on the Special Rules for Terminating Employment Relationships with Employees for Reasons Not Attributable to Employees (consolidated text in the Journal of Laws of 2018, item 1969)
Supplementary Oversight Act – Act of 15 April 2005 on supplementary oversight over credit institutions and insurance undertakings, reinsurance undertakings and investment firms comprising a financial conglomerate (consolidated text: Journal of Laws of 2019, Item 2146, as amended).
OSM PZU – Ordinary Shareholder Meeting of Powszechny Zakład Ubezpieczeń Spółka Akcyjna.