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Capital management

PZU AR 2021 > Risk management > Capital management
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On 25 March 2021 the PZU Supervisory Board adopted a resolution to approve the PZU Group’s Capital and Dividend Policy for 2021-2024. The adopted policy is a continuation of the principles set forth in the PZU Group’s Capital and Dividend Policy for 2016-2020.

In accordance with the Policy, the PZU Group endeavors to do the following:

  • manage capital effectively by optimizing the usage of capital from the Group’s perspective;
  • maximize the rate of return on equity for the parent company’s shareholders, in particular by maintaining the level of security and retaining capital resources for strategic growth objectives through organic growth and acquisitions;
  • ensure sufficient financial means to cover the Group’s liabilities to its clients.

The capital management policy rests on the following principles:

  • manage the PZU Group’s capital (including excess capital) at the level of PZU;
  • sustain target solvency ratios at the level of 200% for the PZU Group, PZU SA and PZU Życie SA (according to Solvency II);
  • maintain the PZU Group’s financial leverage ratio at a level no higher than 25%;
  • ensure funds for growth and acquisitions;
  • maintain the financial conglomerate’s surplus own funds above the pertinent requirements for solvency;
  • PZU will not issue any new shares for the duration of this Policy.

It is assumed that certain temporary deviations in the actual solvency ratio above or below the target level may occasionally occur.

As at the end of Q3 2021, the estimated solvency ratio (calculated according to the standard Solvency II equation) was 229%, a level above the average solvency ratio reported by insurance groups in Europe.

The Solvency II ratio for the PZU Group comprared to European insurers

Source: Data taken from insurers’ reports as of Q3 2019 in the case of Ageas, Allianz, Aviva, AXA, CNP, Generali, Gjensidige, Munich Re, NN, Phoenix, RSA, Sampo, Scor, Talanx, Topdanmark, Tryg and as of H1 2019 in the case of the other insurers

In Bank Pekao and Alior Bank, the capital adequacy ratio and the Tier 1 ratio were computed on the basis of 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 (CRR) and also the various types of risk identified in the Internal Capital Adequacy Assessment Process (ICAAP).

Solvency ratio

Solvency ratio 2020 Q3 2021*

PZU Group 236% 229%
PZU 268% 256%
PZU Życie 348% 346%

PZU Group 412% 385%
PZU 960% 948%
PZU Życie 772% 769%
CRR 2020 2021
Pekao Group – total capital adequacy ratio 19,2% 16,9%
Tier 1 17,2% 15,1%
Alior Bank Group – total capital adequacy ratio 15,9% 14,2%
Tier 1 13,5% 12,5%

*Q3 2021 has not been audited or reviewed by statutory auditor