Earnings call transcript: Powszechny Zaklad Ubezpieczen Q2 2025 sees strong growth

Powszechny Zaklad Ubezpieczen (PZU) reported a robust performance in its Q2 2025 earnings call, showcasing significant revenue growth and a notable increase in net profit. Currently trading at $17.03, InvestingPro analysis suggests the stock is undervalued, with a GREAT Financial Health Score of 3.38 out of 5. The company’s impressive year-to-date return of 36.56% reflects strong investor confidence in its strategic initiatives and market position.

Key Takeaways

• Revenue increased by nearly 6% year-over-year.
• Net profit surged by over 900 million euros.
• New product launches and healthcare expansion are key growth drivers.
• Solvency II ratio stands strong at 225%.
• Stock price saw a 2.35% increase post-earnings.

Company Performance

PZU demonstrated a strong financial performance in Q2 2025, with consolidated revenues growing by almost 6% compared to the previous year. The company reported a total profitability of 3.2 billion PLN, driven by strategic product launches and operational efficiency. Trading at an attractive P/E ratio of 9.18 and offering a substantial dividend yield of 7.14%, PZU maintains robust profitability metrics. Despite challenging weather events impacting insurance claims, PZU maintained a return on equity at 19%. For deeper insights into PZU’s valuation metrics and growth potential, InvestingPro subscribers can access over 30 additional financial metrics and exclusive ProTips.

Financial Highlights

• Revenue: Increased by nearly 1 billion PLN year-over-year.
• Net profit: Over 900 million euros increase.
• Adjusted ROE: Above 20%.
• Solvency II ratio: 225%.

Outlook & Guidance

PZU’s strategic focus remains on expanding its healthcare pillar, with plans to open more facilities in Poznan and grow Employee Capital Schemes (PPK). The company aims to achieve 5 billion PLN in healthcare revenue by 2025 and is exploring non-organic growth opportunities in this sector. Future EPS forecasts for FY2025 and FY2026 are 1.86 USD and 1.87 USD, respectively, with revenue projections of 8.58 billion USD and 9.11 billion USD.

Executive Commentary

Tomas Kulik, a board member, highlighted the company’s consistent growth, stating, "We have been growing year on year." Jan Jimovich, PZU Healthcare President, expressed optimism about the healthcare market’s potential, noting, "We believe that the health pillar of the private market for health care services will grow by 50%." Kulik also reassured shareholders, emphasizing, "We need to ensure that at no point during this reorganization, our shareholders might be harmed."

Risks and Challenges

• Weather events continue to impact insurance claims.
• The motor insurance market is experiencing a slight negative trend (-2.6%).
• Increasing operational costs pose a challenge.
• The evolving competitive landscape in the healthcare sector requires strategic agility.
• Potential regulatory changes could affect market dynamics.

Q&A

During the Q&A session, analysts inquired about the dividend distribution process and the potential restructuring into a holding company. Executives emphasized their commitment to protecting shareholder interests and addressed concerns about maintaining service quality in the healthcare segment.

PZU’s strong financial performance and strategic initiatives position it well for future growth, with a clear focus on expanding its healthcare offerings and leveraging its market leadership in insurance products.

Full transcript - Powszechny Zaklad Ubezpieczen SA (PZU) Q2 2025:

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: Ladies and gentlemen, it is my pleasure to welcome you at today’s conference. Today, we’ll discuss the financial results of the Pezzat O Capital Group during the 2025. We’ll focus in particular on the 2025. Together with me, there is Tomas Kulik and Jan Jimovich, member of the Board. And I’ll hand over to Mr.

Kulik. Mr. Kulik. Ladies and gentlemen, it is my pleasure to welcome you at this conference. We will present to you our financial results for the first six months of twenty twenty five with a particular focus on the 2025.

We will start by presenting our main achievements, then we will brief you on our standing on the market and at that point we will move away from IFRS and we will use local ratios because these are the ratios that our competition is using when they present their results. Then we will present to you our strategy for the years twenty twenty five-twenty twenty seven, which is going to be followed by a Q and A session. Given the agenda and given the fact that we are joined by Mr. Jimovich, who is the Head of Behzeto Health, I suggest to discuss very quickly the general information so in this way we’ll have more time to discuss other matters that we believe are important for our company’s future and which will be the main driver of growth. So without further ado, I would like to tell you that we have been growing year on year, both when we compare the last half year and the last quarter.

We have generated an almost 1 additional billion in revenue year on year. The profitability is high. We use adjusted ROE to measure it, and adjusted ROE is at above 20%. The total profitability is PLN 3,200,000,000.0. We have a very strong capital position, and we will offer very high dividend in this quarter.

So those of you who decided to trust our strategy or those who have invested in our shares for quite a long time will be quite pleased with the dividend yield. How did we generate our dynamic growth? We have we can report a large increase in insurance, 50% year on year. In our banking portfolio, the growth was slightly lower. If we take into account the results from our services and profitability and the result on investment portfolio, the K margin and the combined ratio, we can say that we had quite a substantial improvement in all of these four areas.

The insurance service result is higher than last year. The result on investment portfolio is also quite substantial. We also have a very strong operating margin, in particular in life insurance. And combined ratio is below 90%. So this means that we are still hitting our strategic objective.

Regarding our the scale of our activity. In this slide, you can see the areas of our activity that have contributed most to the scale up. As usual, we have non motor insurance revenue. The increase year on year is at over 11%. Next, individual protection insurance revenue, the increase year on year is above 12%.

The health pillar revenue that we are about to discuss in detail is also doing quite well. The same goes for the assets of external clients under our management. TFI PZ2 is still number one among nonbank TFIs, and we have reported nearly 2,000,000,000 increase. We also have a high rating and a very secure investment portfolio. We also have reinsurance protection.

This is what helps us to build our capital position. And at the end of Q2, the Solvency II ratio for our group was at 225%. We are not operating on an easy or straightforward market. We’re actually being tested constantly by the market. I would like to share with you our take on a very mediatized event, namely the fire in Zampky.

Like last year, this year, we tried to build trust with our clients by showing them that our group is present on-site one day after a calamity occurs and that the claims are settled as quickly as possible. 2025 was full of fires and damage that those fires that were quite mediatized caused. We also had quite a lot of damage caused by weather events. In Poland, usually in May and June we report high level of rainfall. This year in particular the weather was not very summer like, if I can put it this way.

As a result, we had to pay out a lot of claims in the 2025. Let me now briefly present to you our the situation in individual segments. Now I will use the Polish reference terms, so we won’t be using accounting terms, but I will give you data regarding gross written premium. The dynamics in the growth of the gross written premium has been flat. The main reason for that is the situation in the corporate segment.

In 2024, in Q2 twenty twenty four, our group was a beneficiary of the general situation. So if we convert the gross written premium into revenue from insurance services, then we’ll see that the second ratio is better to describe our exposure and how it changed in time. Because regardless of the payment due date and regardless of the sales date and when the insurance policy is recognized in our portfolio. So regardless of them, are still some changes in the gross written premium. But regarding the way that new policies affect our exposure and the way that insurance service is used.

Well, Regarding mass insurance in the non motor sector, we have a good growth of 8.4% year on year. So again, it is important always to take the general context into account and this will allow to draw the right conclusions from the data. We also have some drops in motor insurance. This is due to the fact that clients migrate to Link four. This was quite a headache for us.

Also, the multi agency channel contributed to this negative trend. We are finding ways to deal with it. However, the measures we have taken are reflected in our top line. This means that the portfolio that was created as a result was not always was not always giving us a good perspective for the future. As a result, we’ll need to focus more on rentability in motor insurance.

Moving on to life insurance. The life insurance portfolio in Q2 Q2 was operating at two speeds. Group insurance and individual continued insurance operated at its own speed. There we are dealing with repricing, especially in health insurance. We have also introduced some changes to our tariffs and attracted new customers, while in other areas working closely with our clients were the factors that generated dynamics year on year.

In individual insurance, we have reported quite a substantial growth, 36%. And this was generated by one off investment products. The market situation is helping because the general mood on the market is good and this incentivizes clients to buy those products, be it life and endowment insurance or semi deposit products. So we are able to generate value for our customers and they respond to it enthusiastically, this explains this massive growth. We also welcome the fact that there is an increase in other products.

The increase is of 21% and those products close to protection and life insurance are less dependent on the market situation and they help us to build a good relationship with our clients. Now we have two new products in our portfolio. One of them is House, the other one is Pezatu for cyclists. And they offer a broad scope of services and a good price. So if there is among you someone who would like to buy an insurance the the very pleased the

Tomas Kulik, Board Member, Pezzat O Capital Group: My name is Jan Jimovich. I’m the President of BZ2 Stravia. If I were to summarize our business, there has been more business, plus 14%. So we managed to generate growth with stable costs. The revenue on the top line was growing.

Our EBITDA has improved from four percent to 11%, so 2.5% more of profitability coming from our subscription business in the health care pillar. So this is already visible when it comes to our contribution to the top line. How is it possible? We still have some reserves in our organization when it comes to cost effectiveness ratio, when it comes to profitability, the number of visits that are actually appointed through our online app. Here, we have still here room for improvement.

And then we have the possibility to service our patients at our own facilities. This gives us a higher profitability and lower own costs in our medical pillar. And these are the two things we have been concentrating on. So on the one hand, the increase of profit, the increase of revenue, we would like to cover all the white spots on the map of Poland. For example, in Poznan, we will be definitely opening more health facilities, more clinics, and we would like to go back to customer acquisition.

We will be changing the funding of PZU Strovia in a way that the company can invest more in growth. So that’s definitely an investment for the future. We believe that the health pillar of the private market for health care services will grow by 50% to PLN 50,000,000,000. We’ll be using our own channels, agency channels, but we would like to step up our collaboration with banks. And what we want to be really famous for is quality.

We’d like to concentrate in our next product on VIP clients. We’d like to be servicing people in one day, for example, when it comes to occupational medicine services. But we also offer cross selling we offer travel insurance to people using our health care services. And I also deal with bank assurance. We are definitely the market leader when it comes to sales.

But what’s interesting, we have been growing more dynamically versus the market. And when it comes to life insurance, year on year, over 18% of growth. And what is really helping us here is very good sales of investment and savings products. We offer them through our banks using Velobank, Alurbank. And at Velobank, we have over 8% year on year.

What we have been also developing is a very prospective future oriented market that is not linked products. For example, at a bank, you will be able to get your motor insurance. And here, we have had a twofold increase. If we have a look at the combined ratio for PZUSA, it’s under 60% for COR, under 70%. We are going to invest in this area.

We are very ambitious when it comes to the cross selling of non linked products. We hope that by the 2026, we would like to have stand alone products at PKOSAN and at the Algorand Bank. Closing this first section, a few words about assets under management. You have already heard about our dynamic growth when it comes to TFIs. I would like to supplement one thing.

We have very strong results when it comes to PPK, which is ECS, Employee Capital Schemes. And this is the next area after our health pillar that should become a great area of growth and definitely an area of focus of our strategy.

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: New products.

Tomas Kulik, Board Member, Pezzat O Capital Group: Here, I would like to mention a product that will have an exposure to gold price. We had a product that invested in mining, gold mining companies. The first product should be launched in a matter of days. So if you have been looking for a similar offer in the market, feel invited to invest. But that’s not the only new product that we are going to launch.

If you are in for a bit more of risk, if you are interested in interesting products, on our website, you will very soon see a new offer. So if you have a more risk oriented investment profile, that will be something for you. And now coming back to the summary of results and back to international financial reporting standards. We are talking about consolidated results. So we do it the way the public listed companies are obliged to report.

We have seen 6% of growth, almost 6% when it comes to revenues from our reascuration services, insurance revenue, as I’ve said, over 6%. We are growing when it comes to mass insurance, especially non motor insurance with over 12% of growth. And when it comes to our corporate clients, we have had a second quarter with a double digit growth. And then when it comes to motor insurances, 12.6% MTPL over 6%. It was quite flat when it comes to individual insurance, which is quite surprisingly good news.

And a two digit increase in individual insurance, Our dynamic is really decent, especially given the situation in The Baltics and in Ukraine with 7% growth. When it comes to insurance services, here the trend has been different. The dynamics was higher, especially when compared to claims, 7.8%. There were two types of events responsible for our payout. First of all, weather conditions, natural catastrophes, hail, floods, frost and so on.

On the other hand, in the corporate world, we had a few bigger scale events, one offs, but still they translated into decreased profitability in this area, which is nevertheless quite high. Now let’s talk about cost. There has been a slowdown of the cost increase, which improves our profitability. We have spent less on administration and on customer acquisition. So we are down 30 basis points per each category.

We’d like to emphasize one thing. The last quarter shows that the quality of our insurance services It translates into this new component of a loss that we have been using. It describes the lack of adjustment of our premium. We really need to analyze it for the whole insurance premium. That’s the difference between Polish standards and international standards.

In Poland, the write off of the amortization period takes twelve months. When it comes to our mass clients, We can see the positives of this different approach to amortisation. Especially when we compare it quarter to quarter year on year. To sum up, it is over EUR 900,000,000 of increase. Our portfolio is performing really well when it comes to the coverage of insurance premiums.

Year on year, we are at almost million, which means even better momentum for our net profit for the equity holders. Excluding the banks. When it comes to the banks, we have had over plus 10%. The increase was due to high interest revenues and lower write offs connected to more so called mortgage holidays. It’s been over 23% of increase year on year.

What’s really important, and I would like you to remember that, is the return on equity. It is at almost 19% despite the difficult weather events. Good news is that we have improved this return of by almost 200 basis points, including the combined ratio. And the margin was well above 25%. And now let me move on to a quick wrap segment by segment.

Let’s start with the mass segment. Here, you have already heard about our revenue structure. I have already discussed motor and non motor insurances. Can see the results for MTPL and MOD. Have been growing.

When it comes to our portfolio, this is not something to be worried about.

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: But this

Tomas Kulik, Board Member, Pezzat O Capital Group: might give us some reasons for concern in the future and a double digit growth in non motor insurance. When it comes to cost, they have been growing but not significantly. We are up 2.6% year on year. Despite what I’ve already mentioned, there is a high payout due to claim servicing, giving extraordinary weather events and extraordinary losses at our customers, given that our portfolio has improved in quality. And we can see plus 55,000,000 when it comes to the new component of loss, which might be difficult to understand, but that’s actually the term that I should be using.

It translates into positive growing results within the motor segment. In the non motor, we have seen an improvement year on year. When it comes to motor insurance, we are slightly below our target. You can see the numbers in the pie chart. When it comes to third party liability, there has been an improvement of over 7.5%.

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: Let me now briefly discuss the situation on the market. This is important because it is going to translate into our results in further quarters. And in terms of points of reference, we are now going to use IFSR. When it comes to MTPL, we are below zero. So this is an adjustment.

The trend is at minus 2.6%. And taking into account the trends from the previous quarter from Q1 and Q3 of the previous year, this is justified. We also need to handle growing costs and expenses. Our company is growing. This means that our expenses grow mainly because of a growing number of people on the payroll.

Will continue to grow, and this might put us in a difficult situation. We had similar challenges in 2024. In 2024, we had a serious drops in MTPL profitability from minus 2% to minus 4%. This year, initially, we had some good news about profitability in MTPL. Also, was a small number relatively of claims.

However, the price is going to be adjusted at the end of Q2, and there is a growing appetite to allocate growing profitability to generate dumping prices. So this market situation will be rather negative from our perspective, and it will generate more difficulties. Let us move on now to the corporate segment. We are glad to report another quarter with double digit growth. In motor insurance, the main driver of growth was MTPL.

Non motor insurance accounted for 9.3% year on year, motor insurance for 12.5% year on year. Expenses. The expenses went up by 23, almost 24%, and this was caused by two factors. I have already highlighted one of them, namely a number of one off events that generated a lot of claims. One of them was a fire that generated 60,000,000 PLN in expenses.

So the growth of that insurance services can be actually explained by this one off event. And another is a slight shift in the market situation compared to the same period last year. These events affected us a lot and we were trying to model our forecasts using expenses as the point of departure. So as a result, the report that growth of expenses is at 23% year on year. That’s a lot and this does affect our result.

But to a certain extent we were ready for this. I also need to underline that the base maybe was not representative enough. If we compare today’s data with the data on the corporate insurance segment last year and the combined ratio was at 58%, then and if we assume that this this level of combined ratio can be repeated in the long run. So now we are back at the normal level of results. Even though that in non motor insurance we are below, we are strategic objectives.

Still, eighty four point four and eighty four point eight generate, I mean, they stand for good profitability. Now, group and individually continued insurance. The result in insurance revenue is rather flat. There is a slight drop compared to last year. How to interpret this data?

First of all, would like to reassure you the situation is good. We sell insurance policies. Our clients are solvent, and we are on a good trajectory. Yet what is important to note is that there is a certain seasonality in the number of claims, in particular the morbidity and mortality ratio. You know that the situation does change between Q4 and Q1.

Also, summer holidays is the period where number of claims is slightly lower, so we have adjusted our forecast to this seasonality. This way, we recognize a lower premium to cover the expected amount of losses and claims. And this generates the value for us in CSM to address losses in the future. Sales of insurance policies do grow, and the growth in absolute figures is at PLN 40,000,000 year on year. The expenses do grow, however, but only at almost 2%.

And this is caused by a lower loss component and a higher amount in claims and benefits. These are the two elements that are responsible for expenses, and you need to add to this the acquisition expenses that are correlated with the cost of the portfolio. As a result, the operating result has been slightly adjusted, while the margin is at 25.6%. So I would say that alright, we are falling, but we are falling in style, and style matters. Now I would like to discuss the distribution of mortality.

I think that, looking at the data and charts, we can, say that the COVID effect is over, by now. Even though that, currently we are reporting a drop in the number of deaths, but this drop is similar to the one that we observed last year. So I think we can talk about the stable, that we are in a stable situation currently. And also in our portfolio, we have reported a lower number of death benefits. There is a change in our portfolio and there is a change that is beneficial for us and that is not correlated with the decisions made by our customers because it’s just a part of a general trend.

Life insurance, individual protection insurance. Let me highlight two things. This segment is non homogenous. We had an increase in CSM at almost 20% year on year and it is owed to two kinds of insurance. One is the individual protection insurance with profit participation and the second is individual protection insurance.

These two account for the growth in this segment, both in absolute figures and also as a part of CSM that was recognised in this area. Insurance service expenses. The trend is quite standard as for this part of the segment and it is created by introducing new solutions, new products and acquisition expenses with a stable level of benefits and claims. This results in a growing operating result, both in absolute and relative terms. So we do generate value.

Even though the volumes are smaller than in case of group insurance, it is still very well performing and promising segment.

Tomas Kulik, Board Member, Pezzat O Capital Group: Margin.

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: The margin is satisfactory in group and individually continued insurance. We have upselling, cross selling and these solutions systemically and systematically generate value. This is good news, especially that this is the case with all product groups. In our investment portfolio, we are operating again at a number of speeds. The structure of the portfolio is still safe and secure.

The debt instrument and tax instrument are at the same level as in the previous quarter. The result is a product of a growing interest revenue and valuation and good yield on capital instruments and equity instruments, in particular stock indexes and our exposure to private our real estate portfolio, both in terms of valuation and additional costs of putting those facilities and the property on the market. We also have the foreign currency exchange ratio has negatively affected our real estate portfolio. And actually, this is a traditional thing already. Always in Q1 and Q3, we report some changes in the valuation depending on the exchange rate.

Tomas Kulik, Board Member, Pezzat O Capital Group: Solvency is high, 225%. Owner capital own equity has been on an increase. So we are definitely above the minimum standards. If we talk about market risk and natural event risk, I believe I would like to explain one thing, why there are two different curves when it comes to the increase of the owner funds versus the required share of capital. We are changing our reinsurance program.

We would like to benefit from a very profitable business. This means that we need to invest more in reinsurance in protection should there be some shocks market. And this is why our strategy. I would like to say that it is in line and on target. But our gross insurance revenue are still a challenge.

This is something that we communicated to you upfront as a part of our strategy. We knew that this is going to be difficult. We are very happy because of the high profitability of the whole and of the insurance part. You can see how it shows through our different segments, material life insurance and nonlife insurance. Here, I’d like to stop and give you time for questions.

So let us move on to your questions. Let’s start with the room. Are there any questions in the room? Kami Dostanatsky from Santander Bank. Two general questions.

Is PSEG going to take its decision on Alior in September? Is that your only question? Okay. So dividend for 2025, I congratulate you on your profit per share. Is there any kind of scenario in which the dividend for 2025 will go to the shareholders or will it go to PKO SA?

And as we have the representative of PZU Healthcare, Three or five, what do you believe is going to be true for 2025? What is closer to your heart? I don’t know the NPS, but when I talk to employees of PZU, they really complain about the quality of service when it comes to Pizetto Healthcare. They say it’s not possible to register for a consult, that it’s difficult to change the date of a visit, of your appointment. So you are talking about more acquisition.

But isn’t it time to do some house housekeeping and to take care of quality of service when it comes to appointments, other canceling and so on? Let me take question. When it comes to Aliorbank, this is not an isolated island but an element of a whole group. Solutions must take into account its role and place in the group. And probably, we’ll have to wait for the final decisions to be taken.

Pizajou has been evolving and introducing changes. So right now, we are not able to tell you more about the earlier situation. And coming back to the dividend question. This is a question about the future schedule of the process. I do understand that the schedule should not be gossiped about.

But the president of PKOSA has already spilled the beans. So let’s say the door is open for me to share some information. It looks as if we are going to close the year with no significant changes. That is, we are going to close the year in which the parent company at PZU, the leading company is PZU SA. Please bear in mind one thing.

We have discussed it a few times. The whole process comprises of two steps. Step number one, creation of a holding company. This is what CEO Klasik mentioned when he discussed the results of 2024. In this step, we need to do two things.

First of all, consider and plan out the structure of the group. And this is in the context of the second step to take place. Here, the assets that are the most diluting from the point of view of the insurance element should be a direct part of the holding company, should be directly attached to it. If this is the case, if we were to close it this year but it’s not really likely to happen, given what must materialise And as of today, we need to change the legal structure for it to happen. And the legal structure, given the schedule, will be realistic, let’s say, by January of the next year.

First of all, we need to create a holding company. If it’s successful, all dividends will either be transferred to the holding company, which is an essential element of PZUSA or will be transferred to the new holding company. Both the new PZU something, let’s call it operating enterprise, that will be paying out the dividend and the banks will be moved to this new holding company. That’s the way to think about it. And only then will it be possible to merge the bank and the holding company?

From that moment on, the bank will become the entity regulating dividend payments for the whole group vis a vis its shareholders. I believe it’s very difficult to tell you more about the schedule and how it will play out. We do realize one thing. When we plan the sequence of events, need to make sure that at no point during this organization reorganization, our shareholders might be harmed. So we need to protect our shareholders.

That’s our priority. Both Andrei and Cesare, as former presidents, talked about it. So let’s say that the framework in place will be close to what we know. There are some recommendations on profit sharing. Usually, they are published more or less mid December.

We’ll have to secure the dividend payer, either it will be BZ USA or the holding company. We need to ensure that the dividend payment runs smoothly. And that’s a crucial element of what we do. And we have been talking to the regulator about how actually to make it happen. And then three or five when it comes to health care.

In our strategy, we promised three plus to our shareholders. We try to use our channels. We try to go for cross selling. We try to increase the premiums. That’s right that during the last conference, Andrei Classic mentioned mentioned 5,000,000,000, but it about $20.25 horizon.

We might get some nonorganic opportunities. That is, for example, entering some segments that we are not present in, like hospital segment or there might be some possible takeovers or mergers. As of this year, when it comes to acquisitions, we do not see the opportunities to actually reach 5,000,000,000 this year. But in a longer time perspective, it’s quite likely to challenge the market leader that is Luxemed. NPS, that’s your second second question.

I would be quite careful here. I don’t believe that that’s a good idea to draw any conclusions on the quality having spoken to a few people, to a handful of people. What we measure is NPS, that’s a ratio of recommendations. For our helpline, it’s plus 27% of those who would promote versus plus 17% that would discourage people from using our services. So we are definitely above the average.

And our customer satisfaction score is at over 80%. Personally, I believe that when it comes to quality, it’s not a moment to rest on our laurels. We still need to take care of our customers to monitor the level of service availability. What we promise is two days for a GP consult and five days for a specialized consult. That’s our promise.

We do have tools to measure it. And what I see on social media, what I see on LinkedIn, when it comes to the treatment for subscription customers versus private customers, I don’t see it in the numbers that we have. We are definitely going to improve the quality of our services, but I don’t agree that we are not ready to grow. But at the same time, we will continue working on digitization. We want to launch a mobile based app.

And then we would like to include new new services that nobody ever had in their health care mobile based apps. If

Unnamed Moderator, Conference Moderator, Pezzat O Capital Group: there are no questions in the room, we’ll address questions that we have received online. One of them regards severe weather events. And the question is as follows. It’s from Yaramir Shartika from PKO BP Securities. Can you give any comments regarding the scale of weather events in this two in this quarter?

Well, yes. But I’m afraid of one thing because I have received exactly the same question in the previous quarter. It was at the May. And we could be optimistic. We could say, oh, of course, May.

Of course, there is this period when always there are some cold days at the May. And, generally, I do not like to detract on what I’ve said before because it’s embarrassing. We do try to keep all the risks under control, we do it quite well except for one thing, weather. So my answer for today is that the severe weather incidents, did not affect us and did not generate any mass tendencies. I’m saying this being fully aware that we have no idea what is going to happen weather wise in q three.

I don’t want to say that everything is possible. However, the weather is changeable and it gets even more changeable and we need to take it into account in property insurance but also in motor insurance because this affects the levels of risk. And I’ll be happy to take another question. Actually, last year, we had a flood in September, and this only proves that it’s good to be prudent when making assumptions. Very good point, mister Rezymovich.

Thank you. Second question is from the same person, Yramir Sharka from PKO BP Securities. What is the plan of the company for higher capital requirements if the legal changes that will make it possible to create the holding will not enter into force? K. Will I do my best to answer this question.

Unfortunately, the question is not too precise and the person is not in the room, so I cannot ask for clarification. So if I understand correctly, we are talking about step one, not about step two. And we are discussing hypothetical situation regarding what may happen if in step one we will not have the formal and legal possibility to finalize the transformation of our group into a holding. We know that currently some acts are pending before the parliament. One of those insurance business.

Another regards the management of state assets, and this will give possibly PTO a different qualification as a state asset. And there is another bill regarding the banking law. If those bills are not signed into law, we first of all need to understand why. What are the possible reasons for this scenario? Because if we understand it, then there is a chance that maybe we can do something that every all interested parties may agree upon.

That’s the first part of my answer. And if it turns out that there is no room for discussion and that the answer is just no because no, then what we can do is an implementation of an internal model which is scheduled for the 2026. This means that we will begin our activity in 2027 with a slightly different take on the risks that are a part of our business. So we will no longer use the one size fits all approach, but we will adopt a model that is better suited for our risk profile. This model, in my opinion, needs to fulfill two purposes, two objectives.

The first is to better adjust the price to this risk profile, to this specific risk profile and as opposed to a standard model. The second one is correlated with the fact that we’ll be able to better manage this risk. So this will translate into different capital requirements. What I can tell you for now is that well, we have shared with you some initial estimates when we were presenting to you the vision of Pezzet O as seen by its new CEO. And these were very initial estimates.

It may happen that in the end we will be less capital intensive than the estimates made in our strategy, because in the strategy we assume that the solvency ratio will go below 200. And what we said is that we want to keep the target of 190 because this is what our peers do and they are our point of reference. So I think that it is possible that if we implement this model and if we manage to better manage our risk, then we’ll keep a solvency ratio at a level of 200 or more. There are no further questions asked online. Do we have any other questions in the room?

Yes. Good morning. Andre Poveja, Citi Handlova Bank. I have a question that regards the presentation and the merger plan with PKO in the future. I would like to ask you about Bank Assurance specifically.

I would like to know if the Bank Assurance segment will have the opportunity to grow faster in the future setup as compared to now because, of course, I’m aware that the situation is highly changeable and, you need to constantly adjust to it. I believe that the model that we aspire to and the one that we have announced, namely a structure in which the bank is the dominant entity, gives us more opportunities. Why? From the perspective of the Alire Bank’s management board or the PKO Bank management board, can be boiled to one thing, namely revenue that they have from the commission from insurance sales. So this perspective changes substantially if the bank not only receives the commission but is also a beneficiary of the profit that the insurance segment generates.

So this is, in a way, a double reward. So if the bank not only receives the commission but also receives income from this revenue, then they are more favorable to this type of solutions. Moreover, after a merger, it is going to be easier to share data with various entities. And we do have a good example from another banking group. A closer cooperation and exchanging data in real time as far as mortgage customers go.

Just to give you an example, it’s easier. So as a result, it’s much easier and more potentially profitable to cross sell and target clients with multiple products. So the merger can give us the possibility to use the potential of that group to the fullest, the banking insurance group. Are there any other questions in the room? I don’t see any, and there are no further online.

So thank you for your participation and for your attention. And we’ll meet during the presentation of Q3 results in November.

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