Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : Financial statement of the PZU 2023

Warsaw, 20 March 2024

Management Board of Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Motion

to the PZU SA Ordinary Shareholder Meeting

regarding:

the approval of the financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with the Polish Accounting Standards.

Content of the motion:

The PZU SA Management Board requests that the Ordinary General Meeting of PZU SA approve the financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with the Polish Accounting Standards.

Reasons:

The subject of the Ordinary Shareholder Meeting should be the consideration and approval of the financial statements for the past financial year. In addition, the annual financial statements are subject to approval by the Ordinary Shareholder Meeting no later than 6 months after the balance sheet date (in accordance with Article 395 § 1 and § 2(1) of the Commercial Company Code, Article 53 of the Accounting Act of 29 September 1994, and § 10(1) and § 18(1) of the Articles of Association of PZU SA).

The Management Board of PZU SA, by Resolution No. UZ/62/2024 of 20 March 2024, approved and the PZU SA Supervisory Board, by Resolution No. URN/49/2024 of 20 March 2024, positively evaluated the financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with the Polish Accounting Standards, and recommended its approval to the PZU SA Ordinary Shareholder Meeting.

The motion is presented by:

/Tomasz Kulik/

/Maciej Rapkiewicz/

Attachment:

1. draft resolution of the PZU SA Shareholder Meeting on approval of the financial statements of the
   Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with the Polish Accounting Standards.

Draft

Re: Item 10 of the Agenda

RESOLUTION NO. ..../2024

ADOPTED BY THE ORDINARY SHAREHOLDER MEETING

OF POWSZECHNY ZAKŁAD UBEZPIECZEŃ SPÓŁKA AKCYJNA

ON 18 JUNE 2024

regarding the approval of the financial statements of Powszechny Zakład Ubezpieczeń Spółka Akcyjna for the year ended 31 December 2023, prepared in accordance with the Polish Accounting Standards

Pursuant to Article 395 § 2(1) of the Commercial Company Code and § 18(1) of the Articles of Association of

PZU SA, the PZU SA Ordinary Shareholder Meeting hereby resolves as follows:

§ 1

The PZU SA Ordinary Shareholder Meeting, after consideration, approves the financial statements of

Powszechny Zakład Ubezpieczeń Spółka Akcyjna for the year ended 31 December 2023, prepared in

accordance with the Polish Accounting Standards, including:

1. balance sheet prepared as of 31 December 2023, closing on the assets and liabilities side with a balance sheet total of PLN 52,964,892 thousand (in words: fifty-two billion, nine hundred and sixty- four million, eight hundred and ninety-two thousand zlotys),
2. non-lifeinsurance technical account for the period from 1 January to 31 December 2023, indicating a technical result to be transferred to the general profit and loss account in the amount of PLN 1,454,616 thousand (in words: one billion four hundred fifty-four million six hundred sixteen thousand zlotys),
3. general profit and loss account for the period from 1 January to 31 December 2023, indicating a net profit of PLN 3,983,187 thousand (three billion nine hundred eighty-three million one hundred eighty- seven thousand zlotys),
4. statement of changes in equity showing an increase in equity during the financial year ending 31 December 2023 by the amount of PLN 5,060,092 thousand (five billion sixty million ninety-two thousand zlotys),
5. cash flow statement showing an increase in cash during the financial year ending 31 December 2023 by the amount of PLN 29,337 thousand (twenty-nine million, three hundred and thirty-seven thousand zlotys),
6. additional notes to the financial statements for the year ended 31 December 2023.

§ 2

The Resolution comes into force when adopted.

Chairman

of the PZU SA Ordinary Shareholder Meeting

Powszechny Zakład Ubezpieczeń

Spółka Akcyjna

Financial statements for the year ended 31 December 2023 prepared in accordance with Polish Accounting Standards

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023
(in thousands of PLN)
Table of Contents
Introduction to the financial statements	4
1.	Introduction	4
2.	Selected standalone financial data of PZU	5
3.	The exchange rate of the zloty against the euro	6
4.	Changes in accounting policies during the financial year	6
5.	Changes in the preparation of financial statements and data comparability	6
6.	Corrections of errors from previous years	6
7.	Significant events that occurred after the balance sheet date and are not included in the financial statements ....	6
8.	Significant events of previous years recognized in the financial statements of the reporting period	6

9. Significant events related to the reporting period affecting a significant change in the structure of balance sheet

	items and financial result	7
10.	Management and supervisory bodies of PZU	7
11.	Audit fee payable to the audit firm auditing the financial statements	10
12.	Accepted accounting policies	10
13.	Indication, explanation and quantification of significant differences between PAS and IFRS	25
Balance sheet and off-balance sheet items	34
Revenue account of non-life insurance	37
General profit and loss account	38
Statement of changes in equity	39
Cash flow statement	41
Technical insurance accounts - direct business	43
Technical insurance accounts - inward reinsurance	62
Additional information and explanations	72
1.	Intangible assets	72
2.	Investments	75
3.	Receivables	115
4.	Other assets	121
5.	Prepayments and accruals	124
6.	Movements in impairment losses	127
7.	Equity	129
8.	Subordinated liabilities	132
9.	Technical provisions	133
10.	Estimated salvage, subrogation and grants	138
11.	Other provisions	138
12.	Other liabilities and special-purpose funds	142
13.	Prepayments and accruals	148
14.	Solvency of the insurance company	148
15.	Off-balance sheet items	149
	2

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023
(in thousands of PLN)
16.	Premiums in property and personal insurance	151
17.	Gross earned premium	152
18.	Reinsurance settlements	153
19.	Amount of gross claims and benefits paid	154
20.	Supplementary data for the technical insurance account	156
21.	Information on the claims handling processes	159
22.	Insurance activity expenses	159
23.	Other operating income	161
24.	Other operating expenses	162
25.	Interest income and expenses	162
26.	Income tax	164
27.	Share of the net profit (loss) of related parties measured by the equity method	165
28.	Notes on the cash flow statement	166
29.	Other notes and explanations	167
30.	Disputes	167
31.	Headcount	170
32.	Contracts for audit and review of financial statements	170
33.	Related party transactions	171
34.	Other information	181

3

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023 (in thousands of PLN)

Introduction to the financial statements

1. Introduction

Basic information about the Company

Powszechny Zakład Ubezpieczeń Spółka Akcyjna ("PZU," "Company") has its headquarters at Rondo Ignacego Daszyńskiego 4, 00-843 Warsaw.

PZU has been entered in the National Court Register kept by the District Court for the Capital City of Warsaw in Warsaw, 13th Commercial Division of the National Court Register.

The core business of PZU according to the Polish Classification of Business Activity and the Statistical Classification of Economic Activities in Europe is property and casualty insurance (65.12).

According to the official newsletter of the Warsaw Stock Exchange, the Company is classified in the "Finance" macro sector, "insurance companies" sector.

PZU is the parent company of Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group ("PZU Group") and prepares consolidated financial statements.

Period covered by the standalone financial statements

These standalone financial statements cover the period of 12 months from 1 January to 31 December 2023. The comparative data refers to the period from 1 January to 31 December 2022.

Format of the standalone financial statements

The standalone financial statements for 2023 include financial data presented in the format specified in Appendix No. 2 to the Finance Minister's Regulation of 5 October 2020 on the scope of information disclosed in financial statements and consolidated financial statements required in prospectuses for issuers based in the territory of the Republic of Poland, for which Polish accounting principles are applicable ("Regulation on financial statements in the prospectus").

Pursuant to Article 45(1f) of the Accounting Act ("Accounting Act") standalone financial statements shall be prepared in electronic form. In addition, according to Article 3 of EU Delegated Regulation No. 2019/815, issuers shall prepare their annual financial statements in XHTML format.

Going concern assumption

These standalone financial statements have been drawn up under the assumption that PZU remains 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 standalone financial statements, there are no facts or circumstances that would indicate a threat to the ability of PZU to continue its 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 its hitherto activity.

Making this assumption, in its assessment, the PZU Management Board took into account the impact of factors subject to uncertainty, in particular the macroeconomic situation and the armed conflict in Ukraine which began on 24 February 2022 (additional information on this matter is presented in section I.34.1 Supplementary information and notes) on the macroeconomic situation and its own operations.

Presentation currency

Unless otherwise noted, all amounts are shown in thousands of Polish zloty in the standalone financial statements.

4

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023 (in thousands of PLN)

Discontinued operations

Both in 2023 and in 2022, PZU did not discontinue any type of operations.

Seasonal or cyclical business

The PZU's business is neither seasonal nor subject to business cycles to a significant extent.

2. Selected standalone financial data of PZU

Data from the balance sheet		31 December 2023		31 December 2022		31 December 2023		31 December 2022
	thous. PLN		thous. PLN		thous. EUR		thous. EUR
Assets		52,964,892		45,935,032		12,181,438		9,794,459
Share capital	86,352	86,352	19,860	18,412
Total equity		20,884,235		15,824,143		4,803,182		3,374,090
Basic and diluted weighted average number of	863,523,000	863,523,000	863,523,000	863,523,000
common shares (items)
Book value per common share (in PLN/EUR)		24.18		18.33		5.56		3.91

Data from the technical non-life insurance			1 January -			1 January -			1 January -			1 January -
account and from the general profit and loss			31 December 2023			31 December 2022			31 December 2023			31 December 2022
account			thous. PLN			thous. PLN			thous. EUR			thous. EUR
	Gross written premiums			16,187,497			14,691,723			3,574,688			3,133,711
Technical result of non-life insurance	1,454,616	1,266,929	321,223	270,233
	Net investment result1)		3,604,170		1,303,073		795,909		277,942
Net profit (loss)	3,983,187	1,636,774	879,608	349,120
	Basic and diluted weighted average number of			863,523,000			863,523,000			863,523,000			863,523,000
	common shares (items)
Basic and diluted earnings per common share (in	4.61	1.90	1.02	0.40
PLN/EUR)

1. Including the item "Share of the net profit (loss) of related parties accounted for using the equity method".

			1 January -		1 January -		1 January -		1 January -
Data from the cash flow statement		31 December 2023		31 December 2022		31 December 2023		31 December 2022
			thous. PLN		thous. PLN		thous. EUR		thous. EUR
	Net cash flows from operating activities		1,709,088		1,528,989		377,418		326,130
Net cash flows from investing activities	593,952	387,368	131,163	82,625
	Net cash flows from financing activities		(2,273,769)		(1,926,135)		-502,117		(410,840)
Total net cash flows	29,271	(9,778)	6,464	(2,086)

5

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023 (in thousands of PLN)

3. The exchange rate of the zloty against the euro

The following exchange rates were used in the financial statements (also for the presentation of selected financial data):

EUR / PLN		1 January -		1 January -		31 December 2023		31 December 2022
	31 December 2023		31 December 2022
Average exchange rate		4.5284		4.6883		4.3480		4.6899
Highest exchange rate in the period	4.7895	4.9647		n.a.		n.a.
Lowest exchange rate in the period		4.3053		4.4879		n.a.		n.a.

These exchange rates are:

• for items in the balance sheet - the average exchange rates of the National Bank of Poland as of the balance sheet date;
• for items in the profit and loss account and cash flow statement - the exchange rates calculated as the arithmetic average of the National Bank of Poland exchange rates in effect on the last day of each month of the period.

4. Changes in accounting policies during the financial year

In 2023, no changes were made to the accounting policies.

5. Changes in the preparation of financial statements and data comparability

In 2023, no changes were made to the preparation of financial statements.

6. Corrections of errors from previous years

The standalone financial statements do not include corrections of errors from previous years.

7. Significant events that occurred after the balance sheet date and are not included in the financial statements

No significant events occurred after the balance sheet date that have not been included in the standalone financial statements.

8. Significant events of previous years recognized in the financial statements of the reporting period

No significant events of previous years have occurred as of the date of signing the standalone financial statements, which should be included in the standalone financial statements.

6

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023 (in thousands of PLN)

9. Significant events related to the reporting period affecting a significant change in the structure of balance sheet items and financial result

9.1 Dividend from Powszechny Zakład Ubezpieczeń na Życie SA ("PZU Życie")

On 6 June 2023, the Annual General Meeting of PZU Życie passed a resolution on the distribution of profit for the financial year

2022 in the amount of PLN 900,691 thousand as follows:

• PLN 897,579 thousand was allocated for dividends
• PLN 3,112 thousand was allocated to the Company Social Benefit Fund.

The record date was set for 29 June 2023, and the dividend payout date was set for 26 September 2023. The dividend was paid out on the record date indicated. This amount increased investment income from related parties.

9.2 Distribution of net profit for the financial year 2022

The issue is described in section 7.2.1 Supplementary information and notes.

10. Management and supervisory bodies of PZU

10.1 PZU Management Board

From 1 January 2023 to 31 December 2023, the composition of the Management Board of PZU was as follows:

• Beata Kozłowska-Chyła - President of the PZU Management Board;
• Ernest Bejda - Member of the PZU Management Board;
• Małgorzata Kot - Member of the PZU Management Board;
• Krzysztof Kozłowski - Member of the PZU Management Board;
• Tomasz Kulik - Member of the PZU Management Board;
• Piotr Nowak - Member of the PZU Management Board;
• Maciej Rapkiewicz - Member of the PZU Management Board;
• Małgorzata Sadurska - Member of the PZU Management Board.

On 23 February 2024, the PZU Supervisory Board dismissed the following persons from the PZU Management Board: Beata Kozłowska-Chyła, Ernest Bejda, Małgorzata Kot, Krzysztof Kozłowski, Piotr Nowak and Małgorzata Sadurska.

At the same time, the PZU Supervisory Board adopted resolutions to delegate the following Members of the PZU Supervisory Board:

• Anita Elżanowska - to temporarily perform the function of the President of the PZU Management Board;
• Michał Bernaczyk - to temporarily perform the function of the Member of the PZU Management Board; This delegating was for a period of no more than 3 months. The resolutions came into force upon their adoption.

From 24 February 2024 to the date of signing the financial statements, the Management Board consisted of the following persons:

• Anita Elżanowska - Member of the PZU Supervisory Board delegated to temporarily perform the function of the President of the PZU Management Board;
• Michał Bernaczyk - Member of the PZU Supervisory Board delegated to temporarily perform the function of the Member of the PZU Management Board;
• Tomasz Kulik - Member of the PZU Management Board;
• Maciej Rapkiewicz - Member of the PZU Management Board.

7

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Financial statements for the year ended 31 December 2023 (in thousands of PLN)

10.2 The PZU Supervisory Board

From 1 January 2023 to the date of conveying the condensed interim financial statements, the composition of the Supervisory Board of PZU was as follows:

• Robert Jastrzębski - Chairman of the Supervisory Board;
• Paweł Górecki - Deputy Chairman of the Supervisory Board;
• Robert Śnitko - Secretary of the Supervisory Board;
• Marcin Chludziński - Member of the Supervisory Board;
• Agata Górnicka - Member of the Supervisory Board;
• Elżbieta Mączyńska-Ziemacka - Member of the Supervisory Board;
• Krzysztof Opolski - Member of the Supervisory Board;
• Radosław Sierpiński - Member of the Supervisory Board;
• Piotr Wachowiak - Member of the Supervisory Board;
• Józef Wierzbowski - Member of the Supervisory Board;
• Maciej Zaborowski - Member of the Supervisory Board.

On 7 June 2023, the Annual General Meeting of PZU appointed the Supervisory Board of PZU for a new term of office in the following composition:

• Marcin Chludziński - Member of the Supervisory Board;
• Agata Górnicka - Member of the Supervisory Board;
• Robert Jastrzębski - Member of the Supervisory Board;
• Marcin Kubicza - Member of the Supervisory Board;
• Elżbieta Mączyńska-Ziemacka - Member of the Supervisory Board;
• Krzysztof Opolski - Member of the Supervisory Board;
• Radosław Sierpiński - Member of the Supervisory Board;
• Józef Wierzbowski - Member of the Supervisory Board;
• Maciej Zaborowski - Member of the Supervisory Board.

The appointment was made for a joint term of office covering three full financial years 2024-2026.

At the same time, as of the date of the Annual General Meeting of PZU, i.e. 7 June 2023, the mandates of two former members of the Supervisory Board of PZU - Piotr Wachowiak and Robert Śnitko - expired.

On 5 June 2023, a shareholder of PZU, the State Treasury, exercising the right provided for in § 20(7) of PZU's Articles of Association, appointed Paweł Górecki to the Supervisory Board of PZU.

On 15 June 2023, Robert Jastrzębski was elected Chairman of the Supervisory Board of PZU and Paweł Górecki was appointed Deputy Chairman of the Supervisory Board of PZU.

On 30 August 2023, the PZU Supervisory Board elected Agata Górnicka as Secretary of the Supervisory Board.

On 13 September 2023, the Extraordinary General Meeting of PZU dismissed Elżbieta Mączyńska-Ziemacka from the PZU Supervisory Board.

On 14 February 2024, PZU received a letter from the Minister for State Assets, acting on behalf of the State Treasury of the Republic of Poland, dated 13 February 2024, notifying of the dismissal of Paweł Górecki from the PZU Supervisory Board. Pursuant to § 20(7) of the Articles of Association of PZU SA and in line with Article 354 § 1of the Commercial Company Code, the dismissal through a written statement submitted by the State Treasury to the Management Board is effective upon its delivery.

On 15 February 2024, the Extraordinary General Meeting of PZU:

• dismissed the following persons from the PZU Supervisory Board: Robert Jastrzębski, Agata Górnicka, Radosław Sierpiński, Marcin Chludziński, Maciej Zaborowski, Krzysztof Opolski and Józef Wierzbowski;
• appointed the following persons to the PZU Supervisory Board: Michał Bernaczyk, Anita Elżanowska, Filip Gorczyca, Michał Jonczynski, Andrzej Kaleta, Małgorzata Kurzynoga, Anna Machnikowska, Wojciech Olejniczak and Adam Uszpolewicz.

8