Good afternoon. Welcome to the press conference dedicated to this discussion on the financial results for Q1 2026. We're going to have this meeting moderated by CEO Bogdan Benczak, as well as Maciej Fedyna, our CFO. Mr. Benczak, over to you.
Good afternoon. Welcome to the financial results conference following Q1 2026 of PZU Group. It is my pleasure that I'm going to co-moderate this conference for the first time together with Maciej Fedyna, responsible for finance and risk area at PZU Group. Welcome. Let us begin, shall we? Q1 2026, PZU Group, well, we consider it a very solid opening of the current year. As far as the market situation goes, with respect to our organization, well, it has been less favorable as it was a year before. What are the factors behind that?
Firstly, volatility on international markets. Secondly, the fact that this year's winter season is indeed very wintery, unlike what we had in the past years. However, we are proud of the fact that we have generated record sales equivalent to PLN 7.8 billion, the highest result ever at the first quarter. Simultaneously, we managed to have PLN 1.4 billion in terms of net profit. This comes as the aftermath of a very conscious risk management and a very diversified risk handling scheme. Maciej will elaborate on various factors that had a lot to do with this result following Q1. That said, Q1 has been concluded with a very stable solvency ratio 239%.
Yesterday, the supervisory board recommended to pay out a dividend in the height of PLN 4.80 per share. Dividend yield equivalent to around 7.6%. On May 12, there have been 16 years since our debut on the Warsaw Stock Exchange. In that period of time, we paid almost PLN 37 billion in dividend. You can see the graph attached. Total return obtained by the PZU Group for the dividend. Our recommended dividend is equivalent to PLN 4.8. Record date shall be September 17, the current year, and the payment date likewise October 8, 2026.
Let me take this opportunity to stress our credit rating is stable, equivalent to A- with a positive outlook, backed by or as a result of solvency ratio at almost 240%. You know best what our investment portfolio is composed of, that is almost 80% in sovereign bonds. By the same token, we are very effective in terms of reinsurance protection. This year, in the beginning, we strived to consistently improve our market standing. We informed you about the fact that we had signed the acquisition agreement for the Ukrainian insurance operator, and we did it MetLife. We did it because it was possible in the first place. In the second place, Ukraine is a market that we have recognized very well.
We've got both the people and financial resources, and our expertise comes to that as well. That was another factor behind. We took advantage of all the instruments available in Poland to mitigate various geopolitical risks that might be associated with that said takeover. Whenever possible, the PZU Group is very apt in enhancing our market standing. In Poland, we consolidated our assets with Link4 in order to fully implement a multi-brand strategy, again, to be able to mitigate various risks which are associated with the fact that we are indeed two separate entities. In parallel, we want to profit as much as we can from the potential of Link4 brand. Again, the move in question is very much about simplification and very much about greater efficiency. For the acquisitions plans.
In terms of MetLife Ukraine, we would like to conclude regulatory proceedings by the end of this year and for the Link4 legal merger, it is to be brought to fruition in Q1 2027. Our growth, what is it based on? It is based on, in the first place, the scale and second of all, the value we generate from our customers. In 2026, we grew specifically in the area of non-motor insurance. As regards non-life insurance sector, I'm proud to see we've been consistent in growing in the life insurance part of our business. At the same time, the health pillar is a very important contributor, as well as our TFI. TFI are also very handy in getting the portfolios of external clients. Let us not disregard the fact that various technologies can come to our benefit. mojePZU platform has gathered around 6 million users.
If we were to compare Q1 against the results obtained in the previous two years, what is striking? Well, for the results of Q1 2026 against all the odds, all the negative factors, all the unfavorable regulatory surroundings, it is evident that the fact that we are diversified in our operations, thanks to this, we managed to guarantee very solid results. The greatest factor in question, revenues from insurance, that is PLN 1,254,110. Investment portfolio, PLN 655 million. Operating margin accounts for 25.3%. Non-life insurance combined ratio standing at 86.8%. Given the current economic cycle and given the fact that in Q1 we obtained a greater frequency of claims resulting from adverse weather conditions, especially in the wintertime, well, with all this in mind, we are very happy to have seen we have, in fact, delivered this kind of result for our shareholders. Let us move on.
We will continue on building up our caring strategy, especially with regard to distribution. Importantly, the odNowa program is set to ensure ever more efficient operations of our tied agents. For the handling of claims, we are well set to have a new system. The operational implementation should start in H2 2026 and in H1 2027 we will see the first outcomes. Currently, we keep improving our actions in this area. Here, we have accommodated a number of actions that will make us more agile claims handling-wise. Moreover, Innovate PL is another action program that we've committed to. We sell our ETF whenever possible. mojePZU platform. Well, this platform should be a strategic way of communications with our customers. After Q1, the platform in question has serviced to as many as 6 million clients. The health pillar has seen a further extension of our in-house medical network.
At the same time, we've been following very closely the overall situation on the market and likewise we are planning on to expand our partnership network. odNowa program. Well, ladies and gentlemen, I have said on numerous occasions that our tied agents are indeed our competitive edge against our rivals and now we are trying to do our best to take advantage of it as much as we can. That is precisely why we have decided to roll out a number of technological solutions such that will help us better handle the needs of our customers. I have stressed a lot our goal is to eliminate our debt. To this end, we have introduced a number of technological solutions. We go and integrate Link4. To this end, multi-brand strategy is in place.
Changes in claims handling processes improving efficiency, that's another chapter of importance. We have managed to shorten the average time of claims settlements. Claims ratio has also gone down. Likewise, we want to increase the share of resolution in claims settlements. In a comment part, Maciej will tell you more how these factors get translated into the change in the so-called triangles, something very important for the reserve pileup. Innovate PL is another focus area. By the same token, we have prepared the first published tokens now listed on WSE. Our plan is to implement other similar products. I always reiterate, everyone at PZU is a salesman. Therefore, let me draw your attention to point five.
By the end of this year, we will have had a special promotional campaign, so please consider buying this product, which is a very solid one indeed, PZU ETFs. Let us now compare where we are in our journey of strategy implementation at the beginning of 2026, where we have had a solid, record-breaking result after Q1, PLN 7.8 billion, PLN 1.4 billion in terms of net profit. These two figures are notably something that very much is in sync with our strategy. For the dividend, we have recommended PLN 4.8 per share. This year, we managed to achieve the ratio as set in our strategy for this year. The strategy was discussed also with you.
The dividend level was no smaller than PLN 4.4. Much from me, ladies and gentlemen. I would like to hand over to Maciej Fedyna together with the clicker.
Good afternoon. My name is Maciej Fedyna, and it's my great pleasure to present to you the group's result for Q1 2026. It's actually my debut, I'm glad that this debut takes place in mid-May. Actually, today we are celebrating 16 years from our IPO, and it overlaps with my debut today in front of you. I would like to start by elaborating on the dividends. Yes, yesterday we have recommended allocating PLN 4.8 per share as dividend. An additional comment on my part is that our recommendation is very much future-oriented. It takes into account the planned acquisition in Ukraine, but we need to obtain all relevant authorizations.
In 2027, we are expecting a change in regulations regarding capital buffers for our sector, and this is important in the context of our group's solvency. Therefore, we have recommended the dividend at PLN 4.8 because it gives us a very comfortable situation. We can rest assured that our group will continue to keep a high solvency ratio and a coherent dividend policy. We have future-proofed our dividends, in short, for the year 2026 and 2027. Moving on to Q1. We had a well-balanced operational activity, solid parameters such as the combined ratio and the margin in life insurance.
These were the main contributors to the result for the shareholders of the parent entity from other than banking activity at the level of over 900 million PLN. If we include the banking leg of our activity, we can report PLN 1 billion 362 million. I will not talk at length about it. About what factors influenced it. There were changes in the WIBOR which had to affect our group's results. We had to handle additional tax on the banking sector, well, these are all factors that you're familiar with, so I will not elaborate on it. I would like to focus on the factors that have influenced our insurance activity.
Year on year, we have grown by 2.3% and it's the best result in our group when it comes to quarterly results. If we examine those figures net, we'll see that the value in the reinsurance contracts is lower this year than in the previous year. That's why we have an improved dynamics in net figures. If we analyze the profitability, I would like to tell you that we have 86.8. This is our combined ratio and this is a very good result in non-life insurance. You are probably aware that this level of results is unachievable for our competitors while we actually deliver it consistently. What has contributed to those results?
Winter, that was, that has already been mentioned by Bogdan. It was a good season for us. We're all aware that winter this year was not unusual, but very different than winters that we had in previous years. The weather conditions did affect our results, but only slightly. We might analyze individual business lines that were affected by the severe low temperatures. I would like also to mention that this affected not only Poland but also the Baltic states. Agricultural insurance, we had a number of claims from farmers due to frost. In non-life insurance, we had an increased number of claims due to damaged buildings and damaged farming equipment as well as heating installations.
These damages entailed more costs this year than in the previous year. Motor insurance, this is always interesting. They were also affected by the weather. The MOD and MTPL were affected to a different degree. To comment upon it, I would have to give you a broader perspective. In MTPL in Q1, we have noted a lower frequency of claims than in the previous year, which is good news. We have also started to note significant income in that is generated by a speeding up of our claims handling because we have a growing number of claims that end in settlements. We have also shortened the average time from reporting a claim to inspection.
The combined positive effect of a lower number of claims in MTPL and improved claims handling process allowed us to compensate for the difference between the average written premium and the growth in the number of claims. This is good news. That's why the combined ratio in MTPL was so good and the same goes to mass insurance, 93% in combined ratio and also in corporate insurance. This actually effect was way less noted. The weather has the winter weather has caused an increase in the number of claims in MOD. However, from the beginning of last year, we have noticed a negative dynamics of the written premium in MOD. The effects are quite visible, namely a reduced margin also in our portfolio.
To counter that, we invested a lot in our procedures. Also procedures regarding establishment the amount of the premium. Because we are well aware that a customer who wants a comprehensive coverage, so MOD and any other insurance policies, motor policies, and also other types of insurance such as non-life insurance or travel insurance. Often those clients are small and medium enterprises, and these are actually our target clients. We want to make sure that we attract them and that we offer them good value for money in the short run and in the long run. This was one of the factors that has affected our profitability in MOD.
We have also recognized the loss component, which actually should deserve a separate comment, especially when we analyze the results year on year. This year we had to pay up PLN 63 million and in the previous year, we actually earned PLN 64. The difference is to our benefit and you can find the figures in our reports. Regardless of the effects of the weather conditions, the motor insurance in mass and corporate sector alike is quite good. 86% on the non-motor and mass insurance and above 50% in corporate insurance. We're quite proud of this result. Especially that the non-life insurance, property insurance are our growth engines. Sometimes we even report 2-digit growth in those areas.
In terms of, we have a double-digit growth in those areas. What it goes up is the premium, the absolute numbers, also the amounts on individual policies, which is good for our image and also good for what we can offer to our clients. Because nothing damages an insurer's image more than a sense that the insured sum was inadequate after a loss is reported. Let us move on to life insurance now, which contributed positively to our results as in terms of growth of income by 7.6% year on year. The margin was also quite high at 25.3%.
Last year, we have celebrated exceeding the number of 0.5 million policies. This product line is growing significantly. It generates a substantial margin, so it is something we can be proud of. Also, in group and individually continued insurance, we can also report solid growth which goes against the negative demographic trends that we are observing in Poland. There is results show that our group can effectively develop and sell insurance policies and to adapt our products to our clients' needs that do change also because of the demographic situation. This is the basis for our solid growth and margin, which is at 21.7%.
Another reason for us to be happy was the drop in number of deaths and lower payments due to, yes, deaths.
Let us have a glimpse into investment result profitability at 4.8%, which is the outcome of a very stable structure of our investment portfolio, 87% in the entire major investment portfolio. This is what we are looking at. That is without the banking business. Debt instruments, 73% government debt. Last year, we took a number of actions to stabilize the profitability situation from the debt instruments. You can see, regardless of somewhat smaller levels of interest rates, especially in the, in January and February, March, stood out in these terms. Against that, our results here are very favorable. There might be some deviations in the actual pricing and implementation of papers, but for the capital instruments, there might be some further deviations. At times we get questions, how does it relate to stock exchange ratios?
Bear in mind there is a difference. We've got very, like single exposures, which are decoupled from what is going on on the stock exchange. The fact is that last year we performed really solidly here. This year, less so. Let me comment on the following. There is a smaller level of revenues from the property investment portfolio. Why did it happened? It happened because of the element of securing the cash flows, currency flows in property specifically. Swap is what we take advantage of. The points here were higher than last year in Q1, and the swap points were significantly lower year on year, and this is the contributor that has affected our results here. Look in the table. There might be some negative values.
The larger part of the amount which gets reported in the table is of temporary nature. The fact how we handle the table in months or quarters, other than the end points of quarters and half years, there is a reversed trend. Negative value of PLN 50 is of temporary nature will no longer be seen in the quarters to come. For the motor insurance market in Poland. Let us look ahead, shall we? The curve up shows us the price pressure, and it got maintained or even strengthened its influence in Q1. After the closure of Q1, there have been some other winds blowing.
1, in the shape of some signs showing us the market has grown more sensible how to price the risks in MTPL and MOD, which is good news for the entire market. Counter to that, there are new entrants on our market. That is why we are getting the impression that the factor in question is the low price. That factor is important for the competitiveness of the offerings, especially in the external channels. Against that, we've got our own channels, our internal channels, thanks to which we can sell irrespective of that particular volatility. Life insurance market in Poland, we've been performing pretty stable here, and we've got a dominant market share for the fixed time periodic premiums.
For the single premiums dynamics, we are even stronger. We need to bear in mind that this market is very volatile. We would try to focus on the first parameter herein reported. Let us move on to the discussion on the health segment. Insurance has already been elaborated on by Bogdan, let me instead focus on cost efficiency as well as operational efficiency. We approach the new era digital offering to medical insurance and medical services at mojePZU. It is an important factor which made it happen that we already have 40% of digital appointments, it is something very effective for our clients as well as very effective cost-wise for our group. The number of remote appointments has now almost achieved the level of 100%.
There is very little room for improvement here. We struck a certain equilibrium. That is, on the one hand, we've got our in-house medical units. We keep extending the network by takeovers or greenfield investments. These will further improve the parameters. Assets under management has already been mentioned. Anyway, we welcome the fact that the CSO as being number 1 for our contracts with TFI, not just on banking TFI, but the entire sector. It has happened thanks to the fact that our long-term products, pension products specifically, take a very important share, and it plays out very well against market volatilities. Against these trends, we see a constant flow of revenues to our group. Finally, we have reached the last slide for that part.
Solvency reimbursement rate at 239%. This is good news also with the outlook with the future outlook. Last year, we managed to have PLN 4 billion of own funds, PLN 4.5 billion. Capital expenditures increased by PLN 200 million, and this increase is broken down in the following way. Half of it is due to the fact that we extended the non-life insurance product portfolios, including the disaster risk. 25% that is to be attached to market risk. The portfolio increased by 10%. The same dynamics is in the capital risk, and the other part is to be attached to capital conditions on the banking sector, capital requirements.
These are all official numbers reported for 2025. We would like to start our next communication with you by showing a hypothetical reimbursement rate should we approach differently the Solvency II rate, especially with regard to the fact whether or not we consider the banking requirements. Be clear, following the regulatory change, the dividend payment capacity of our group will be more than good. Much from me. Thank you. Thank you very much indeed for the presentation. I encourage you to ask questions. Maybe let us take first questions from the room. Are there any?
Andrzej Powierża, Citi Handlowy, the brokerage house. Let us begin with what you ended at, that is the dividend payout and the capital position of the PZU Group. I have two questions. One, the internal model rollout project, how does it fare now?
Are there any other initiatives other than the group restructuring? It is something dependent on the legal affairs. Anyway, what can you do under the current situation to optimize the capital position of the group? That was one. Two, getting to the topic of dividend. With respect to your strategic goals, the dividend now already goes beyond that threshold. What does it mean actually? Does it mean that the further you go maintaining the dividend status of PZU, or maybe when it decreases under the strategic goal and under the level that was recommended for the current year, what will happen?
Maybe given the fact that you consider yourself a dividend company, the dividend will never drop. Let me begin, because the topic of internal model is very much in sync with my responsibilities.
Our position is a sum of many, many items. There are many factors to be taken into consideration.
Thank you very much. You have brought up a number of topics. The internal model is amongst the most important ones. A disclaimer right at the start, shall we? In order to be able to apply the internal model as we calculate the internal model and to be able to display the results outside, we need to go through the entire process, get the proper regulatory consent. For the status of works, from the internal standpoint, we have already rolled it out. It is operational. We have calculations ready for many reporting periods. Therefore, we can see both the scale and other factors. There are different formulas that we can look at, and this results in a better risk assessment.
Bearing in mind we take proper care of the fact that our communication to the market is precise, we won't share the results of these calculations at the current stage. Reinsurance program selection is the field in question. Another topic is how we select a portfolio for further growth, where we should grow faster, where we should grow less. This may affect pricing or how we rate the risks. There are some profits that we have started taking advantage of. In parallel, there is a series of other tools that we can benefit from, provided the restructuring does not go as wished for. If it is for some reporting reasons we are not yet ready for Q1 2027 and need to put it off in time. Reinsurance program should be our entry field for the capital market analysis.
It is quite reasonable from the cost side. We have identified a number of other leverages, one being the very structure of an investment portfolio. Ours is a safe one, extremely safe one. Should other options come up, we may still think how to reduce the risk profile. I'm now going over various campaigns, various possible campaigns. The way we approach this topic now for the sake of our own risk assessment, it is rather apparent we shouldn't plan for any extreme scenarios because the forecasts say our levels of payout will rather be safe. Our end will stay safe. We will pay out the dividends abiding by our own dividend payout standards. We will adhere to the limits of the dividend payouts in the future.
As far as the increase of dividend goes, I'm a newbie here, so I'm looking at the CEO to read from his face if I can comment on that. Okay, I see that I can. We have no forecasts regarding the nominal value of the dividend, but our ambition is to keep the dividend at the amount that is not lower than the current one. Given the fact that the regulatory framework is about to change, we want to first and foremost make sure that our company delivers on its commitments. We do have a specific dividend policy and always when we take decisions on the recommendation for the dividend amount, we take into account the current situation in the company and the situation on the market. Basically, we want to be predictable as a group. Thank you.
Are there any other questions in the room?
I have two questions. One regards the dividend and more. The current operating goals were established or targets were established in December 2024. A lot has changed since then. I'm curious if we should expect any changes to the operating targets, and if so, what are the possible areas that might be affected? This is the first question to the management board that I have.
Well, yes, we do monitor on an ongoing basis the implementation of our strategy as well as the market situation and market possibilities.
We have found ourselves in a new situation, we have a new management board, we want to carry out a review of the current events, the past events, and if necessary, to revise some areas of our activity. The bottom line of our dividend policy is delivering on our commitments, this is not going to change.
Thank you. My second question is as follows. Does the new management board see any potential for structural change in the PZU Group as far as the reinsurance policy goes, or should we stick to same old? I'm asking you if there are any plans to take greater risks maybe or investing in that area.
As you know, foreign expansion was one of the growth pillars of our strategy.
A part of this foreign expansion is reinsurance, active reinsurance. Q4 is the renewal period for the reinsurance business, and in that period, we have signed a number of new contracts. We are monitoring how this part of our business is developing. We are not planning to revise anything in this area. 1 question from me. I wanted to ask you about the Baltic States. A worse insurance result was reported for that part of the world. Why? As far as the profitability in the Baltic States goes, well, the main factor there is the weather. Let us examine separately motor insurance and other types of insurance. We have a number of corporate clients in the motor insurance section in the Baltic States.
This means that those clients have to carry out transport services regardless of the weather. They cannot afford suspending their activity. This means that this will always affect the motor insurance result and was one of the reasons why we had slightly worse results there in Q1 in motor insurance. Another factor that explains the slightly worse results was the effect that the weather had on property. To put it in simple terms, when I talked to my colleagues from the Baltic States, I actually remember there was also a question about the Baltics during my first press conference.
Anyhow, I spent a lot of time there, and my colleagues from the Baltic States told me that's just because of mild winters that we've been having, they forgot how destructive actually snow can be. This year, ice roads were opened in Estonia for the first time in 10 years. Actually, I wanted to ask about the weather in the context of Q2. I'm curious if we can already make some forecasts regarding the results of Q2 in the context of ground frost that we had in Q2. Another question I would like to ask is about the rising fuel prices. Is it going to affect the number of claims or the amount of claims, or maybe it won't? Actually, the question to both of your questions is yes.
We haven't received a lot of claims regarding the ground frost, but we expect more of them coming in soon. It is too early to make any estimates regarding the impact of the ground frost on our results. The loss adjustment process in agriculture is complex, and it takes time. What needs to be taken into account are also the effect of compensation of losses once the crops are ready to harvest. Also, the share of fruit trees insurance is not as high as it used to be, so our exposure to risk connected with ground frost is also slightly lower than it used to be. Still, it is an important part of our business, so I expect that we will see the effect of ground frost on our portfolio at some point.
Regarding the fuel prices, their impact is not going to be that extensive, because of the subsidies that were introduced, and they softened the impact of high fuel prices on consumers. What we did notice, however, in April and May, we've noticed a smaller number of motor insurance claims, and we believe that it's connected to a different behavior patterns among those clients who only use MOD insurance and those who buy MOD and MTPL alike. Are there any further questions in the room? Okay, I can't see any, but if you have any question, you can ask it at later. I have a question from PKO Securities. Can you give us more specific numbers regarding agricultural losses after the cold winter. That's the first question.
The second question is, are you expecting an increase in claims in the upcoming quarters due to, for instance, drought? I will address both questions. We estimate the impact of the severe weather in winter on agricultural insurance at PLN 40 million in Q1. It's too early to make any estimates regarding future quarters. What I can tell you is that few farmers buy out drought insurance and the also drought is treated as a natural disaster. We do not offer on a mass insurance against drought.
As far as I know, this form of product is not commonplace on the market at all because it would be very expensive, especially in Poland because the soil conditions and the hydrological situation would make those products very expensive for the customers. Actually I would like to ask you about the reorganization of the PZU Group and Pekao SA . Can you tell us more? Are those entities going to merge? The short answer is the term sheet is still valid. You can find all the milestones there as well as events that would trigger the merger. Among those events are changes in the regulatory framework.
We have done our homework at PZU and, if the legislation changes, we know what we need to do to carve out the insurance and holding part of the activity. What are the possibilities that this piece of legislation will be voted in? I'm not into estimating probabilities, so please release me from that question. I'm a legal counsel. One more question in the room. If we are asking unusual questions, I will ask a question about the health segment because you have given us numbers, you're talking about optimization, but if I'm not mistaken, I haven't seen the quantified result of that segment or maybe I missed it. Maybe it was not on the slide. Actually, this was not on the slide.
What I can tell you is that we are happy about the double-digit margin in that business area. We believe that there is a lot of room for improvement there. The top line is going up. The margin is going up as well. We are on the same trajectory as we were last year in the health segment. There are no further questions. I will just hand over to the CEO to close the conference.
I would like to thank you once again for your attendance. You have noticed, PZU has reported solid results. This is a consequence of our approach. We invest into improving our effectiveness, our operating model and our fundamentals. Of course, we do invest in promising areas. Maciej, I would like to thank you and to congratulate you as well.
Thank you. We would like to invite you to the next conference and to our AGM. Thank you.