Powszechny Zaklad Ubezpieczen SA

WSE:PZU

Earnings Call Transcript 2020-Q3

[Tomasz Kulik, executive]

[Technical Difficulty]

And we'll talk about how this looks with respect to the market, we'll talk about our financial results, and then we'll recap in terms of the strategy, which is coming to an end at the end of this year. So let's go ahead and take a look at our main accomplishments.

If we look at Q3 of this year, this is yet another quarter in which PZU has proven itself to be pretty resilient with respect to the various turbulence on the financial markets as well as on the insurance markets.

This is a quarter in which we generated a very good result despite the pandemic. The Q3 result is PLN 190 million. It's slightly higher year-on-year despite the demanding, challenging situation, in particular, in the banking sector, the additional provisions, the additional impairment losses and lower interest income meant that contrary to the insurance segment, where we had increases of some 12%, we have posted a slowdown.

So if you take in consideration everything together the total sum of all of our segments, this means that the result comes in at this level. So even though we're growing, having in mind the various health-related challenges, we've been able to grow despite those challenges.

So if you look at the profitability in life business, and in the non-life business, primarily in the motor section, we can say that we're able to generate high returns on investments were 3.9 percentage points above the risk-free rate.

So we have a large amount of safety. And we have a strong position, capital position, which is measured by Solvency II, which is nearly 260%, which is a very safe level. So if we look at the profitability of our capital, and I would want to emphasize one thing here.

The return on equity, even though it's very high. Having in mind, this result, it's in excess of 20%. It has been generated on a capital base that has grown because the dividend has been suspended in terms of its payment. PZU has recommended this way to Polish FSA's recommendation. And this was a letter written by the Chairman in March of this year.

And so we suspended the dividend payout. And that means the capital base where we measure the ROE is higher as a result. If we look at the market share, both in terms of individual life insurance as well as with respect to periodic premiums, we've been a beneficiary of higher renewals. These are the major events with which we've run into in Q3.

Once again, we would like to look at the 3 quarters on a year-to-date basis. This is not the first quarter during which we are grappling with the following situation, where we have very good underwriting results, insurance results, and they're slightly offset by what's happening in the banking sector.

And so the result we produce have reported after the 3 quarters -- at the end of the 3 quarters, which is PLN 1.2 billion. If they were to be cleansed of the nonrecurring events, which we had in Q1, Q2, we could say that the normalized result is growing year-on-year by some 17%.

The one-offs that I have in mind are impairments on assets identified during the process of acquiring the 2 banks. And then we also have additional provisions that have been basically recognized by the PZU Group.

If we look at our core business in this period, we can say that we have big growth in excess of some 20%. So the situation is very good. And we can look quite optimistically -- 24%. So this means we can take a pretty optimistic view of what's happening in the entire 2020 year so far. If we look at sales now looking just at Q3 itself, in terms of sales, we can say the following.

Even though we're facing challenges linked to new sales, the challenges linked to the declines in new car sales, the number of new and used cars that are being registered with the Department of Motor Vehicles, which talk about the potential and the insurance -- motor insurance market, we've been able to generate pretty decent sales results.

So our gross written premium in total, was PLN 5.6 billion in Q3. So we can say that we're at the level we had in 2019. Even though we're less accessible, the ability to contact, to have interactions with new clients this quarter was totally different and incomparable with Q3 of last year.

So if you look at the main building blocks. So if you look at life insurance, we can say that the 3% growth we see here, is primarily in the individual insurance business. This, in turn, has led to high market share, PZU life in Poland. We have a 42.4% market share which is an increase of nearly 3 percentage points year-on-year.

On the other hand, we have the situation that I mentioned previously, which is on the non-life side of things, where we've posted declines in sales, in corporate business as well as in individual business primarily, these sales pertain to the motor business, so motor own damage and motor TPL.

This was offset to a certain extent by large growth in the sales of apartment insurance, residential insurance for SMES, ADD insurance for physicians. Despite that -- despite the good situation we have in the non-motor insurance business, the overall non-life business has a minus 3%.

So our international companies have basically been flat year-on-year, which means but this is -- we have the level of premium we have. So we have PLN 5.6 billion.

At the same time, we've seen pretty strong growth in health business. So we've grown both in terms of the subscription business as well as fee-for-service as well as an insurance part of our health business.

And just like in the life portfolio, we've been able to encourage our customers to buy not just protection insurance but also to purchase medical insurance. So we've been able to add a large number of riders. If we look at our fourth business segment, so assets and asset management through our TFIs, what we've been able to achieve is a pretty big success.

So our assets under management has grown, while the market has constricted. We could illustrate the situation in the following manner. PZU is growing. So our TFI has seen an increase of assets by PLN 600 million, while the overall market shrank by some PLN 9 billion. We continue to cooperate with banks, and that gives volumes of business, both to ourselves to PZU as well as to the banks.

So if you look at the profit of individual business lines, we can say the following things. We have a high result, ROE of 20.4% despite the fact that the dividend was retained.

And so basically, the denominator has increased. So if you look at life insurance, we have an increased profitability. We have greater profitability in non-motor business as well, especially in the corporate segment. We had some challenges linked to large claims, which we encountered in September, primarily.

So we can see that the results were very good. Our costs were below the level target in our strategic plan. So under 6.5%, so the level that we had in Q3 was 6.3%, the cost ratio with a very safe capital position. So when I think about the capital position, as I speak about it. Once again, I would like to reiterate 2 things. The first one is that at the unit level PZU, PZU SA, PZU life and PZU as a chain, PZU and consolidated, we have a very high level of solvency, and this is something that's without precedent.

I would like to indicate one thing. This is according to the economic balance at the end of Q2. We report our solvency position with one quarter lag. Having in mind how we convert our accounting results into economic results, the solvency at the end of Q3 is higher, and we report that at the proper time.

This enables us to think quite positively about the distribution of profits for 2020 and the payout of dividends. Of course, we're in close dialogue with the regulator. But having in mind the levels of safety we have, we believe that the Polish FSA will share our optimism in this field.

When we talk about safety, we have a safe investment portfolio and we continue something that we started some time ago, so greater diversification, greater safety. And we have fewer equity instruments. So we have a recurring result, highly recurring result despite the situation we have around us and with the interest rates falling substantially in Q3 of this year compared to Q3 of last year.

Let me say a couple of words. About the development of our business. It's good to have a point of reference how the market has grown and against that background, talk about PZU, which -- in terms of life and non-life insurance, which is the clear leader.

If we look at some of the trends and what's happening in non-life insurance, this is not a slide that fills us with optimism because it shows declines year-on-year. As we look at the motor business and the non-motor business, in the former case, we see rather profound decline minus 7% year-on-year.

The second one is minus 4% on the non-motor insurance market, but please have in mind these are the loss profound declines we've seen in many years. So it's a challenging market if we think about further growth.

Despite that, I would like for this to ring out, we have sales levels at a similar level year-on-year. So if you look at the average transaction price for TPL and the number of policies, we see that the number of policies has fallen in terms of non-motor, so accident insurance, travel insurance, for obvious reasons, we had the lockdown. Now we have extensive restrictions but we are behaving accordingly.

And it's very difficult to imagine that Poles will take vacation on a mass basis. So there is a certain amount of correction here. We have a similar correction. If we look at the financial insurance market, guarantees for these type of products having in mind, the situation we're grappling with has suffered.

And so we do post declines year-on-year. This has been offset to a certain extent, by Class 8 and Class 9 insurance, Class 13, so general TPL insurance, where we have 0-plus growth rates. We have 33% nearly market share while at the same time, accounting for more than -- nearly 50%, so 47% of the technical result of the market.

So if you look at our sales and the parameters for sales here. As we've said, the gross written business in non-motor business has fallen. So the market fell by 5%. So in terms of leads, contacts and conversions into new sales year-on-year, we were down, but this has all been offset by a higher percentage of renewals in the portfolio.

So this is a positive aspect, which means that the negative rates are only at the level of 5%, having in mind that in second quarter, third quarter of this year, new sales of MTPL and the dealer channel, we're down some 10% new registrations, of course, other areas, it's down by nearly 5%. And if we look at non-motor business, as I mentioned, we're growing 2% year-on-year. And this is an area where we're particularly satisfied.

If we think then about life insurance, Q2 is the last quarter for which we have official statistics. Looking at the development of the market. So we had a decline in the life market. The market shrank by 4%. This decline was almost entirely caused by investment insurance with single premiums. And having in mind, how -- or the structure, the composition of PZU's portfolio, thanks to robust sales, not only of our core product, group and individual continued business, but also thanks to rising sales in individual business, we were able to grow despite the fact that the market was shrinking.

So we increased our market share to an excess of 42%. And in the periodic premium market, so at the end of Q2, we have a market share in excess of 45%.

We also saw some growth for single premium products at the end of Q2. We're the leader, not only in terms of incremental growth but also on an absolute basis. If we think about PZU life's market share, at the end of Q2, we're substantially above the average in terms of our profitability.

So PZU has a profitability in -- 10 percentage points higher than the overall market. The overall other market is around 14.5%. So we have some 55% of the technicals result out of the market. So if you think about how we've grown, on the life insurance side, we have stable sales in group business and individual continuation were stable despite the pandemic and despite the limitation of employee benefits or incentive perks that employers give to employees.

And despite rising unemployment and the loss of customers -- so attrition of customers on a drip basis in the group portfolio. So we worked on driving up the number of products sold per person, in particular, in health and even though there was some slowdown in Q2, we have returned to the growth trajectory, enabling us to look optimistically, and having PLN 1 billion revenue in 2022, which is a strategic target.

So we continue to offer or strive to offer additional solutions to our clients. We're promoting a new rider, which is an accident insurance product for individual continuation business. And so these are things that enable us to have a comparable level of sales year-on-year.

So if we think about individual insurance, we see big growth in bancassurance with Bank Pekao and other banks in the group. If you look at protection business, single premium products who are for customers of banks like cash loans, mortgage loans. So we've seen quite a bit of growth in this channel. We've also seen big onetime contributions to retirement accounts. So in Q3, our sales were very high at a record level.

Now as we turn our attention to health, we continue to do what we've done up until now, pretty consistently. We're growing not only through riders, insurance riders but we're also growing our business in terms of subscriptions, fees for service. We're gradually growing the number of contracts in force, and so we're expanding our offering and coverage in terms of specializations, hospitals, physicians, entities cooperating with us. And we're emphasizing strongly our own outlets, which enables us to keep the average cost of a single service at a similar level year-on-year. So the development of this business is in line with our targets, and our profitability is above the strategic target.

If we look at assets under management and development of cooperation with banks, many things have already been said, but I'll reference 2 things here.

We continue our work in terms of cost synergy. I'll remind you that in our strategy, we wanted our cost synergies as a result of cooperating better with banks. And being a beneficiary of more cost competitive will give us savings of PLN 100 million. Today, we can say that the savings are approximately PLN 180 million. So we have beat the target we set for ourselves substantially.

If we look at AUM, we're growing. We have -- in PZU SA, we're launching new products. We have a couple of different retirement accounts, IRA and IKZE, then we have group pension schemes.

So even though the assets have fallen in our PTE as a result of what's happening on this stock exchange and as a result of the slide mechanism because we have additional pension products. We have a large number of assets under management, and that figure is growing. How does this convert into our financial results? We talked about sales. So I want to repeat my discussion of our sales, but both on a quarter-on-quarter and year-on-year basis, things are quite stable.

So we can say that we have big profitability on the life side. It's slightly smaller on the non-life side. So this means that from the point of view of claims and benefits, of course, net of the investment products, whose result doesn't affect our profitability.

So as we look at that level, we can say that we're -- we have highly comparable results year-on-year. But from the point of view of profitability, especially on the life side, quarter-on-quarter, we can see that we've improved substantially. This improvement has been achieved with similar acquisition expenses.

This means that the cost structure is essentially the same, the cost mix. We're pleased by admin expenses as a percentage of premium falling. At the end of Q1, beginning of Q2, we had big expenditures linked to shifting PZU from a classic model -- business model to a remote business model. I'm not only thinking about our employees, but I'm thinking about our sales network. Basically, our sales people are contacting with clients, new clients in a totally different way from up until now.

So we've been attempting to move that traffic into e-commerce, if I can use that term here. And so we're promoting the solutions we have, our remote solutions to a greater extent. My PZU as well as inPZU for the purposes of making investments. All of this has enabled us to net of the bank sector, we have a very good result of PLN 935 million.

That's our profit -- operating profit, which is a growth year-on-year. Unfortunately, we have a decline on the banking side, which is more than 40% decline. Despite that we're above the level in 2019. What we're pleased by, as I've mentioned, is that we have a high profitability in terms of the non-life business. We -- in both segments, we have return of profitability. We have a slight deterioration in the non-motor business. And this was the result of single claims, which took place in September in the corporate segment above all. In terms of our mass insurance segment, we're a little down in terms of profitability year-on-year.

And this is because of hail and torrential rain in the summer period. And this meant that we had higher -- we had a higher combined ratio in this particular segment. So it's 22.5% profitability. And so we have slightly different components. We have, by higher profitability in group, smaller profitability in individual insurance because of bancassurance being bigger, we have different levels of commissions. So the overall impact is that in life insurance year-on-year, we have the same margins year-on-year. Similarly, this applies to our international companies.

If we look at a deep dive approach, on the non-life insurance and here, what can you say is as follows. Well, many things have already been said. What I would like to emphasize is when looking at motor business, we see big decline in new sales and new registrations. We see a collapse on the lease market. And this has translated into smaller volumes of motor business.

At the same time, we had a lower frequency of claims. So it's down some 25% in Q2. In Q3, we tried to come back to a normal functioning. We were benefiting from the lower frequencies of claims, but the decline is roughly 13% -- almost 13%. This means -- well, basically, there was also changes in the Euro-PLN exchange rate, which meant that spare parts had a different cost base.

So that means we've had lower combined ratio in motor business. In non-motor business, as I mentioned previously, we did have a poor profitability. We've been trying to change our mentality and depart the idea from a classically focusing on the profitability, but given policy, we're thinking our client in this segment.

We want to have a profitable client in terms of the product basket that the client has. We're thinking about customer lifetime value here, which means that we're not going to penalize clients so much for having higher loss costs in specific products. We don't want to squeezing out of the portfolio, if there's some sort of event in the ROE, we want to think about having long-term relations with our customers. If we move on to life insurance, as we -- as I mentioned previously, especially in group and individual continued insurance in Q3, we see a lower loss ratio in paramedical.

So hospitalization, surgical operations, critical analysis, we see lower levels of dismemberment claims, lower benefits because of childbirth. In Q3, we did have higher mortality figures, which means that the loss ratio of death risks is worse and had a bigger impact on this segment. It was a negative impact of 2.7%. So if you look at the individual insurance, as I mentioned previously, the margin fell because of the cooperation with banks where they have higher volumes, but at the same time, they have a higher commission rate, which does have an impact -- a direct impact on the margin.

Having in mind the pandemic and the loss ratio in our portfolio, we have decided to speak quite extensively on the subject. In Q3, we see an increase in the number of deaths in Poland by 5%. This has affected the profitability of our portfolio. So in this risk, our portfolio has seen an increase of 2.7%.

But at the same time, we've benefited by other risks whose total sum from the point of view of profitability in group business and individual continuation. So year-on-year, this had a positive impact. So that means that the overall profitability was higher.

But of course, we're fully aware that giving consideration to the further development of the pandemic, we're going to have to grapple with rising numbers of deaths. So there's been a lot of public speculation. What could this mean to PZU? And for that reason, that's why we put this slide in.

It seems that these are fairly obvious things, but I think it's worth addressing them directly because they enable us to understand, comprehend better how this pandemic can affect the results up until the end of the year? And what that will mean for the consolidated results and for PZU life's result on a stand-alone basis?

Over the last 3, 4 weeks, we've seen an increase mortality. And so you can see that on this graph, on the left side, well, this shows that death is in the age group, 65 and above. If we look at the age group, 65 and below, both with respect to women in men, please note that we have the 2 curves.

And they're basically at the same level as in previous periods. So we can say that this pandemic and its impact on mortality in our portfolio primarily has an impact amongst customers in the age group, 65 and above.

This is perhaps somewhat intuitive. And so if you look at that graph at the bottom of the page, you look at our normalized statistics in terms of the development of mortality in this portfolio compared to what we're observing today. We can see that in the lower age groups, mortality has even fallen.

Why is this important? The age and product mix have an impact. How we will recognize additional costs in Q4 based on benefits paid due to a higher number of deaths in Poland and in our portfolio. We have estimated this range as an additional PLN 50 million, PLN 150 million net. This is a range that we should add to the normalized result the PZU group normally reports in Q4. But in terms of the final value, many factors will affect them. And here, we can start to speculate and guess how the coronavirus will develop. How many new daily cases there will be and how many infections there will be, how many hospital beds will be occupied because it's not only death but also hospitalization where we're paying benefits.

We should be aware of the fact that this growth as was the case in Q3 will be offset to a certain extent, I'm looking for a good word to describe this, by savings on other risks, what other risks do I have in mind?

We talked about this on the previous slide, where we showed you a very positive impact of paramedical riders risk as like dismemberment on the portfolio, even though we see the growing extent of the pandemic and the higher number of deaths in Q3 of this year compared to Q3 of last year in the overall population.

So this is -- these are things we're going to look at in Q4. So the additional cost, we're ready -- we're aware that this will transpire. It will be affected by the level of mortality, the number of hospital beds taken or occupied and then we'll look at the ongoing development of daily cases of infection as well as deaths.

So this will be partially set off by what's happening in our other insurance risks as well as the release of mathematical provisions when we can ascertain that a customer has exited the portfolio. So we want to emphasize -- this quite strongly.

Actually, we're not able to tell you anything more specific. We do not know what the situation, how the situation will proceed. This is a short observation. We're not able to give better estimates. But having in mind, how important this parameter is to assess and evaluate our profitability, we decided to give you this information as an input.

If we look at our investment portfolio, this is another important element. Here, we can say that nothing has changed between the quarters. We've decided that since we're doing things well, we're going to continue doing them well. And we've not changed our philosophy nor have we changed our approach. These are debt portfolios, both in terms of treasury and corporate debt.

As I mentioned previously, we have tried to limit our concentration exposure in terms of individual investments where we have an elevated risk, if I could mention it this way -- put it this way.

So we are trying to pursue our investment policy in a very responsible way, having in mind volatility and unpredictability of the situation in which we find ourselves.

If we look at the performance, despite the fact that interest rates have fallen, we have very good yields in interest.

So the measurement of our instruments denominated in euro has grown. We're not playing exchange rates. Basically, the instruments in euro offset our provisions denominated in foreign currencies. And so we have certain positions denominated nominate in foreign currencies, and that enables us to offset the costs that would show up had we not engaged in currency matching in terms of our asset liability matching policy. So our investment products had slightly worse results in Q3. There was quite a bit of growth on the stock exchange in Q2, so our customers had higher rates of return. In Q3, things were flatter. And that's why the numbers are a little bit less comparable, but better than last year.

If we look at the other elements we had the same thing that we always have in Q1 and Q3 where we have recognition of FX differences. In terms of our investment properties, let me remind you that in every first quarter and every third quarter, this takes place because our appraisals are prepared 2 times a year, at the end of the year and at the end of Q2, and that means that the exchange rate differs from the appraisals, real estate at premiums differs from what we have on the spot markets. And so in this year, we see that there's a negative difference, then we recognize an additional cost in Q1 and in Q3, which is then reversed to the same point, which is the FX rate dominated in the real estate appraisal at the end of the year and Q2.

Now a couple elements about changes of 10 basis points. So if you look at the admin expense ratio, which is 6.3%, well, we have in mind personnel costs. There's wage pressure and we also have provisions for recreational leave. It's very difficult to demand that employees take their holiday leave. It's a difficult period to expect that, so the entire organization has focused on changing and retooling the processes in the company, and that's why the holiday leave provisions have grown.

We also see costs falling with respect to Q2. These are costs related to additional payouts due to the COVID situation. So we've continued to do. We continue to invest, make -- incur capital expenditures for the digital ecosystem, I think that's the best slogan. We want to be accessible to our customers in every single channel also in the digital channel. As you know, PZU has not been identified as a leader in the digital channel. COVID has compelled us to move in this direction. So we're shifting the organization, aligning the organization to be able to distribute products to customers through the digital channel.

So if we move on to solvency, we're at very safe levels, nearly 260%. And if we look at this at PZU SA, PZU life, the levels are higher. This is the result at the end of Q2. Q3, we'll see additional growth in terms of solvency.

And as I mentioned, this should give us a lot of optimism in terms of fulfilling the expectations of the Polish regulator in our ability to share profits with the shareholders by paying out dividends for 2020.

The last slide in this presentation is about the execution of the key metrics of our strategy. We've talked about all of them. Maybe I just have a couple of words of commentary to add here. As I wrap up one of the last quarters of when it's in force. So we're profitable, but we're growing a little less -- a little slower than we wanted to. So if we look at growth and profitability, we prefer profitability over growth. And this is can be seen in our admin expense ratio and also in terms of how we think about investments if we look at the contribution of various business lines to the consolidated result.

We have talked about investment insurance. We're pretty much online. We want to grow in terms of magnitude. That's not been successful. Despite that, we've been able to get the contribution to the consolidated result that we wanted at the level we had anticipated.

We wanted to generate PLN 200 million, and we did. And so if we look at the strategic target for rolling quarters from October of 2019 until September 30, 2020, we see that we have PLN 973 million in sales. So we're very optimistic as we look at those levels, also in terms of the margin in the health business, if we look at banking assets, we can say that we hit our target, but we're far from our expectations in terms of its contribution to the consolidated result.

So the total picture in terms of ROE is very good, like 9.3%. If you net out the nonrecurring events, we are above 20%. And having in mind how much the environment has changed, I'm not talking only about COVID, but I'm also looking about interest rates and how they have affected our ability to replicate high yields through PZU and its international companies and also through its banks, we believe this is a very high result.

And this is more or less where I would like to end our discussion of our results. I understand that we do have some questions. And so now I would like to try to respond to these questions. So I do see that we have a number of questions.

[Tomasz Kulik, executive]

You've recognized PLN 200 million of provisional dividend in your solvency ratio. So this is a normalized level of assets or own funds. In terms of your capital position, could you make a comment on this?

Yes, of course, we can. Let me say once again, 2 things. Please remember that what you see, 258%, this is at the end of Q2. From the point of view of the results after 2 quarters, so the consolidated results were PLN 300 million, so PLN 200 million is at the value historically speaking, that's the classic amount of the dividend to be paid out. With respect to the consolidated results, there's no surprise here. This is a matter of normalizing own funds to ensure we don't want to show this all at once in Q4. So we did this on a distributed basis.

The next question. PZU has a very solvency ratio. If the regulator alters its expectations in terms of the dividend, will you consider paying a dividend for 2019? Or will you retain it to support your M&A activity in the banking sector?

I'll respond to this question as follows: what we would like to do. We'd like to share the result with our shareholders to the greatest extent possible, not only in terms of the regular distribution of 2020.

And I can say as follows: 2020, I've talked with some of you on one-to-one meetings. This is a year in which the stand-alone result will be higher than the consolidated result. So probably, having in mind our approach to the stand-alone result. Why? Because PZU SA pays dividends on a stand-alone basis, and that's what is distributable.

And this is only referred to the consolidated results. So we can say that if that's going to be the case at the end of the year, and everything suggests that, so with respect to the consolidated results, we're going to want to pay out.

We want to follow the current dividend policy. And if that happens, we'll pay out more than 100% of the consolidated result. We remember about 2019. What I can say is as follows: we're in the course of talking with KNF also about that year. And I don't want to promise any of you but this is exactly what happened 100% because I don't have that type of persuasive power.

We are keen on this. We understand this subject. And we don't need such a strong balance sheet. We don't plan any spectacular acquisitions. And even if we were to do so, the level of own funds we have is totally sufficient to engage in any type of transaction. So we'd like to address that. We also want to look at 2019 in this framework, as I've mentioned.

So the next question what was the scale of claims in corporate segment, were they pandemic claims?

No. They were claims relating -- they were non-life claims unrelated to the pandemic. They were unrelated to the growing credit risk in terms of the guarantees we've given. The impact of these claims on the corporate segment, this was in September. This is roughly PLN 50 million.

The impact that you've assessed of PLN 50 million to PLN 150 million, that's based on what number of deaths in November and December?

Well, let me respond to this question as follows. I would not like to give a precise number. where we're talking about 567 events per day because that's not sensible. What I would like to reiterate here. The final -- please do not -- that was just a number that popped into my head. It's not related to anything. Please don't attach any importance to that figure. And please do not reflect on that number at all. The final value of benefits to be paid will be driven not only by the number of deaths, it will be offset by other risks.

And so I would very much want to sensitize you to that fact. We're talking about older persons, so people age 65 and above, they are our clients and individual continuation to a greater extent as opposed to individual life insurance clients.

So the payment of benefits means that we can also release mathematical provisions. So the net impact is not equal to the number of deaths per day times the sum insured. You can't treat it this way. On purpose, I'm not giving the values because we do not divulge our plans or figures about individual years or about individual insurance lines.

Since we don't have sector results for Q3, let's talk about Q2. There was a decline in the premium at PZU by 12% on the market, it fell by 7%, why the PZU's market share fall so much?

I don't remember well. If we're talking about the overall segment of non-life insurance are only motor if we're comparing things like-to-like. But responding to your question, I can say the following. In Q2, what happened in the marketplace, unfortunately, I can only regret that. It was a situation that surprised us a bit. Our competitors elected in terms of the savings linked to frequency of claims, they decided to earmark those funds to acquisition.

So to speak succinctly, prices were adjusted downwards quite strongly in that quarter. We were a little more reserved and reticent on that subject matter. Let me remind you the declaration I made some time ago. When we talk about profitable growth or growth at all costs, we're actually much more involved in profitable growth. We don't believe that it makes any sense to buy the market. Why?

As opposed to other products, the transaction here is for annual periods, the customer pays a premium and assuming that nothing happens, we'll see the customer in a year. So the adjustment of a price can take place 12 months after the purchase of the insurance. Now we have a pandemic.

And I mentioned statistics, and I had a reason for doing so for Q3 about frequency of claims. Because frequency of claims were coming back, but they were coming back gradually. In July, we still had major differences year-on-year. In August, they weren't so deep. And then in September, year-on-year, we were more or less at the same level. What happened in September?

Well, in September, the market had a pretty big loss in terms of the price that some of our competitors were willing to freeze or lock in place for another 12 months. And sadly, if the pandemic comes to an end, and it will come to an end. The question is only when and how? If frequencies come back or revert to the levels we had in September.

And if we add to that rising costs of spare parts because spare parts costs have grown, that means the cost of repair of cars has also grown by a double digit figure, then there's no technical count that can actually sustain that change.

I can only regret that this has happened, but it did happen. And so we can address this as follows. So if we return to normal development of insurance policies that means that our colleagues from the market who decided to be so aggressive in terms of pricing, means that they'll have a dramatic outcome. We don't want to conduct ourselves in that manner.

We believe that in terms of our responsibility and our duties to our shareholders and to our customers who don't really understand what's happening on the price side of things that we owe them a much more accountable and responsible approach.

So I'm going to remove some of these questions. There's a rather large number of questions.

And so is PZU considering the payout of an overdue dividend from 2019 in 2021?

I already respond to the question. We would like for that to happen.

What are your assumptions on mortality in November and December?

I think we've already explored that topic quite strongly. But I can say they're based on growing numbers of the first 2 dimensions. But for obvious reasons, I don't want to talk about specific levels. Each one of us has his own curve or her own curve in their head. And so whether or not the epidemic will be, have a curve in the form of a pyramid or the litter end? It doesn't -- I mean, those are all things that people have in their heads.

What COVID's impact be on the life and non-life business in 2021?

It all depends on how things materialize. There's such a quantum of things we don't know. But this would be a much more academic discussion. I'm not sure if it's sensible to talk about it. What I can say, as we anticipated the second wave, I think the second wave and its depth has surprised us to some extent. So a lot of attempts are being made now to curtail the impacts of the sort of lockdown. In September, we thought that the lockdown wasn't going to take place. Now it's kind of a rolling lockdown. So I would not like to speak to what's going to happen in 2021 because I can't tell you how COVID will develop. We have tens of scenarios, which show totally different pictures. And so I can run the narrative in such a way, what will happen if something happens. But I couldn't respond to this question because we have one central scenario -- we don't have a single central scenario. That would only be a matter of somehow falsifying the narrative.

So if you look about -- we already talked about the upcoming weeks of November and December. Is it possible? When you present the results in Q4, could Madam President be present?

Madam President was present during the prior presentation for the press. But having in mind that were one of the important elements of the market in terms of coronavirus, unfortunately, Madam President wasn't able to come to this specific meeting because she had other obligations. I don't want to speak not on behalf of myself, I'm just saying that Madam President was at the first part of the meeting.

There's a question about the current motor price framework. We see average prices falling. As I've mentioned, when I look at Q2, we have a moderate appetite to enable us -- to allow ourselves to be sucked into this. Well, so we don't want to drive that spiral downwards. And so we want to avoid that entirely.

So we've addressed this question as well, the lower profitability in corporate business in September because you have mentioned that these are one-offs, what do they come from? What part of the economy? And what was the global amount?

I think I've already reacted to that. This is non-life insurance in the corporate segment, roughly PLN 50 million was the impact on the results in September.

What is the outlook for the market in motor, non-motor and life?

Well, fortunately or unfortunately, the outlook depends on what's going to happen in the economy on a broad base.

I think I can respond to this question in the following manner. In the summer of this year, we had a following look at the economy. We were of the opinion that after the adjustment this year in terms of GDP, that the adjustment might be around 3.5 percentage points.

Then next year would be a rebound in terms of capital expenditures and consumption with respect to a shallower year of 2020. And so we would have a sales decline of 3% to 4% And then we will have a rebound in the following year, and that we would see faster growth rates 2.4, 2.8 to 3 percentage points.

Today, everything has been shifted in time with respect to the vector, will the vector be a 6-month vector, a 9-month vector? Today, it's difficult to discern. We're closer to the hypothesis that it's a 6-month vector. The information concerning vaccines are positive. We want to somehow charm reality and believe that in a few moments, the coronavirus will be overcome, and we want to be able to come back to a new normal, whether that happens or not, we'll see.

When can we anticipate to see your strategy for banking assets along with your strategy for the overall group? The President of Aviva said that it's coming back to the motor business because there's higher profitability. That's impossible.

Well, there's higher profitability. But not at the expense of not having higher premiums, lower frequencies. That's where it's happening. And this is linked to what PZU has been doing. We -- in terms of falling prices, I think if we said everything that we want to say, basically, it's a difficult market, a challenging market as it was a few years ago when Aviva initially entered the direct business and then a little bit more broadly in other channels. What I can say is that I'll cross my fingers for our colleagues, I hope that they do as well as possible.

And I hope they joined PZU as a voice of reason. Because we can say that some people don't have that common sense view.

When do you plan to publish the strategy? Madam President talked about the first quarter of this year.

Well, we've decided to push back the publication because of the pandemic. We want to understand better what's happening at the end of the year. We've come to the conclusion that publishing a strategy in the very middle of the COVID situation is not the best idea. So as a result, we've pushed it back to Q1 2021.

To anticipate any time of measures to curtail losses in the banking sector, are you thinking about taking over Alior Bank?

I'm not sure if I understand the question. We don't have to take over Alior Bank because it's controlled by PZU Group. We do not assume -- I'm not sure what a campaign measure to curtail losses in the banking sector would mean. But what I think we should say is as follows: the profitability of this sector is under gigantic pressure for a number of reasons. There's additional risk, credit risk, the coronavirus situation, which affects customers, which means that it's limited capabilities to service debt, interest debts -- or interest rates are down. And this is not something that will change up until the end of the year. So it's -- or even in upcoming quarters. So it would be hard to talk about a targeted campaign to change all of that.

We do not assume that any type of swift change could transpire in terms of exposure to banking assets. We want to benefit from these channels and generate higher sales in the bank channel. But how we see banking assets in the group will reflect on this subject along with the publication of the strategy in Q1 of next year.

And that's the last question that came in from the Internet. So I understand that means we can wrap up the session. If any other doubts arise in the meantime, or if anything needs a better explanation, then we would ask you to contact our Investor Relations department directly or contact me directly.

I understand that in the near future, we'll have the opportunity to see one another. I would like to be able to see one you -- one of us -- see you, I think we'll hear each other in -- during various calls and conferences where all of these important issues can be explored further with you.

But today, I'd like to thank you very much very warmly for today's attendance. And let's hope that we'll be able to see each other in the near future. Talk to you later then. Bye-bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]