These results affirm our unwavering strategy execution, not just in terms of the overarching objective of return on equity (ROE) but also in terms of various lines of business, efficiency and profitability parameters.
In 2018, the PZU Group attained a very robust combined ratio (COR) in non-life insurance – 86.6% in Poland. This ratio underwent substantial improvement (falling 2.7 p.p. versus 2017) that was particularly manifest in the retail client segment (improvement of 3.4 p.p.). The decline in claims frequency in motor and other insurance was among the contributing factors. We will continue to toil to match insurance prices to client profiles better in a competitive market environment by utilizing and constantly refining risk pricing algorithms.
The level of, and trends in, administrative expenses in PZU and PZU Życie also merit attention. The administration expense ratio in 2018 was 6.6%, a better result to the tune of 0.2 p.p. versus 2017 and it is very close to the level we have designated as being strategic. The Group’s administrative expenses did in truth rise, but this was the outcome of consolidating Bank Pekao for a better part of the year than in 2017. Net of banking activity, the Group’s costs edged down by nearly 1% year-on-year, a solid result, especially when juxtaposed with the expanding size of the business (gross written premium hit another record by surging forward by nearly 3% year-on-year) and the wage pressure noticeable across all the sectors of the economy.
A high level of safety measured by the SII solvency ratio accompanies improved profitability; at the end of Q3 it was 245%. This ratio does not include the subtraction of the anticipated dividend. The robust results generated in 2018 make it probable that the dividend will be distributed. We strive to deliver on the promise we extended to our shareholders of growing the dividend steadily.
the PZU Group’s CFO