56. Transactions with related entities

56.1 Key management 

The PZU Management Board Members and PZU Group Directors are assumed to be the key management of the PZU Group.

In 2020 and in 2019, the PZU Group companies did not grant any loans or similar benefits to members of their key management.

Compensation of the key management and members of the PZU SA Supervisory Board

The compensation paid to members of PZU’s key management staff (PZU Management Board Members, senior managers and Supervisory Board members who discharged their duties for at least one day in 2020 and 2019) is presented below. The figures are presented in thousands of PLN.

In 2020, PZU Management Board Members were paid part of the benefits for 2017-2019 under the variable compensation system. The payout of the remaining part of the bonus for 2017-2020 may be made in subsequent periods. A provision has been recognized for these benefits with the total amount of PLN 15,688 thousand as at 31 December 2020 (including the employer’s burdens; PLN 11,791 thousand as at 31 December 2019). 

56.2 Related party transactions concluded by PZU or subsidiaries on non-arm’s length conditions

In 2020, neither PZU nor its subsidiaries executed any transaction with their related parties which were of material significance individually or collectively and were executed on non-arm’s length conditions.

56.3 Other related party transactions

At the stage of acquisition of the shares in Alior Bank and Pekao, respectively, PZU filed with KNF the Representations on Liabilities referred to in Article 25h(3) of the Banking Law, according to which, acting as a strategic investor, it should ensure, without limitation, that:

• The Banks will be managed in such a way as to maintain at all times liquidity, own funds and solvency ratios on a stable level as required by the law, guaranteeing the Banks’ ability to satisfy their liabilities;
• appropriate capital support without undue delay in the event of a decline or threat of decline of capital adequacy ratios or liquidity of the Banks below the level required by the law and regulations and recommendations of Polish banking regulatory authorities. Each support for the Banks, however, requires PZU’s analysis aimed to maintain the trust to PZU, through maintaining, even in a crisis situation, a high level of solvency of PZU and the PZU Group as a whole;
• as part of the powers vested in PZU as a shareholder, all decisions pertaining to dividend payout and reinvestment of the Banks’ profits will take into account the Banks’ development needs and stability and safety of the funds deposited in the Banks by their clients. In particular, in a situation when the Banks’ liquidity or capital position required by law or recommendations of competent banking regulatory authorities for the banking sector in Poland are at threat, no dividend will be paid out, and retained earnings will be allocated for increasing the Banks’ own funds.

56.4 Transactions with State Treasury’s related parties

Transactions with subsidiaries, joint ventures and associates of the State Treasury were predominantly non-life insurance agreements, life insurance agreements and investment contracts and banking services. Such transactions are concluded and settled on terms and conditions available to customers, who are not related parties. Receivables from and liabilities to parties related to the State Treasury under insurance contracts are usually short-term.