40.2 Distribution of the parent company’s profit

As regards distribution of profit for 2020 and previous years, only the profit captured in the PZU standalone financial statements prepared in accordance with PAS is subject to distribution.

40.2.1.1. Distribution of the 2019 profit

On 26 May 2020, PZU’s Ordinary Shareholder Meeting distributed PZU's net profit for the year ended 31 December 2019 totaling PLN 2,651 million by earmarking:

• PLN 2,644 million as supplementary capital;
• PLN 7 million to the Company Social Benefit Fund.

The proposed profit distribution complied with the stance of the KNF expressed in its letter of 26 March 2020 and sent to insurance and reinsurance undertakings in which KNF indicates that having regard for the current situation involving the epidemic announced in Poland and its possible further adverse economic consequences as well as their expected adverse impact on the insurance sector, the regulatory authority expects that insurance undertakings retain the entirety of profit earned in previous years, notwithstanding the actions previously undertaken in this area.

In addition, KNF has emphasized that it is advisable for undertakings not to take other actions without making arrangements with the regulatory authority, in particular, actions falling outside the scope of their ongoing business and operating activity that could lead to weakening their capital base.

40.2.1.2. Distribution of the 2020 profit

As at the date of signing these consolidated financial statements, the PZU Management Board has not adopted a resolution in the matter of the proposed distribution of the 2020 profit.