Reinsurance protection in the PZU Group secures insurance activity, limiting the consequences of the occurrence of catastrophic phenomena that could adversely affect the financial standing of insurance undertakings. This task is performed through obligatory reinsurance contracts supplemented by facultative reinsurance.
PZU consciously and adequately protects the Company’s financial result against the results of materialization of natural risks, e.g. severe storms, floods, droughts or fires, associated with, among others, the climate change. For this purpose, the PZU Group runs, among others, periodic analyses of the non-life insurance portfolio for its exposure to natural disasters. The portfolio is divided into zones with specific degrees of exposure to the risk of floods and cyclones has been introduced. Each such zone is assigned a value of potential losses. They correspond to the severity of the given phenomenon and, consequently, specific probability levels. On this basis, as part of the annual reinsurance cover program design process, the distribution of the level of possible catastrophic loss is estimated.
On the base of the reinsurance treaties it has entered into PZU limits its risk related to catastrophic losses among others through a catastrophic non-proportional excess of loss treaty. The risk related to the consequences of large single losses, in turn, is mitigated under non-proportional reinsurance treaties to protect its portfolios of property, technical, marine, air, third party liability and third party liability motor insurance.
PZU’s risk is also mitigated by proportional and nonproportional reinsurance of the financial insurance portfolio (e.g. guarantees, commercial credit). PZU’s reinsurance partners have high S&P ratings. That evidences the reinsurer’s robust financial position and affords the Company security.
PZU’s inward reinsurance business involves the PZU Group’s other insurance companies. As a result of the exposure to protect Baltic companies, Link4 and TUW PZUW, PZU continues to generate a high gross written premium by virtue thereof. In addition, PZU generates gross written premium on inward reinsurance on domestic business through facultative and obligatory reinsurance.
The outward reinsurance treaty entered into by PZU Życie protects the company’s entire portfolio against the accumulation of risk and individual policies with higher sums insured. Reinsurance partners have high S&P ratings. That evidences the reinsurer’s robust financial position and affords the Company security.
The PZU Group’s other insurance companies, i.e. Lietuvos Draudimas, Lietuvos Draudimas Branch in Estonia, AAS Balta, PZU Ukraine, LINK4 and TUW PZUW have reinsurance cover aligned to the profile of their operations and their financial standing. Every material insurance portfolio is secured with the appropriate obligatory treaty. Reinsurance cover is provided for the most part by PZU, which transfers a portion of the accepted risk outside the Group.