Powszechny Zaklad Ubezpieczen SA (PZU) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. We're pleased to welcome all of you to our earnings conference to recap the results of PZU for Q2. As was the case in the previous quarter, this meeting is being held primarily through remote communication devices. So on one hand, we have the streaming webcast. But it's also possible for you to have contact with us. At the end of the presentation, you'll be able to post questions through our website. So I believe that just as during the previous quarter, it would be good if we were to divide our presentation into 4 major blocks. We'll begin with a recap of our major accomplishments as the PZU group. We'll say a few words about what we've been doing in this quarter and how that translated into our financial results. And then we'll sum up everything with the recap of where we are in terms of the execution of the major targets in our strategy for the years 2017-2020. The entire presentation and this meeting will be run by myself, along with Mr. Marcin Eckert, a Member of the Board. So without any more unnecessary ado, let's go ahead and get started with what we believe were the most important events, the key contributing factors linked to PZU Group's results in Q2. What we would like to underscore very strongly is that we have a very stable business model, which has proven its ability to be resilient to all of the turbulence we saw in this quarter, so the turbulence linked to coronavirus. This business model was sound, but at the same time, it was eclipsed by worse than expected results in the banking sector. We've already said to you and reported to the market in terms of the impairments that we've taken in terms of the assets that we acquired from those -- from the banking sector, the 2 banking assets. So if we look at the insurance business, we can say that in Q2, we improved our profitability in non-life insurance and in life insurance, the yield is substantially above our strategic target. The strategic target is 200 basis points above the risk-free rates. This quarter we have 450 basis points. So this shows you how well we were prepared for this very turbulent time. And how the portfolio we had is more and was more of a defensive portfolio, one that endeavors on a long term to generate value. It doesn't have a high risk appetite, and we're not striving to achieve short-term profits or cash out or monetize on opportunities that can show up now and again as a result of discounted asset prices. We're trying to build our position in our consolidated results. So in Q2, having in mind the nonrecurring events we've mentioned has very robust performance. So if you look at the corresponding period of the previous year, it's grown by some 37%. And so this means that we have an ROE net of these nonrecurring events in excess of 20%, coming in at 23.1%. In fact, if we look at the top line position on the market, we're growing in terms of life insurance. This continues to be a market that's under pressure with respect to investment insurance with single premiums, having in mind the volatility. And that's point A, point B is the position of unit-linked products and the expectations that's been out there for some time now that the Polish FSA will do some product interventions, and there's some shrinkage there. We, nevertheless, are growing. We're growing quite strongly. After Q2 or at the end of Q2, we have the biggest position -- market position, market share that we've had since 2011. So it's nearly 42%. If we look at non-life, we have some slowdown in the motor market, there was less traffic. Also, tourist insurance was down. But we have growth in other types of insurance, residential insurance, insurance for SMEs, small and medium enterprises, also for assets in corporate segment. So we can say that we continue to be able to grow in those areas where we have ample margins. So Q2 was primarily the period of the pandemic. So on one hand, we wanted to build long-term value for our shareholders. At the same time, we needed to care about the other stakeholders. So I have in mind our employees, our clients, our business partners, all of those persons for home PZU is an important entity and where we have long-term relations with those stakeholders. Q2 was also a period in which we invested in digital transformation and technology. This is something that we see as an investment to build on our sustainable competitive edge. We're profoundly convinced that this will enable us to emerge from this challenging pandemic period even stronger, and we're going to be able to fix and place all of those things that we've been able to monetize to this stage and have constituted our competitive advantage. If we look now at sales, what I would like to emphasize very strongly is that we're talking about a quarter that was dominated to a large extent, by limitations in the business environment through limitations on mobility. We remember what the streets looked like. And despite that fact, PZU has navigated this period very capably. I think we can say that we've passed the exam and we've earned the top score, utilizing the top grade using a scholastic example. If we look at the business lines, in life business, we've grown our market share. We've continued to see growth, not by leaps and bounds, but within the boundaries of our appetite for group and individually continued business. So even though there have been some limitations to -- in terms of our access to customers, both corporate and individual retail as well as seeing customers not having access to all of our branches, we really wanted to have openness in our relations with our customers. And we know that those limitations did have some type of impact on us. We have a very good position in individual life. We've seen growth in protection business, 15% year-on-year. And we're a leader in terms of the periodic premium business. If we look at non-life, as I've mentioned, the declines in new sales were in motor business. We remember the limited possibilities to buy new cars. We saw that there is limited ability to transact business on the secondary market, so change -- cars to change hands. And so there were fewer registrations. So we can say, to a certain extent, this was offset by higher renewals, great retention in the portfolio, greater loyalty amongst our customers in this demanding time. Some customers tended to appreciate those players or partners in the market who have invariably been providing us customers with true value. And so our customers in Q2 really did steam this. If we look at health sector services, we continue to see very good demand, enabling us to grow year-on-year with more than 20% year-on-year growth. We're a little bit below the trajectory that we had intended to follow. But this is very strong growth in the direction of our strategic target of PLN 1 billion in revenues. If we look at our external customers, TFI PZU -- was the TFI on the market, the mutual fund management company that was capable of growing. It grew both in terms of AUM as well as attracting new assets into the portfolio. And it also saw share prices or unit prices rise, which contrasted with the rest of the market. It saw growth, while the rest of the market saw assets being withdrawn of PLN 17 billion. We worked very strongly with the banks and -- in our group, and we engaged in assurbanking as well as bancassurance. So both sides of the equation were utilized. If we look at net profit, of course, net of the impairments, it's a very high level. It's up some 38% year-on-year. But if we look at the individual product lines, we can say the following thing: in non-life business, we have a very high profitability. The combined ratio is 87.8% and so it's up some -- so 86.8%. So it's some 4 percentage points change. And so the contribution of this segment to the consolidated result is higher by more than 30% year-on-year. If we look at the life segment. We can see that in group and individual continued business, the margin is at a record-breaking level of 29.8%. And so this segment has increased its contribution by some 25% year-on-year. The growth is very large because of the higher profitability on surgical operations, permanent dismemberments, critical illnesses and health services. And so these are the type of things that were linked to our very strong activity in the health sector, health segment. So we saw a very strong yield in our main portfolio. We've already talked about that. We're 450 basis points in the quarter and 320 basis points above the LIBOR for the 6 months term at the end of June 30, 2020. We're substantially above our strategic target despite the various forms of turbulence we experienced on the market. So our costs are under control. Our cost ratio is 7.2%, with a return on equity in excess of 23%. Of course, this one a -- is on a normalized basis, net of nonrecurring events. If we look at our capital position, what we would like to underscore is the stability we have. So we have AAA capital strength. We're a company that frequently confirms its rating -- gets asked for affirmation of its rating. S&P has affirmed this reading. It's A- with a stable outlook. And what I would like -- I would like to quote something that the agency said, after the information we disclosed about the impairments we were going to take on our banking assets. The analysts of the agency mentioned that despite the impairments on banking assets, the PZU Group should in '22, generate comparable results in 2020 to what international insurers will generate and we'll maintain a capital cushion above the model that S&P uses to determine a AAA rating. So this is not just information from inside the organization. The information we're giving you has been checked and vetted by a rating agency. This basically confirms the position that PZU is a great choice in such turbulent times. If we look at the solvency ratio, which is linked to the safety, capital safety. So we've seen a very strong Solvency II position of 256%. And despite the impairments we recognized in Q2, we can say our position at the end of Q2 is very similar, 258%. We can say it's one of the highest, if not the highest in the peer group of European insurers. In Q2, the environment compelled us to review -- revise our working assumptions in terms of how we build our technical provisions, especially in the life business. As you will recall, we've had three rate cuts. And basically, we had to take that into account. If we look at the discount rate, what we call the technical rate in life insurance. And we'll talk about this later in the course of today's presentation at greater length. So we saw a positive effect as a result of a certain amount of conservatism in our provisions. And so nothing will change in this scope. Well, we have conservatism because we're cautious because we are on the safe side in terms of the distribution or the achievement of actuarial assumptions like mortality or the claims frequency, what's happening with respect to co-insurance in our portfolio. And when that is combined, with the verification of the technical rate, we were able to shore up our provisions at a level that was very close to the opening balance. So we've moved through one of the more difficult exercises that insurers have when interest rates compress. So if we look at our capital position, it wasn't affected here. It would be worthwhile to mention, as we look at our balance sheet, we have a conservative and safe portfolio -- investment portfolio, which, on one hand, enabled us to generate these results, but at the same time, we have a stable and recurring and predictable set of investment results. As I mentioned, Q2 was a quarter in which we turned our attention to a couple of different subjects. One of them was building shareholder value, and at the same time, we looked at other stakeholders. And at this point, I'd like to give the floor to Marcin, who will walk us through this portion of the presentation.

So our reaction to the COVID-19 pandemic was multidisciplinary and was on multiple fields. First thing we did was with respect to our employees, we had the lockdown. We were able to send our employees to do remote work. So we had to implement IT systems, we had in our organization prior to the pandemic. We had to increase the number of VPN connections from 2,000 to more than 12,000. And -- so virtual private networks. So at the beginning of the lockdown, it wasn't possible to buy ready, off-the-shelf equipment to do that. But because of the creativity of our IT teams, we were able to afford this opportunity to our employees. So our employees reacted well to the ability and the necessity of working remotely. The research we've done shows that 4 out of 5 employees believe that they were able to work quite effectively and would like to continue remote work in the future. So this inclines us to work on a new model of work linked, of course, to the pandemic itself, but also in terms of our plans to move into a new headquarters and some 2 years from today. So this should contribute to the efficiency of processes our organization has. The second thing is that we reacted, responded to provide safety to our clients. We want to make sure that our branch network was open the entire time. To a large extent, we were able to do so. So 98% of our branches operated without any interruption whatsoever. So we focused on remote channels of access, and we made it possible for people to buy our services through the web or through a hotline. All of this was rolled out and delivered solid results. And then we had our corporate social responsibility, where we gave nearly PLN 15 million to combat pandemic. Our employees were able to gather -- collect more than PLN 200,000 for their own accord, and then we manage that, and we were able to buy some barrier tents, obstacle tents. And so this was for the health professionals. And this was done in the framework of employee voluntaries, and I'd like to emphasize is we're, as a management team, very proud of how our employees responded. And so we're pleased that our business continuity was maintained with very robust performance. If we look at the projects that we implemented, one of the important things in the pandemic was our portal. And we also had band of life and also remote notification of injuries. And so we gave nearly 1,000 bands of life to the infectious hospitals, disease hospitals and to monitor the state of health of people, and the health professionals who were responsible for taking care of them. And so our portal was very popular amongst people. And so the number of users in June was in excess of 1 million. Jointly with Alior Bank, we have a unique offer for employers, and we want to give our employees additional nonsalary-related benefits. And so we have the cash portal, which means that people can get inexpensive loans that are paid back from their salaries. So formalities are at a bare minimum. And so this is an example of very good cooperation amongst the major companies in the PZU Group. So the actual situation meant that companies had to adapt across the world, new approaches and adapt themselves. We can see that our customers also adapted. So despite these limitations, social distance requirements and as a result of the lockdown prior to that, we were able to alter the way in which we cooperate with our customers, and we continue to maintain that closeness, proximity to our customers. And so we want to utilize to the greatest extent possible our remote channels of communication with customers. And new technologies in terms of the processes taking place within the company with -- along with the ability to utilize artificial intelligence. This means that we could continue to do sales and after sales under this new model, which means that our customers have assurance of additional safety. And so we had more products that were available online. And this was medical services as well as the sales of our flagship products in insurance. Perhaps a few words about the trends we've seen. So on the non-life insurance market in Q1 of 2020, this is the data we have from the Polish Financial Service Association. So -- from the KNF, so we've seen a decline of 1% year-on-year in terms of the decline in the sales of motor insurance. But we've seen growth in the non-motor business of 11%. We can say that classes 8 and 9, so fire insurance and other damages have grown the strongest, nearly 15% year-on-year. We've maintained a strong market share of 33.3% with a high level of profitability. So our market share in the technical result is nearly double the level it is in sales. The premium in Q2 fell year-on-year because of what happened with cars, Tomasz talked about that previously. We saw a 12% decline in the dealer channel for car insurance, you can see this in the bottom right. We've also seen greater loyalty amongst our clients and a higher number of renewals. So that's grown by nearly 2% year-on-year. So a greater percentage of our employees have decided -- of our clients have decided to stay with us. And you can see that on the bottom left graph, that this has grown, the renal rate has grown by 2 percentage points. So if you look at residential insurance, so since people were in their apartments for a longer period of time, we saw growth of 18% year-on-year. We've also sold more insurance linked to electronic equipment. And so the pandemic forced customers to utilize remote work to a greater extent. And so they paid greater attention to the devices they use on a daily basis. If we look at the trends in life business, we grew contrary to the market trends in Q1 2020 shrank where as PZU life, our major subsidiary, grew by 5.3% year-on-year. So our market share was higher for another quarter in a row. It was nearly 42%, which was the best result in more than 10 years. So I'd like to draw your attention to the fact that we're growing not only in these segments where we're traditionally very strong, so -- where we have a periodic premium but we're also the sales leader in individual insurance as well as in single premium business. This is very good news for us. In Q2 2020, the situation was more challenging because of higher unemployment and the turbulence in the financial markets, even though our premium and group business and individual continued business was higher. So if you look at the protection individual insurance, we saw that this grew by some 15%, mostly because of our cooperation with banks. And because of the worst conditions on the financial markets and lower demand for these type of products, investment products, we saw that the demand for that shrink. If we look at private -- high-quality private medical services, demand continues to be very strong. We're very -- we're one of the most important players in the market. After the second quarter, we had 130 own outlets. And then we had a large number of cooperating entities. And so our revenue has grown by more than 20%, top line is growing by more than 20%. And so we have dynamic growth in the sales of our services as well as subscriptions as well as what's being offered directly by our own medical centers. As Tomasz has mentioned, if you look at our TFI, our mutual fund investment company, it's one of the market leaders in terms of new sales of mutual funds. Our TFI attracted nearly PLN 0.5 billion, while the other players in the market saw withdrawals of some PLN 17 billion in terms of the assets they had previously had under management. And so you can say we have an attractive team. We have primarily products to save for retirement. So pension programs, capital accumulation products and they're resilient to short-term turbulence on the financial markets. We're the most important player on the PPE market. So ECS, simply capital schemes. We have more than 600,000 contracts signed in this area, which is a very good result in our opinion. And so our cooperation with the banks has developed and been cultivated very dynamically. So year-on-year, we've doubled the number of people that we've attracted to this in terms of life and non-life business. So I'd like to thank you very much for your attention. This is the time when I should give the floor back to Tomasz.

Thank you very much, Marcin. So ladies and gentlemen, we've said quite a bit about our results. So I think it's time now for us to sum up the P&L for Q2. If we look at gross written premium, I won't reiterate what we've already said in nominal terms, it's PLN 5.6 billion. But let me remind you, and I'll say one thing. So the gross written premium, giving consideration to the composition of our distribution channels as well as the customers we have where we have corporate clients, which take coverage for more than 12 months. So gross written premium is not the best metric to utilize in terms of what's happening in the market. Whether or not we have an increase or a decrease in sales, a much better metric is earned premium. And if we look at what took place this year, we can see that the earned premium grew year-on-year. It grew by 1%, which compared to the decline on the market means that the PZU Group is capable of growing on this very challenging market. Claims and benefits paid we can say that they're down this year from the previous quarter, both in life and non-life segments, we'll come back to that in a moment. But the very total -- the total amount of change or payouts, along with the movement in provisions, we saw some increase because of the investments of our customers and their strategies in Q2 generated pretty high yields contrary to the first quarter. So we can say that this line item is a little bit -- is a little bit contaminated because of the differences against Q1. So if we look at the strategy of our customers and the growth we've seen, we do have some negative factors linked to FX rates, which we saw in Q1. And we can look at real estate valuation and movements in the measurement, which take place in Q1 and Q3 of every year. We have big negative figures and now those were reversed, which means that we have a very high result. If we look at admin expenses, we're growing here on account of 3 things. The first one is the wage pressure we started this year with. This results from -- for hikes, we recognized in the previous year. And this is, of course, the knock on effect. The second element is the employee holiday leave provision. Because of the lockdown, it wasn't so easy for our employees to take their holiday leave, so that meant that the provision edged up. And so we have higher employee staff costs in Q2. The third driver was linked to technology and the CapEx and OpEx because of digitization of various process as well as the incremental cost, Marcin mentioned, because we had to respond to the challenges linked to the pandemic, the COVID-19 pandemic. If we look at acquisition expenses, we can see a decline, but this is not at the same level as the decline in gross written premium. This is because of a change in the structure, the composition, where we had higher percentage of the more expensive channels of distribution, primarily, we're talking here about motor business. But structurally, nothing bad is happening. This is just a change of the lower base as well as the change of the product mix. In the nonbanking segment, we closed up the quarter at a very high level with the net profit to the equity holders was more than PLN 1.1 billion, and this was adjusted by the impairment in this quarter on a net basis, some PLN 700 million. As I mentioned previously, this quarter had a negative contribution from the banking segment. And this meant that we had to recognize on that result, PLN 185 million. But the net result, net of these nonrecurring events was more than PLN 1 billion. We talked about the profitability of the various parts and buckets of our business. I'm not going to read this out from the slide now. But now if we can walk through the various business lines. The key things we would like to emphasize, very strong profitability in non-motor and motor business. In nonlife business, we benefited from slightly smaller frequencies, claims frequencies. But we had above-average claims linked to torrential rains between June and July. And as a result, this result was put under quite a bit of pressure linked to weather-related claims. If we look at other non-motor business, we can say that we had pretty good results. On the life side, in group and individual business, we had the highest results since 2009. As we mentioned, we had lower frequency of paramedical risks. We had fewer benefits played. We saw a small decline in the margin in retail business of 0.3 percentage points because we have had more protection products sold through the banking channel, where we have slightly higher costs. Now in terms of what's happening and why we had this higher profitability in the group and individual continued business despite the pandemic. The first quarter saw very much lower mortality rate. In the second quarter, it was a little bit higher. So compared to the comparable quarter of the previous year, the mortality was 1 percentage point higher year-on-year. But what was positive and affected our profitability positively, this was our health business, permanent dismemberment, permanent disability as well as childbirth. These are the kind of things that exhibit a positive impact on our profitability. And so this profitability from the point of view of the claims ratio -- sorry, claims ratio was the lowest it's been since 2012 in the second quarter. So now we can talk about aligning our technical rates to the overall market situation. Through the first part of the year, we talked with you and you frequently posed the question. What does this mean to you? When you publish a report, when you show your sensitivity to changes or movement in the interest rates, market interest rates and how that affects your provisions, we've seen cuts in the market rates. And what will that mean for us in terms of the dividend? Well, ladies and gentlemen, what we would like to emphasize very strongly is that we now have this difficult topic behind us. We've put it behind us. Our interest rates are at a pretty conservative -- or technical rates are pretty conservative if we look at the ways in which we want to cover up our liabilities, and we can look at the maturity and the yield. So the technical rate has been reduced. And it's unified in all of our products at 1.5 percentage points. So it was in the range of 1.5% to 3%, depending on the tranche and the time period we were talking to -- we're talking about. At the same time, we've updated our actuarial assumptions, where the most important one was the probability of death up until now. We were using the survival tables from 1995 for the life expectancy tables, mortality tables and now we've replaced them with the tables from 2018. This has affected the probability of having co insurers. So having offspring and the likelihood as well as predecessors, and so the likelihood of death of parents, parents in law, what's going to happen with children. And so the method of calculation has also changed from a group portfolio approach to an individual approach. So the combined impact of all of these events on the provisions at the end of Q2 on net business was PLN 6 million. So you can say that essentially, it had no impact on the profitability and the results of PZU, whether we're talking about the stand-alone level or the consolidated level. Now a couple of words about our investment activity. What did we do this quarter? We continued our philosophy from some time ago that we manage profitability on a long-term basis, where any short-term volatility or fluctuation against expectations are recognized in equity and is not recognized through the P&L. So we continue to follow that OCI approach. It's a safe approach. In terms of the mosaic of instruments, we have debt instruments, which represent nearly 85% of the portfolio. Primarily, this is treasury debt, some corporate debt with a very high investment-grade. So we have a very low-risk profile there. So both operationally and we suspended certain investment projects, and we didn't take -- we had limited FX exposure. And our interest rate exposure was covered in terms of our provisions denominated in foreign currencies. All of this means that we have a recurring impact. I see here that perhaps a battery is dying in some of the equipment. But this has made an impact on our results, and this creates long-term value because these results don't vary so much. And if you look at our interest result, it fell as a result of the corporate income falling due to the floating rate falling. We saw a strong contribution in terms of our logistics exposures. We're talking about investment properties. So warehouses representing the lion's share of our portfolio. And this is just segment that has benefited from the evolution on the market, moving away from traditional channels in the direction of e-commerce. And so as interest rates have fallen, we see that these properties -- investment properties have seen their underlying value grow. So we've seen a reversal of the negative changes in rates in the previous quarter. So that's what happened here in the real estate portfolio. If we look at our cost effectiveness, while we have a cost ratio of 7.2%. Above all, we're talking about staff expenses, the lockdown, the impact exerted by our systems and digitization. And then we have the solvency of the group, which is not just the accounting result, both the economic result, and this is talking about how we at PZU create real value. So to sum up the financial portion of our presentation, we always look at the execution of the key metrics of the strategy. We're in the final year of our strategy period. So this tells you where we are. If we look at market share, we're growing, both nominally, the way we wanted to grow, but we've not been able to do the same in non-life because our market share is 33.3%, where we've got very strong profitability, both in life and non-life. And we have an attractive level of costs or cost effectiveness has been very dominant. We're a little bit below our strategic objective. So the number of customers is something that has been under pressure in Q2 because of COVID and this pressure will continue to be present in Q3 and Q4. In Q2, in Poland, we saw higher unemployment, more than 20,000 people lost their jobs, which means there's a direct impact on our life portfolio where we have a large portion of people who are professionally active and it's very difficult to counteract those types of macroeconomic events. And so assets under management of third-party clients, we didn't do what we plan to do. We did not consolidate the market here. And looking at the current market situation, it seems that we won't be a consolidator in the market this year. We don't want to buy at all costs. We want to create value. And despite the fact that we've not been able to grow as quickly and by leaps and bounds like we wanted to in our strategy, the contribution of this segment to the consolidated results above the strategic target, so PLN 220 million today. And so we've already talked about the profitability of the main portfolio. If we look at the sector now, the health segment, we can see the revenue on an annualized basis of the last 4 quarters, some PLN 920 million. So it's just a little bit below the trajectory we've defined of PLN 1 billion. But because of the lockdown because of lower sales in Q2, but also because of some systemic things, what we see and our customers agree with us on this, is we have certain decisions to defer in time. The start, the launch or sometimes the extension of additional scopes of services for employees. So we don't have to utilize more drastic solutions, so group dismissals employees. So our customers are looking for savings. And sometimes in this transition period, they're resigning from some employee benefits, and some of them include health coverage. And so we've seen a slight slowdown. But again, we're above the strategic objective. If we look at the banking assets, we're above the objective, the strategic objective. So in terms of the magnitude of our business, we are where we are -- wanted to be. But in terms of the profitability, this is a very distinct quarter and half year period, interim period. We believe that this is something that's ephemeral. So unfortunately, our strategy talks about -- our strategy for 2020 in terms of the profitability, we believe that it's going to be very, very difficult to achieve that. So ladies and gentlemen, in terms of our delivery of the presentation, we've made it to the end. And it's now time for any possible questions you may have and responses we can give to those questions. So thank you very much for the tablet. So we have questions being posted only through the Internet at this time.

Thomas Fossard. So can you expect recurring results in the investment segment despite we have -- the fact of having 0 interest rates? Well, I could say with some humility that you can't extract blood from a turnip. As you know, we do benefit from the composition of our assets, and we have historical profitabilities frequently above 4%. And so for a long period of time, our portfolio will continue to act as a shield, a strong shield despite what's happening on the marketplace. So I'm profoundly convinced that how we've construed on our portfolio in terms of the mix of asset classes is the perfect response to the volatility we've seen in the marketplace. We, certainly, this year, want to achieve our target comparable to last year's objective and performance. What's going to happen in subsequent years? Well, we could ask the question what's going to happen with interest rates. I'm not capable of responding to that question in an unequivocal fashion. We do have a surplus or reserve, I'm not sure what the apt term would be, which would enable us to navigate through a situation in which we have nearly 0 interest rates for some amount of time, and we can do that without getting our feet wet that if the interest rate environment is going to be low forever, that means we'll have to think about different components to build our consolidated result on. Now we have IPOPEMA. What portion of your decline in the motor premium was linked to the decline in volumes? And what -- to what extent was this driven by prices? What is the management belief about what's going to happen with premiums in upcoming quarters? Is there a risk of additional provisioning because of lower interest rates, is this something we believe to be material? And what's the major reason for making this decision? I think we've already responded to these questions. We do think it's material, and we think we have this situation. Put it behind us. Are you considering any measures in the banking segment that you would either merge or sell? So let's begin with the beginning. If we look at the motor segment, at PZU, we haven't changed prices. We believe that what happened in Q2 in terms of new sales, I want to emphasize new sales, we believe that there was price adequacy on the market. Unfortunately, and this is one of the things I'm sorry about, there are players on the market who elected to distort that adequacy, and for a very short-term period. And as you can see, as you look out the window, we have normal amounts of traffic. What we were benefited by was the limitation of traffic and lower frequency of accidents. Well, now we're back to the normal cycle. Unfortunately, some of the players made the decision to utilize that incremental transitional profit to reduce prices, which, in many cases, led to a disturbance of the price adequacy that the regulatory is vying to create. We will continue to scrutinize that subject. We don't believe that this is a good time to lower prices. Let me remind you that many things have changed in claims handling. We have higher costs for spare parts, which are denominated in euro, also painting the cost of the replacement car where people had to use replacement cars for longer periods of time because the given spare part wasn't available on stock, and we had to wait for that. So these were things that occurred. These were trends, which mean that in Q3 and in Q4, if prices were to be reduced, then we would see losses on the motor market, and that's something we don't want to see. That's our response to what's happening in the motor business and how prices should be formed. If we look at the banking segment, I think the best response we could give is to return to the subject in the framework of our strategy. Today, we're not able, not because we don't want to, but it would be irresponsible to talk about what's going to happen in the future and what will inform the strategy of the overall group over the upcoming years. So if you look at the operational result in insurance segment. If we sum up the earned premium and the costs, why is there a difference between your operating results? And -- but we see there's a difference of PLN 200 million. I don't have the financial statements right now. I can't do the full mathematics on your question. This is a question from Trigon. Perhaps I've made a mistake in the assumptions. But we're going to try to respond to your question off-line about the difference between the PLN 400 million and PLN 200 million. So you had said there were going to be some changes in the banking sector. When should we anticipate the details and when should we anticipate the strategy being announced? Will the positive trends in health segment continued to be prevalent? Or is this an ephemeral thing? If we think about awareness, the awareness of holding a very good insurance policy for tough times. I think COVID has clearly demonstrated the need for holding a good insurance policy. Especially if the trends taking place in the economy, where what's happening with wages, and this is impacting purchasing power. If we come back to the new normalcy, then people are going to look for these type of solutions. What's clearly a transitional result. This is the above-average profitability. In Q2, this slowdown has transpired in terms of utilization of our medical packages. So we don't anticipate this continuing into Q3, if that was your question. If you think about the lost portion of your motor insurance premium, do you think you're going to be able to recover that? And then next half of the year, is it possible to merge PKO and Alior Bank? So the first question, in terms of recovering a portion of the lost premium. Let me remind you the fact that we slowed down in terms of sales of motor business. That doesn't mean that we have to recover that premium because it evaporated. Well, in this period in time, the market was what it was. And it was difficult to sell anything new to get new sales. I emphasize very strongly, a much better proxy for developing a view on whether or not we're growing or not in terms of whether we should recover anything or not, we should look here about earned premium and earned premium, especially if we look at cyclical or seasonal turbulence, this is something we should follow. If we look at recovering market share, and as we mentioned many times, we're in an organization that above all, wants to grow profitably. As a result, we won't buy the market. We've never bought the market and nothing is going to change here. Please give us a commentary about motor prices. I think we've already talked about that. And whether or not there's price sort of fight. I think we responded to that. This is something that I tried to address. And it's frequently overlooked. Unfortunately, costs are growing, not claims handling costs, but the cost of claims. Costs of claims are growing period -- every period. We're talking -- and they've been growing for the last 3 years, while premiums have remained flat. And in some insurers have even tried to reduce their premiums. The conclusions are more than obvious. So we can say that the shrinking area between premiums and costs had an obvious impact. And so there's no real margin on new sales. And so for continuing to reduce sales prices is something that's extremely unreasonable. Well, netting, it's not possible to do that directly. It's not possible to say that our result -- that's to be distributed is going to be higher because in some sort of mysterious way, we can net out the impairments. What I can say is that in the second half of the year, we're going to try to rebuild what was consumed in a certain extent by the banking sector through those impairments. Well, in terms of the amount that could be distributed would be as high as possible. That's what we're going endeavor to do. As you recall, the payer of the dividend is PZU SA based on the consolidated results. That means, perhaps this year, we'll have a situation, it's something that we -- it's not very frequent that the stand-alone result is higher than the consolidated results. And that would enable us to consider possibly whether or not we could pay out an amount higher than the consolidated result. There's a lot of assumptions here and a lot of speculation. We're fully aware of who we are. We're a dividend company, and nothing has changed. We want to share our profits with our shareholders. And we assume that the second half of the year, having in mind, the biggest problems we have behind us. So the interest rates cuts as well as the impairments and the third thing is the provisions for the banking activity. That means that we're going to be able to show profitability. It's our proportion considered -- compared to what we had in the first half of the year. And that would have an impact on the possible level of dividend. That's it in terms of the questions we've received. I think we've exhausted the list of questions. I don't see any new questions coming forward. So if you were to have any additional questions, we would encourage you to be in touch with us, with our Investor Relations department or office to contact me directly as the person who's responsible for Investor Relations in PZU. With some of you, we'll have the opportunity to hear each other in the near future. And so I think this will be a stage for us to talk about what was discussed today. So I'd like to thank you very much for today's attendance. I'd like to thank you much, Marcin.

Thank you.

So -- okay. Thank you very much. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]