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

[Interpreted] Good morning, ladies and gentlemen. I'm delighted to give you a warm welcome to this meeting, which is to summarize the results of PZU for Q4 and the whole 2022. I would like to welcome everyone who is here on site at PZU Park. And also, I would like to give a warm welcome to our guests online. So the agenda is the same as a proven workflow. So we're going to go through the agenda beginning by discussing the main achievements in Q4 and 2022. We will speak about the successes and also the challenges, also how this translated into our financial results. And we will also discuss the group strategy because we are exactly in the middle of it. And we will also discuss what it means in the context of some important changes that will begin in 2023 and concern the insurance sector in a very particular way. So let me begin. Ladies and gentlemen, a lot can be said about 2022 and it certainly was surprising and volatile and practically in every aspect of PZU business. We all know what happened on the financial markets, and we know that the banking sector was under a big pressure. This posed some challenges to insurance products, especially those the motor ones. But despite this surrounding, we have been able to close 2022 with a very high level of sales mirrored by gross written premium. This is historically the highest level achieved above the benchmark set down in the strategy by 2024. Also, we have closed the year and especially Q4 with a very high net profit for the parent company. And this obviously translates into higher own equity, profitability, higher yield than the one taking into account in the strategy. We've been growing higher than especially considering sales. In Q4, we are growing faster than the market. So soon the financial supervision authority will publish data for Q4. And then we'll be able to confirm this based on the full data from the market, especially since our share will go up for the end of the year. Good news is the fact that the profitability of basic operations is good. This is not a one-off event. This is our core business. And the core business includes areas that have been growing and these increases will translate into higher results. So high profitability of property insurance and also life insurance. This is a recovered profitability. This is partially due to the fact that the pandemic is over, a huge return on the investment portfolio. In Q4, it was almost 7%. This is very good news. And this allows us to be very optimistic when it comes about -- when speaking of the return and the increase in the upcoming quarters. Now sales. So let me mention Q4 there has been a huge acceleration in the rate of growth of sales. So we've been growing and faster than the market. Take Q4 alone, almost 20%. This concerns both the property insurance activity especially here, including the contributions from the corporate segment. Here, we have witnessed a very solid growth, both annually and in Q4. Also life insurance has been growing and despite of the fact that there have been some issues with the distribution in the banking sector. So the increase is about 8%. We've been growing the volumes a bit smaller here, but we've been growing in foreign markets, Lithuania, Latvia, Estonia, an increase of over 20% over there. So much for the premium, but also let me continue discussing the growth. We're continuing on the very good trajectory in terms of health insurance, a year-to-year increase of about 16%, both sales generated in own [ tight ] and also the equivalent on the insurance side. And we have been also growing in terms of the assets related to the management of assets of external customers. So these are some recurring aspects that have translated into the result of the group, both in Q4 and also hopefully in the next -- the whole next year. So let me sum up the result in 2022. The premium has reached PLN 26.7 billion, and the net result now has reached the level set in the strategy of PLN 3.3 billion. And the operational margin for group and individually continued insurance, 17.4%. and the combined ratio amounts to almost 90%. So this translates into, as I've mentioned, high yield on capital on equity. And this is also with a very high level of security, which is measured by the solvency ratio. Here, there is a year-to-year growth. So this is over the average in the peer group for the European insurers. And also, it's above the goal set in the strategy. So this is very good news, especially since the surrounding the market has been very volatile. So we've been growing actively. We are aware of the impact we have on the Polish economy and society. Therefore, whatever we do, we try to do it in a socially responsible way. So we promote the quality of health of Pols. We try to mobilize them and set examples. We also try to promote role models, role models for our customers, but also for everyone who would like to promote a healthy lifestyle. We also support the growth of Polish sports, we corporate with Iga Swiatek. We are also very helpful. We provide aid in difficult situations. Let me only remind you that we've been involved in helping people affected by the war in Ukraine. We are also a partner in green transition. We've already communicated this fact broadly. And today, we are broadcasting from the greenest building. This also contributes to our energy -- green energy transition. So now let me speak about the business development. So a few words about the context, the market. Also, the information from the market arrives a quarter later. So whatever I will discuss now, it applies to Q3. So the situation of property insurance in Q3 was the following. So non-motor high growth over a almost 12%, mostly thanks to growth in Group 8 and 9 with quite stable growth in other types of insurance. So here, the level is a bit lower, about 4%. So as I've said, the market has been growing mostly the eighth and ninth group, housing insurance, SMEs, et cetera. And now speaking about motor insurance and total premium MTPL and MOD, the rate is over 6%. And the situation is similar to the one witnessed in the previous quarter. So what I mean is that the growth is triggered by a dynamic rate growth in MOD over 15% year-to-year and a slight increase only in sales of MTPL measured by written premium. And these dynamics is related rather to the quantity rather than premiums and tariffs. Now the motor insurance segment. I'm speaking about Q3. In Q4, there was a technical loss on this market, PLN 700 million. This loss was caused mostly by MTPL products. And also, let me remind you that speaking about PZU and Q3, our profitability was positive. So we might say that the PZU markets has lower levels in terms of the technical result. Now let me discuss the prices in Q3. So at the beginning of Q3, the prices went slightly down and then they flattened in Q4. So the first signs of growth were visible in Q4 and Q1 of this year. But as I've already said a quarter ago, these increases are not very dynamic. They are actually tiny growth. But also at the same time, we can see on the market that there are higher levels of offering. And also more and more customers are checking the prices. And by saying this, I mean that in the segment of motor insurance, customers are offered a renewal of their policy. And this makes them check the prices on the market. And we know what it means for the strategy of our -- pricing strategy of our competitors. At the same time, we are able to achieve positive returns both in Q4 and Q3 as PZU and this was largely to the drop in the frequency of claims. As you can see, there was a claims frequency drop versus the previous quarter and also a like-to-like as they were 2-digit decreases. As a consequence, most market players were able to offset claims inflation. But it wasn't a booster strong enough to affect -- to impact the pricing. But now this market has been changing gradually and has been trying to adapt to the surrounding, to the challenges, to the recommendations of the regulator, the financial supervision authority and also to adapt the claim handling processes to the recommendations we discussed in the previous sector -- quarter. Now as regards this developing market and now we're looking at the PZU Group and moving on to discuss quarter 4. Unfortunately, we have this desynchronization in terms of the report we have for the general market and for us. We've seen a big growth in nonmotor insurance, strong growth in terms of motor own damage insurance, slightly smaller growth in MTPL. What is good is they're growing saturation and better relationship between MTPL and MOD, which we has been improving since 2021, exceeding level of 30%, which is not a little amount. If you look at historical figures, we would be seeing 26% and 27% for a long time. This is where we have been for a long time, and we've seen a dynamic growth since then, but there is still a gap compared to other more developed markets, more developed in terms of awareness and the possibility of market participation of companies such as us. So these are the components of our growth that translated into the growth we've seen in the growth dynamics. We've seen in the non-life insurance 13.6% in Q4 year-to-year. I would like to draw our attention now to another point, namely our product initiatives, but in broad sense. I'm talking about certain initiatives that make it possible to offer to our customers insurance products that are very different than your typical insurance product, so there is a loss in receiving payment. I would like to draw our attention to this product because I do believe that they give us a competitive advantage. And some time ago, similar products were implemented in motor insurance. Self-handling instruments, that's an example, especially for home -- for home insurance. In such cases, the customers are very interested in a speedy procedure so that they can restore their real estate, the previous condition as soon as possible. So on the one hand, it makes them more involved and self-handling instruments give them a sense of control over the process. It increases the level of satisfaction. And on the other hand, it removes a part of the burden from our shareholders because the algorithms are at work, and we can use photographs submitted by the customer to analyze the claims. So then the payment can be organized more speedily than in the regular procedures. So it's a very interesting new instrument for home insurance. On the other hand, functionality, we have been investing in for a few years now because we do believe that this is the right direction to go. And we will keep pushing in that direction in the upcoming quarters. I'm talking about improving the adjustments of prices looking at customer profiles in order to improve our tariffs. You would be familiar with the CEPiK project, which is an integration with the Central Register of Vehicles and the Central Register of Drivers. This solution is by today available in almost all our channels. So our online customers can be given an even better offering than before. When I say that the better offering, I'm not necessarily talking about lower prices because customers, which represent a higher risk have to realize that the prices we offer them might not be as low as they would like to see, but we do have to take into account the loss history. But this is the direction we intend to go, and we will be doing so consistently so that in the end, we can offer our customers prices that will be attractive and that will be better matched to their individual risk profiles. We know what happens if the price is not adapted to individual risk profiles. And we know that one size fits all is the worst philosophy you can take in insurance prices. In terms of life insurance market trends, we can say that Q3 did not surprise in terms of protection insurance in Group 1 and insurance riders in Group 5. On the market of periodic premium, periodical premium market, we've seen some developments. But however, there has been a continued negative impact on the developments on investment insurance. On the other hand, when we look at the single premium insurance market, we've seen a repetition of what we had seen in the previous quarters of the year, namely I'm talking about strong declines in terms of revenue from unit-linked products, we've seen some negative dynamics exceeding 80% in this case. So with such a market situation, the dynamics of the entire single premium segment ended up on the level of minus 30% year-to-year. The standing of PZU on this market looking in the periodical premium -- periodic premium is quite stable with 33%. Now looking at PZU and Q4, the situation was as follows: we've seen certain growth in group and individually continued insurance growth of more or less 2.5%. And that despite the negative effect of the pandemic. It's very important to emphasizing -- to emphasize it, looking at the scale of our portfolio. And then riders, especially in the field of health insurance. On the life insurance side, we see almost 2.7 million active contracts or active customers. And throughout the health pillar, we will see as many as 3.2 million such contracts, which only reflects the growth dynamic and the scale of the health insurance pillar. The portfolio will consistently be saturated and has been consistently saturated with riders. And that was the essential reason behind the growth in this segment of our operations. Now looking at individual insurance. We've seen very strong growth. On the one hand, the PZU Bezpieczny Zysk product in PZU branches, the sales of this product in Q4 only reached a level of PLN 90 million. We've seen continued strong sales from new products such as Pewny Profit and Bezpieczne Jutro. In the banking channel in total in Q3 and for and revenue was PLN 380 million measured based on the written premium, so a very solid growth. In terms of protection products offered in this channel, we've seen some decline. And we know which pressure has been exercised on this segment. We know how sales have been developing newly in the banking channel. And all that translated into a level of sales of insurance policies of our core product sold by our banking partners. Also, the lower level of single payments to the insurance unit-linked accounts. Now looking a little bit closer at the health pillar. I've already said that we have been growing quite dynamically in terms of the -- in terms of numbers of insurance policies sold, but also in terms of revenues, while we realize what the level of inflation is in this segment also. Also for this reason, in this year, we will pay more attention to the right targeting, to the utilization ratio, to the nonshow ratio. So the number of visits that are not attended by the patients in the end in order for these factors not to exceed our cost expense, we have per patient and per medical procedure, so that we can continue offering this excellent product and service at competitive price level. But in order for this to happen, we have to make sure that we control our cost. So as I said, we will pay more attention to this pillar, especially to our own medical centers in order to make sure that we direct an even more portion of the traffic to our own medical centers and at the same time, make sure that we increase the amount of remote online visits. So all these factors which can translate into lower cost and in consequence, make it possible to keep the attractive prices that we offer -- we have offered to our customers so far. So it is all about the right management of costs. And so for that assets under management, I have said a lot already, but I would like to leave you with a few sentences. We are the #1 in terms of the influx of new contracts and sales with almost PLN 1 billion in the context of a huge outflow of the asset management market, almost PLN 24 billion. We have taken over the management of the assets of TFI Energia, which increased the scale of our operations in this field. But this is not the only reason we've been growing. We have also been growing organically with ECS assets in the value of PLN 2.4 billion. We ranked first on the market on the ECS market measured by the number of companies acquired. And looking at our strategic goals if you combine it with the assets of external customers, TFI and our banking customers, we will have about -- we have about 10% year-to-year. In the area of bancassurance and assurbanking, it was our product offering. It is important to note that PZU as a company is able to adjust to a very volatile and often difficult market situation that we've been having. The products I have mentioned the product with a guaranteed rate and secured special instruments. These products are distributed mainly through the banks, through their banking channel and in our own branches, and this has led to the fact that the natural decline in the revenue from sold insurance policies. It's natural because it's a natural consequence of the situation we've seen in the banking sector and their new loan and credit policies. But thanks to our approach, we were able to address this gap that was created because of this situation. We use the opportunities available on the present market, which involves higher interest rates. So we created products within the time perspective over the next 24 or 36 months will make it possible to offer a very good return on the equity -- on the capital entrusted to us, which as we believe will provide a great complement to our existing product offering and also increase our competitive advantage over other products. So what's the approach now to the results of PZU. I've discussed sales, a very robust growth year-to-year and like-to-like over like-to-like over 20% year-to-year, 12% almost. This is a spectacular result. And obviously, this is very good news. So as a consequence, our market share of the group in Q4 has grown. Another piece of good news is that the rate of growth of the revenues is higher than the rate of growth of the cost, and this includes acquisition costs but also administration costs. So if you take the written premium and how this translates into these ratio and the earned premium, so the net premium sum. So as a consequence, this ratio should remain in the upcoming periods under a robust solid control. This is maybe not yet the target situation, but we are already nearing the declining trajectory. Now compensation and benefits, some growth here. And in Q4, this was due to a few factors. First, claims ratio grew in the corporate sector on property claims, property insurance, there was a significant event here. It's very huge unit value recognized in Q4. Quarter-to-quarter, the claim ratio was higher also for life insurance. This is something that we could all expect. Well, this was a cycle. We know how the distribution of mortality looks like, not only in our portfolio, but also in the whole population. Therefore, this is a normal event, also higher provisions related to investment products. I've already discussed that, but this doesn't impact the bottom line. So as a consequence, we have closed Q4 at a high level of PLN 937 million over 19% year-to-year and 9.5% like-to-like. And if you take the additional contribution from the banking sector in account, we can close the quarter with PLN 1.234 billion. And this is a very robust growth. So once again, let me stress that this is a consequence of recurrent events of our business as usual, high sales, high yields of our main portfolio, and I will get back to that. And also what has been growing a bit, but not over the cycle is the combined ratio for property, 91.4%. I remember I talked to some of you about what we could expect in Q4. So I was then discussing the level of about 92%. So I have to say that this result, well, I won't say that this comes as a surprise to me, but it is an effect of a huge effort. Now the margin, group insurance and individual continued insurance, a huge growth year-to-year. Let me remind you, in 2021, we were under a huge pressure, pressure of the pandemic. We've been now over this. Q3, Q4 is a very good example of that. The acquisitions costs are flat and administrative expense is -- has been growing slightly, but we are expecting it to flatten in the upcoming quarters. Now profitability by our operating segments. I've already discussed this in detail, but now some crucial news. So nonlife insurance, 91.4%. The combined ratio and under 90% for the whole 2022. And this is a very good result, especially if you think about the situation in the MTPL market. So in both cases, the 97% is a very good result. A very solid and growing contribution of nonmotor products in the mass segment, I've already mentioned this one big event in the corporate insurance, nonmotor. So unfortunately, the loss here is higher. The claims ratio is higher and the combined ratio is higher as a consequence. But this is a one-off event but unfortunately, of quite a huge value. So life insurance has recovered the profitability, especially that this is a very important part of our business. This is a recurrent business with a regular premium, very good profitability abroad, especially in the Baltic countries. As you can see, property insurance, the increase in the premium is of about 27%, 26%. So it's a very good result. Now the combined ratio. Well, I think that we've already discussed this. Well, I've already told you all I wanted to say, so I'm not going to repeat myself. So life insurance now. So the result here is 21.7%, rather 10.6%. So what lies behind this result is lower mortality related to pandemic, which also is linked to the frequency of the higher revenue from the investments and the risk-free rate, lower level of benefits because of childbirth and a higher utilization of outpatient insurance. Here, we've been growing -- well, the take-up of these medical products has been growing. And then also there is an increase in operating expenses, and there is a drop when it comes to risks related to the permanent disability and health impairment. So there is a drop in the death rate. So partially, we could release the provision for unexpired risk in Q4, and this includes these concerns about PLN 25 million. So again -- this is, again, the information about the distribution of deaths in the population and PZU's portfolio and also in the long term. So the frequency of deaths and the claims ratio and how this evolved quarter-to-quarter? So it was -- there was an increase in this context in the claims ratio of 16% amortized, offset by the health products and other risks, permanent impairment, disability and childbirth benefits. Now the investment result. Once again, I can see that this is a recurring situation increasingly so this is good news. The investment portfolio growth year-to-year of almost 8% quarter-to-quarter 15%, and there is a higher interest rate result in the first place, thanks to variable coupon, bonds and investment products and equity instruments, there is a pressure. We know what's been going on with stocks. We know that the market has been tight, and this has been also reflected in the strategy of our customers. Well, I mean the approach of the customers to the product we are offering. So now the appetite for risk is much higher. Unit-linked instruments, equity instruments involve some equity in our case. So here, we've seen some lower pricing and lower sentiments in Q4, adjusted slightly by the situation in the logistics sector. What's also good news is the good pricing and the share of the housing of the real property sector in the segment, PLN 38 million. This is what further on translates into the portfolio's profitability at the level of 6.8%. So an increase in costs, we've discussed that. So from the point of view of the PZU, the cost is a challenge. There is a pressure on salaries, that the salaries are growing, and we have to respond to the market. Also, we've moved to a new headquarter. So there was an increase in the maintenance cost and also the indexation of prices. This is what you have to add to that and to the increase in the minimum wage, which is often, in many cases, a benchmark for our contracts with third parties. The purchase of materials related to the new headquarters also saw some sponsorship activities, also IT which also as a consequence of the fact that for some time now, we've been working in a hybrid mode. So this also requires some activity from the point of view of technological solutions. But also let me stress that with this comes a quite high level of monetization, which we have achieved in Q3. Again, because of the reporting delay, we are speaking about Q3. In terms of the solvency, the solvency report will be made public next week. So you're encouraged to have a look. Now we are still in Q3, and it shows quite a stable level of capital consumption with the growth of own resources of equity. So this is -- there is an increase in own funds and this also shows that we are able to turn these nominal results into real money. So I can tell you one thing that there was a world we knew we understood. And in 2023, there was a huge change on turbulence as a consequence. What does it mean for PZU? There's something I would like to stress, and I would like to highlight it really strongly. So we have maintained the same strategy for business products and customer relations. The changes in valuation presentation of methods in the financial statement of the same events do not -- this change doesn't affect the strategy or the ability to convert the strategy into an increased value of the group. So it will not affect our cash flows in any way. And let me put you at ease here, we are not expecting any changes in our dividend-related policies. However, we will inform you separately about that in the following periods because we feel it is our obligation to inform you about the impact of applying the new standard in the situation as of -- because it was introduced on January 1, 2022, and it led to rapid interest -- an increase in equity of PLN 5 billion to PLN 5.1 billion. Those of you who have been reading our reports, especially our solvency report for some time now will not be surprised by that because we have been talking quite a lot about it. And we've been quite open and precise in our information trying to comply with SII and also -- so -- and reconcile the balances under the accounting principles and SII. So we will not be surprised, but we do believe that we need to provide you information with some slight recalibration of the solutions we have implemented in the context of this new standard. What will change is the way we talk and report about our core business. And that despite the fact that in the strategic layer, we won't see any changes. But then we do feel it is our obligation that we entered in early 2022, and we do take it seriously, and we will fulfill this obligation. But the influence on the strategy on our reporting will change in a way that the event will be evaluated in a slightly different way and the way of presenting information will change. But we will provide you with more detailed information as soon as we can. And also, we will -- we would like to talk not only about the new standard, but also the changing environment. A lot has changed in the last 2 years with the pandemic and then the war in Ukraine, and all that has strongly affected our business environment despite that some of our goals such as our net profit and the old written premium, I say old because in the new report we will no longer have this item. So of course, we will provide you with this information so that you can understand it better because it may give you a better overview, especially when we speak about our previous growth -- our future growth, sorry. It is our ambition to continue growing, and I think this information will allow you to better understand what it means from the ROI perspective, looking at this point of transition, we can say which is January 1, 2022. And it will allow you to better understand what this means from the perspective of our strategy and long-term perspective. So please keep reading -- keep following us, keep reading our updates. This information will be coming. And on this note, I would like to close my presentation and move on to the second part, which Q&A session.

[Interpreted] If there are any questions to me, please feel free to ask. Both people sitting here in this room can ask questions or our viewers online. We will start with questions from the room.

[Interpreted] Santander Bank, my name is [indiscernible]. I would like to congratulate you on your great results. I do have questions about results from Q4. My question is -- let me rephrase. Could you tell us a little bit more about the nature of the premium growth in Q4? I'm not talking about not non-life and non-motor. So nonlife, right? Are you talking about much annual products or 1-year product? And what does the seasonality come from whether any exceptional events?

[Interpreted] There were no exceptional events or circumstances involved. However, we did see a strong growth in the relationship with our long-term customers and clients in corporate. We are talking about long-term insurance policies here. As you will know, ladies and gentlemen, for quite a long time. Now we have -- our results are independent by long-term products, certain volatility and changeability of working. This is an important component of our exposure. And here, we are talking about clients that have been our portfolio for a long time. Now we've seen a strong increase in the value of the portfolio. Here, we will see these effects and they are especially strong in Q4. That's why we will be seeing growth in revenues. So also, we see more -- and also we see and it is very good that more and more customers see the need to increase their insurance some looking at the scale of their operations. And talking about corporate clients, especially institutional clients. The risk appetite is moderate, naturally because we know that if there is significant loss event in decades. It will lead to serious problems and suspension of operations to a certain extent. So these customers are more willing to update the coverage and possibly to increase that coverage. And this translates -- and we'll continue translating into the growth we see in the nonmotor insurance segment. What we've been trying to do, looking at what was happening in 2022 was to engage in better distribution from the [ Class ]. We have mutual insurance, for example TUW. So because this is a channel where we can deliver an even better value than we can in our core business and corporate insurance business more than that. If the claim history is positive in this mutual relationship, the success can be returned back to the other party. So our clients are naturally more interested in the solution. This is the reason or these are the reasons for the growth we saw in Q4.

[Interpreted] I have a second question about this large claim. This incident you mentioned. It was covered by reinsurance to a major extent, right? But is it possible to say what the effect of the single event was on the PZU?

[Interpreted] On this subject let me say the following. As of the end of December, this claim has not been directly submitted to us. It remains a part of IBNR. So it's a reserve we hold a provision for claims that will probably be submitted because the incident happened, but haven't been submitted yet. So in this case, we are unable to provide you with a responsible estimate of the impact. As I said, it's still an IBNR, so a provision and not an actually submitted claim yet. So I can't tell you about the net contribution and the net effect of this incident, it will probably depend on the developments we'll see in the following quarters. And I wouldn't like to discuss in the virtual events with your individual claims with you because this is not something we inform about publicly. I could give you a more general information of the business line, but I'm not going to do it.

[Interpreted] The results from interest rates dropped by 10% quarter-to-quarter. What was the reason looking at the growing interest rate? And can you give us a color to describe these results you have on real estate, did you purchase something? Sales?

[Interpreted] I think it's a lot of questions. So let me put some order here. In terms of our real estate portfolio as there have been some changes in our engagement in different segments, we've mainly been active on 3 segments: first, logistics, big engagement to warehouses and logistics hubs. As you know, some of them we develop built ourselves. Others, we developed in a consortium with a large construction company. So this is 1 segment or one type of our operations. The second is commercials and trade. The third one is real estate -- oh, sorry. it's offices, office spaces. So these would be the 3 kinds of activity or engagement real estate. And depending on what's happening in the environment, we try to shift focus on one or the other. In terms of the results you addressed to we are beneficial with a good situation in Q4. There are 2 reasons behind that. The first one is a good valuation and also the swaps on quarters. And this brought positive results of, if I remember correctly, PLN 230 million. I would have to go back to that slide. But I do believe I remember correctly. Does it answer your question?

[Interpreted] Yes, it does I do have a last one though. Looking at the dividend and the recommendations of the published financial supervision authority, are there any other restrictions and limitations for dividends we can expect?

[Interpreted] I don't think we can, we should. I said before that in the upcoming next week we will have some more information and have better well, know better probability about what to expect because there will be a publication update of the SCR recommendation. So this is something we have to deduct from our own funds in upcoming 2 months and one of such components will be affected is the dividends. So I guess the next week will bring us more information about what we can expect or calculate. Today, looking at our policies, it is at least 50%, 50% from PLN 3.370 billion, it's easy to calculate. It is -- the capping is provided to the maximum level is dictated by FSA recommendations. So this is all I can say today, more information will be coming next year. What we want be able to tell you for obvious reason is where we will be in terms of the combinations formulated by the management Board to the Supervisory Board and by the Supervisory Board and to the general meeting. Okay. So I'll move now to the questions submitted online. What is the participation you expect in the ECS given the new subscription scheme? Well, it's a difficult question, I have to say because this concerns of a very specific, a very operational matter. So if you allow me, and if you don't mind, I will -- I would like to respond offline later on to this question because I would like to -- I wouldn't like to say something, and that's not correct. We always try to be at the forefront also considering upcoming events. So we are ready for this. But if you're asking me what our aims, what our ambitions are in terms of the 3 subscription. Well, I will come back to you.

Nonmotor and the sustainable...

[Interpreted] Well, I get the impression that I've already addressed this question, let me stress one more thing though. We've been growing in nonmotor in both segments. And I know for a fact that the growth of nonmotor in the mass segment might not come as very spectacular to you. But there is one important thing here that I would like to stress. It's that in Q4, our rate of sales in both segments was very, very high and reaching levels that will allow us to show you a higher market share at the end of Q4. Therefore, while I wanted to highlight that. Now speaking about the drivers of growth. Mostly, this is the insurance sum. So aligning the [ carved ] and the actual levels related to high inflation and also new sales and also in the mass segment, this new sale is not as significant as in the other segment.

[ It ] has normalized. Can you exit margins in excess of -- in 2023?

[Interpreted] Well, I think that as of today, if I were to answer this question, I'd say that this might be hard, but again, it depends -- it depends on the further evolution of mortality rates and the death, health and the long COVID complications. So while the problem is that if we were to quantify all these variables today. This is very difficult because we are discussing unprecedented events here. So we don't even have a single similar event in the history of insurance as such that we could rely on for forecasting. So we -- there is no event we can rely on as a representative event to draw conclusions and build our forecast on that. So I tried to answer this question by saying that it's going to be a big challenge to go -- exceed or go back to the levels of over 20% unless the following scenario materializes. Well, for the last 2 years, the mortality rates were quite higher in the pandemic, sometimes in 2021, it was twice the normal mortality rate. So there will be an important improvement here, but this will be a short-term improvement because, obviously, in this context, we are speaking about the most vulnerable people, people most sensitive to this type of risk. So maybe in the short term, we might go back to the 20% -- over 20% results. But long-term wise, I think it's going to be hard.

For group combined ratio in 2023, given the ongoing challenges in motor TPL.

[Interpreted] Yes. I can share you the possible approach that one might take, but also I will challenge my approach later on. So if we think about the financial statement that was binding for us until 2022. So in this context, I can give you a central outlook for PZU. So further growth of the combined ratio for MTPL nearing, let's say, 100% maybe in both segments with a quite good profitability of MOD and a quite recurring profitability, historically representative profitability of nonmotor business. But unfortunately, as you know, the world has changed. It changed on the 23rd of December. So starting from the first -- January 1, this will be now measured differently. So now we will have the new equivalent of the technical account. So the same events will be seen differently reflected differently in the financial statement. So as I've already told you, we will be back soon, and we will give you just a form of a recalibration of how you should approach PZU in the context of these new requirements, the new standard. So in the old world, yes, the answer would be yes. So have a look at the presentation, the claim ratio, the profitability of different groups. So this, you can calculate it. But as insurance liability will be measured differently and the costs will be presented differently in the technical account. So the levels will be different. The levels will change. And I simply wanted to bring this to your attention. So the -- now the question is about the scale of this one-off event in the corporate assets. I cannot address this question for obvious reasons. So I can only say that without this event, this corporate would be -- in the black would be -- will have a positive result. So by this -- judging by what I've just said, you can try to estimate the value and the effect.

MTPL market in 2023 with claims inflation rising, what are your expectation from a market for MTPL tariff hikes this year?

[Interpreted] Well, I can only rely on the current situation of the market. And the market hasn't seen any tariff hikes for now. What we've seen so far is a gradual adaptation to the changes, regulatory changes also pertaining to the claims ratio. And also speaking about the outlook, so I think that we should take 2 scenarios into consideration. The first one is what I've just said. So what -- the first one is actually what has happened in Q1. And as I've already said, no important hikes here. So in the long run, if this is maintained, the market will have to adjust to the new claim ratios on the one hand, increasing because of the inflation and also offset by lower frequency rates. Or alternatively a situation where in Q2 or the second half of the year, there might be some bigger movements in the market. But today, I would say that this is not very likely the second scenario. But let me stress once more that there is a very dynamic growth of quotations on the market for MTPL. Now this means that customers want to check out the market. And obviously, you can draw the conclusions yourself, what it means for the market.

Net margin is running above 20% for 2 quarters in a row. Do you expect this to be a sustainable level going forward?

[Interpreted] Well, I already answered this question to a certain extent, but also let me add a point here. Well, it's depends on which of these 2 scenarios materializes. And today, while it's difficult to tell because as I've said, we're discussing an unprecedented event. Also, the new standard has been implemented and that also means that we will allocate the results from the location operation in the context of assets assigned to cover these technical obligations differently, we'll do it differently now. So as I've said, some things will have to be recalibrated. Therefore, we want to meet once more with you. We want to get back to you of this matter. But I think that in the long run, if you speak about the real allocation of the profit from investments to the segment and not theoretical one. And also mentioning here the security instruments, well, in the old world, this is a huge -- a very huge challenge. Okay. I think this has exhausted all the questions that have come in, both online and offline. So thank you very much for all your questions. Thank you very much for your attendance, for your attention. And do follow us to follow our updates in the context of all the information I have given you today. Those of you, ladies and gentlemen, who still if you desire for conversation, for more conversation with us, contact our Investor Relations employees or talk to me directly. Thank you for your attention today. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]