PZU：MTPL仍是痛点，评级下调至持有

Issuer of report:HSBC Securities and CapitalMarkets (India) Private LimitedView HSBC Global Research at:https://www.research.hsbc.comDOWNGRADE TO HOLDTARGET PRICE(PLN)65.00SHARE PRICE(PLN)63.32as of16 May 2025MARKET DATAMarket cap(PLNm)Market cap (USDm)3MADTV (USDm)FINANCIALS AND RATIOS(PLN)Year to12/2024aIFRS EPSIFRS EPS (prev)Change (%)Consensus EPSPE (x)Dividend yield (%)RoTNAV (%)52-WEEK PRICE(PLN)Source:LSEGIBES, HSBC estimatesBhavin Rathod*, CFAAnalystHSBC Securities and Capital Markets (India) PrivateLimitedbhavinkumarrathod@hsbc.co.in+9180 4550 2993Steven Haywood*Analyst, European InsuranceHSBC Bank plcsteven.haywood@hsbcib.com+44 20 7991 3184Kailesh Mistry*, CFAGlobal Head, Insurance & Digital FinanceResearchHSBC Bank plckailesh.mistry@hsbc.com+44 20 7991 6756* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquitiesInsurancePoland05/24Target price: 65.00 ◆◆◆ PREVIOUS TARGET(PLN)63.50UPSIDE/DOWNSIDE+2.7%54,678Free float14,299BBG29RIC12/2025e12/2026e6.197.016.956.196.736.960.04.00.05.776.746.7210.29.09.17.17.17.420.521.619.911/24High: 63.32 Low: 39.15 Current: 63.32 60%PZU PWPZU.WA12/2027e7.237.220.17.138.87.719.435.0052.0069.0005/25 2PZU: Financials & valuationP&L Summary (PLNm)Year to Dec2024Corporate insurance749Mass insurance1,176Group & individual continued1,974Individual Life379Banking11,31411,505 10,918 10,631Baltics and Ukraine408Pension162Investments208Others(674)(662)Group operating profit15,69616,787 16,269 16,373Profit from associates8Profit before tax15,70416,787 16,269 16,373Income tax(3,484)(4,029)(3,905)(3,930)Net income12,22012,758 12,364 12,444Minorities(6,879)(6,709)(6,360)(6,200)Net profit to equity holders of parent5,341Balance sheet summaryYear to Dec2024Shareholders' funds32,111Minority interests33,146Total Equity65,257Intangible assets5,165Tangible NAV (ex-minorities)26,946Operating metricsYear to Dec2024Non-life Insurance revenue (Poland)17,810-growthNon-life combined ratio-Poland92.5%-Corporate Insurance85.1%-Mass Insurance94.2%-International markets97.5%-Baltics87.1%Life Insurance revenue (Poland)8,584-growthLife margins-% of Insurancerevenue-Group & individual continued25.2%-Individual life50.9%Per share data (PLN)Year to Dec20242025eBook value37.2Comprehensive Equity45.1Tangible NAV31.2IFRS EPS (Diluted)6.19DPS4.47Operating FCF4.49 Tailwindsappear to be priced inPZU shares are up38% ytd, outperforming the insurance sector by20% and localmarketby10%.Whileconsensus EPShasremainedbroadly stable, the outperformance wasratheraresult ofmultiple expansion.We believe that following factors played out favourably for thegroup andhavehelped investor sentiment:◆MTPL rateshaveexhibited signs of turnaround since the start of 2024,providingsupport tothe view thatmotor underwriting margins are settoimprove on a sustainable basis. Wageinflation,on the other hand, which remains a critical component of motor claims costs,peaked in 2Q24 and has been moderating since then.◆PZUhas beenfocused on growing its high marginnon-motorbookamidst stiffcompetition withinthe MTPLlineandhasthusbeenable to offset the pressure fromtheMTPL line.Averagequarterly GWP growthin3Q23-3Q24wasc20%,surpassing the growth of the competition.◆The new group strategyannounced in December 2024appeared well receivedby themarket as its chalks out clear growth path for individual segments◆The uncertaintyaboutgroup’s dividend policy under new management has also been put torest with the announcement ofa 2024DPS of PLN4.47,implyinga100% payout ofthe2024local GAAPnet profit.Exhibit1: Share price performance(rebased to 100)708090100110120130140150Jan-24Mar-24May-24Jul-24Sep-24PZUWIG 20Source:LSEG DatastreamWe believe thatpositivesarenowlargely priced inand,in the absence of furthernewcatalysts,webelieve afurther reratingis unlikely.1Q25 results came in better than market expectations,but in large parts were driven bytheabsence of any large events and a favourable reserverelease in corporate insurance,which are largely one off in nature.We do not expectthe1Qresults to trigger majorconsensusEPS revision.Nevertheless,the next key event towatchfor willbetheorganisationof the new holding structureand clarity aroundthe fate of PZU’s stake in Banking entitiesthat will likely be announced in 3Q.Given all options remain open, thepossibility of PZU selling out its Banks stake cannot be ruledout, but as we flagged inPZU: Focus to revert tofundamentals post-rejig(1 April 2025),such ascenario should be evaluated in light oftheimplications for PZU’s current strategy. Nov-24Jan-25Mar-25May-25Insurance sectorPolish Banks 3 Valuation no longerappears attractiverelativeto historyFollowing strong priceperformance,PZUsharescurrentlytradeabovetheirhistorical averages.With a consensus12m forward PE of 9.6x,shares trade at24%/11% PE premiumstothe1Y/5Yaverages, respectively. Also relative toWIG20,it tradesataPEpremiumof 5%vsa5-yearaverage discount of8%. Relative to the se