5.2 Amendments to the applied IFRS

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5.2.1. Standards, interpretations and amended standards effective from 1 January 2017

The following changes in standards were applied to the consolidated financial statements.

Standard/interpretationDate of entry into effect for annual periods beginning onRegulation approving the standard or interpretationCommentary
Amendment to IAS 12 – Recognition of deferred tax assets for unrealized losses1 January 20171989/2017The amendment clarifies, among others, that unrealized losses related to debt instruments measured at fair value for which the tax value is their initial cost may give rise to deductible temporary differences.   The change did not affect the consolidated financial statements.
Amendment to IAS 7 – Disclosure Initiative1 January 20171990/2017The amendment results in the presentation of disclosures enabling an assessment of changes in the value of liabilities created as part of financial activity (resulting from either cash flows or changes of a non-cash flow nature).   The PZU Group made the relevant disclosures in the consolidated financial statements
Amendments to IFRS 2014-20161 January 2017182/2018Amendment relating to IFRS 12 – disclosures pertaining to assets classified as held for sale or discontinued operations in accordance with IFRS 5;   The change did not affect the PZU Group’s consolidated financial statements.
   

5.2.2. Standards, interpretations and amended standards not yet effective

5.2.2.1. IFRS 9 – Financial Instruments

IFRS 9 Financial Instruments, published by the IASB in July 2014 and approved by the European Commission in November 2016, replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

In October 2017, the IASB published amendments to IFRS 9 entitled Prepayment features with negative compensation.

The amendment is effective for annual periods beginning on or after 1 January 2019. Earlier application is permitted.

The PZU Group will apply IFRS 9 as of 1 January 2018, in the version published in July 2014 and it will take advantage of the possibility of earlier application of the above amendments to IFRS 9.

IFRS 9 sets out new requirements for the classification and measurement of financial instruments, impairment of financial assets and hedge accounting.

Estimated impact of the application of the new standard

The PZU Group is still analyzing the practical aspects of applying the IFRS 9 requirements in the context of the consolidation of receivables from loans taken over in the Pekao and Alior Bank acquisitions, including the initial fair value measurement under IFRS 3 and, in particular, the allocation of impairment losses to stages as at the date of obtaining control over Pekao and Alior Bank. In addition, the final purchase price allocation of the Pekao acquisition will be important for the assessment of the cumulative effect of the application of IFRS 9 on the PZU Group’s consolidated equity.

Accordingly, the calculation of cumulative effect of the application of IFRS 9 on the PZU Group’s consolidated equity has not yet been completed.

Below we present an estimate, prepared as at 1 January 2018, of the effect that the application of IFRS 9 would have on the selected components of the PZU Group, i.e. mainly on the insurance companies and on the banks – the Pekao Group and the Alior Bank Group (their data were presented based on their consolidated financial statements). The effect of changes in impairment losses under IAS 39 on credit risk losses under IFRS 9, as shown below, will be partially offset by expected credit losses already recognized in the consolidated financial statements as a decrease in the value of loan receivables of the Pekao Group and the Alior Bank Group, in the part in which they constitute an element of fair value measurement recognized at the moment PZU obtained control over the banks.

 Change in allowances for expected credit lossesChange of classification and measurement  Tax effect  Total effect on equityof which:
     on revaluation reserve  on retained earningson non- controlling interest
PZU Group (w/o banks)(83)1314(56)(146)90-
Alior Bank Group(1,026)5195(826)4(270)(560)
Pekao Group(1,094)221152(721)43(187)(577)
 

Classification and measurement of financial assets

This standard introduces a new approach to the classification of financial assets, which depends on:

  • the entity’s business model for managing the financial assets and
  • the contractual cash flow characteristics of the financial asset.

According to IFRS 9 financial assets are classified for valuation at:

  • amortized cost;
  • fair value through profit or loss;
  • fair value through other comprehensive income.

The instruments are classified as at the time of application of IFRS 9 for the first time or at the time of recognition of the instrument. The classification may only be changed in very rare cases when the business model changes.

Business models

The PZU Group has evaluated the business models in which financial assets are managed and management information is provided. This analysis included, among others:

  • how the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity's key management personnel;
  • the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed.

Financial assets held for trading and those that are managed and evaluated at fair value will be measured at fair value through profit or loss because they are not held for the purpose of obtaining only contractual cash flows, or for both the purpose of obtaining contractual cash flows and selling financial assets.

SPPI test

In order to evaluate whether contractual cash flows consist of solely payments of principal and interest (so called the SPPI test), a special test is performed. The principal amount is defined as the fair value of the financial asset at initial recognition. Interest consists of consideration for the time value of money, for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

The SPPI test examines whether a financial asset contains contractual terms that could change the timing or amounts of contractual cash flows so that the condition of obtaining solely payments of principal and interest would not be met. In making its evaluation, the PZU Group takes the following into account:

  • conditional events that could change the amounts and timing of cash flows;
  • factors increasing interest;
  • terms of prepayment and extension;
  • terms limiting the right to obtain cash flows;
  • factors that modify the time value of money, e.g. periodic resets of the interest rate.

Financial assets measured at amortized cost

A financial asset is classified as financial asset measured at amortized cost if both of the following conditions are met:

  • the financial asset is held within a business model whose objective is achieved by holding financial assets in order to collect contractual cash flows,
  • it passes the SPPI test – the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These conditions are met by the financial assets classified according to the current IAS 39 as loans and receivables (of which most credit receivables from clients) and financial assets held to maturity, except for the financial assets, for which it was resolved after an analysis that their terms may result in cash flows that are not solely payments of principal and interest on the principal amount outstanding.

Financial assets measured at amortized cost also include purchased financial assets impaired due to credit risk. Such financial assets were acquired in connection with the merger with a separate part of Bank BPH in 2016 and Bank Meritum in 2015. As a result, loans and debt securities (treasury bonds) of an investment nature were classified as measured at amortized cost. Under IAS 39 provisions, which were applied until 31 December 2017, the items were classified respectively as loans and receivables, financial assets available for sale and financial assets held to maturity.

An assessment was also made of the business model for investment securities, which are mostly held to obtain cash flows and for sale, as a result of which it was concluded that it was common practice in some of these securities to hold them to obtain cash flows and the intentions with respect to them had not changed. Therefore, it was concluded that the appropriate business model for these securities is a model whose objective is achieved by holding financial assets to collect contractual cash flows and accordingly they were reclassified to assets measured at amortized cost. Previously, these securities were classified as available for sale and measured at fair value through equity.

Financial assets measured at fair value through other comprehensive income

Financial assets are measured at fair value through other comprehensive income if both of the following conditions are met:

  • the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets,
  • it passes the SPPI test – the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These conditions are satisfied in particular by the debt instruments, which under IAS 39 were classified as financial assets available for sale.

Since some receivables from clients on account of loans and corporate and municipal securities were classified into a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, these loans will be measured at fair value through equity. Before applying IFRS 9, these items were measured at amortized cost in accordance with IAS 39.

In connection with the possible sale of some assets from the portfolio of securities previously held to maturity, they were reclassified to fair value through equity, because the relevant business model for these securities is a model whose objective is achieved by both collecting cash flows and selling financial assets. Before applying IFRS 9, these items were measured at amortized cost in accordance with IAS 39.

This category of financial assets also includes equity instruments, for which an irrevocable designation has been made to be measured at fair value, with subsequent changes in fair value recognized in other comprehensive income.

Financial assets at fair value through profit or loss

This category includes other financial instruments that do not meet the conditions for being classified as financial assets measured at amortized cost or fair value through other comprehensive income. This pertains in particular to the following financial assets:

  • financial assets designated at fair value through profit or loss,
  • financial assets classified under IAS 39 as held for trading,
  • derivatives,
  • participation units that are not equity instruments and to which the SPPI condition does not apply, which solely payment of principal and interest, classified under IAS 39 as financial assets available for sale,
  • financial assets that have not passed the SPPI test - for which contractual terms result in cash flows not being solely payments of principal and interest,
  • financial assets held within a business model other than the one whose objective is to hold financial assets in order to collect contractual cash flows or both to collect contractual cash flows and to sell financial assets,
  • equity instruments that, in accordance with IAS 39, were classified as available for sale and measured at fair value through equity but not irrevocably designated as at fair value through equity,
  • loan receivables from customers for loans under which contractual cash flows are not solely payments of principal and interest due to financial leverage increasing the variability of contractual cash flows. This applies mainly to student loans, loans with subsidies from the Agency for Restructuring and Modernization of Agriculture and some corporate exposures. Before applying IFRS 9, these items were measured at amortized cost in accordance with IAS 39.

Classification and measurement of financial liabilities

Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss include those instruments that were classified in the same category under IAS 39, in particular:

  • derivatives,
  • liabilities on borrowed securities (short sale),
  • investment contracts for the client’s account and risk (unit-linked),
  • liabilities to members of consolidated mutual funds.

Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include those instruments that were classified in the same category under IAS 39, in particular:

  • deposit obtained by PZU Group’s banks,
  • securities issued by banks,
  • loans received,
  • liabilities on the issue of own debt securities,
  • subordinated liabilities
  • liabilities under repurchase transactions.

Impairment

IFRS 9 introduces an obligation to recognize not only incurred losses, as in the case of IAS 39, but also expected credit loss (ECL). This means a significant increase in the probability weighted estimates of expected credit loss.

The new impairment model is applied to the following financial assets that are not measured at fair value through profit or loss:

  • loan receivables from clients
  • debt securities
  • lease receivables
  • lending commitments and issued financial guarantees (previously impairment losses were recognized in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets).

For debt assets measured at amortized cost and at fair value through other comprehensive income, impairment is measured as:

Lifetime ECL are the expected credit losses that result from all possible default events over the expected life of a financial instrument.

12-month ECL is the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date.

The Group measures the loss allowance at an amount equal to lifetime ECL, except for the following instruments, for which 12-month ECL is recognized instead:

  • debt securities that have low credit risk at the reporting date. Low-risk debt securities are those securities that have been assigned an external investment-grade rating,
  • other financial instruments for which credit risk has not increased significantly since initial recognition.

Change of the approach to calculation of impairment losses will have significant consequences in the case of modelling of the credit risk parameters and final amount of the charges made. The loss identification period and IBNR charge will no longer be used. The charge will be calculated in three categories:

  • stage 1 – stage with low credit risk – 12-month ECL will be recognized;
  • stage 2 – the portfolio in which a significant increase of credit risk occurs – lifetime ECL will be recognized;
  • stage 3 – impaired loans – lifetime ECL will be recognized.

The impairment loss calculation method also impacts the method of recognizing interest income – for stages 1 and 2 interest income will be determined on the basis of gross exposures, and in stage 3 on the net basis. If credit risk increases significantly (stage 2) then the expected credit losses will be recognized earlier, which will contribute to higher impairment losses and consequently affect the financial result.

The PZU Group recognizes the cumulative changes in lifetime ECL since initial recognition as a loss allowance for ECL from purchased or originated credit-impaired financial assets (POCI).

Calculation of PD and LGD parameters

PZU Group uses the following parameters to estimate loss allowances:

  • Probability of Default (PD) – probability of default of a counterparty over a specified time horizon,
  • Loss given Default (LGD) – loss given default, expressed as a percentage of the total exposure in case of a counterparty’s insolvency.

For issuers and exposures that are externally rated, PDs is assigned on the basis of the average market default rate for the rating classes concerned. First, the internal rating of an entity/issue is determined in accordance with the internal rating methodology. The tables published by external rating agencies are used to estimate average PD.

The Moody’s RiskCalc model is used for issuers of corporate bonds and corporate loans, for which no external rating is available. The EDF parameter (expected default frequency) is used to estimate PD. When estimating lifetime PD for exposures with maturity above 5 years (in the RiskCalc model, the forward EDF curve refers to a 5-year period), it is assumed that in subsequent years PD is constant and corresponds to the value determined by the model for the 5th year.

For issuers of corporate bonds and corporate loans, 12-month LGD is determined based on the Moody’s RiskCalc model (LGD module). When estimating lifetime LGD for exposures with maturity above 5 years, it is assumed that in subsequent years LGD is constant and corresponds to the value determined by the module for the 5th year.

If a credit rating agency has allocated a separate recovery rate to the instrument concerned then this parameter is used. For a given RR parameter the formula: LGD = 1-RR is applicable.

Where the RiskCalc model cannot be used to estimate LGD levels and where the instrument does not have LGD awarded by an external rating agency then the average RR should be used, based on market data (properly differentiating for the corporate and sovereign debt class) from external rating agencies, i.e. Moody's, Standard&Poor's or Fitch, using the following formula: LGD = 1-RR. When lifetime LGD must be estimated, the value of this parameter is assumed to be constant. The degree of subordination of debt is taken into account when selecting data for LGD.

Change in credit risk since initial recognition

At each reporting date, the PZU Group shall assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the PZU Group should use the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Group compares the PD for the financial instrument as at the reporting date with the PD as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort.

It is assumed that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. The PZU Group assumes that financial instruments have low credit risk at the reporting date even if it has an external investment-grade rating.

For financial instruments, the PZU Group assesses whether credit risk has increased significantly by comparing:

  • lifetime PD at the reporting date, with
  • lifetime PD estimated at the time of initial recognition.

The PZU Group regularly monitors the effectiveness of the criteria used to identify a significant increase in credit risk, in order to confirm that:

  • the criteria allow for identification of a significant increase in credit risk before the impairment of the exposure occurs,
  • the criteria do not coincide with the 30-day past due period,
  • the average time between identifying a significant increase in credit risk and impairment is reasonable,
  • exposures are generally not transferred directly from stage 1 (12-month ECL) to stage 3 (impairment)
  • there is no unreasonable volatility of allowances for expected credit losses resulting from transfers between 12- month ECL and lifetime ECL.

Hedge accounting

Upon first application of IFRS 9 it is possible to opt to continue application of the hedge accounting requirements in accordance with IAS 39 instead of section 6 of IFRS 9. The PZU Group has made a decision to continue to apply IAS 39 to hedge accounting. However, in respect to hedge accounting disclosures, the Group will apply IFRS 7 Financial Instruments: Disclosures amended by IFRS 9, because the option to choose an accounting policy does not exempt the Group from the application of the new disclosure requirements.

Disclosures

The requirements of IFRS 9 will result in a significant change in the presentation disclosures pertaining to financial instruments. The PZU Group intends to take advantage of the exemption not to restate the comparative data from prior periods in respect to the changes resulting from classification and measurement (including impairment). The differences in the carrying amount of financial assets and liabilities arising from the application of IFRS 9 will be recognized in the “Retained earnings” item.

5.2.2.2. Other standards, interpretations and amended standards issued but not effective:

  • Approved by the regulation of the European Commission

    Standard/interpretation  Effective date for annual periods starting fromRegulation approving the standard or interpretation    Commentary
IFRS 15 – Revenue from Contracts with Customers1 January 2018              1905/2016IFRS 15 specifies how and when to recognize revenues and requires the presentation of more detailed disclosures. The standard replaces IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of interpretations related to revenue recognition. The standard applies to almost all agreements with customers (the main exceptions concern lease agreements, financial instruments and insurance agreements). The fundamental principle of the new standard is to recognize revenues in a manner that reflects the transfer of goods or services to customers and in an amount that reflects the value of consideration (i.e. the payment) which the company expects to obtain a right to in exchange for the goods or services. The standard also provides guidelines for recognizing transactions that were not regulated in detail in previous standards (e.g. revenues from services or modification of agreements) and contains more comprehensive explanations on the recognition of agreements with multiple deliverables. The standard does not apply to insurance contracts, financing arrangements and secondary activity (e.g. sale of fixed assets).   The PZU Group will apply IFRS 15 in accordance with the approach described in section C3 b) – retrospectively, with joint effect for contracts in force as at 1 January 2018 (date of initial application) recognized once as at that date, which will entail the need to disclose additional data for 2018 also in compliance with the prevailing principles. The PZU Group has analyzed the impact the new standard will have on agreements signed by PZU Group entities and has not identified any agreements, for which application of IFRS 15 would have a material effect on the consolidated financial statements. This is because revenues covered by IFRS 15 are of secondary importance to the financial reporting of the PZU Group.
IFRS 16 – Leases1 January 2019      1986/2017IFRS 16 replaces IAS 17 Leases and any interpretations related to this standard. In respect of lessees, the new standard eliminates the distinction between financial leases and operating leases. The recognition of current operating leases in the statement of financial position will result in the recognition of a new asset (the right to use the leased object) and a new liability (the liability of lease payments). The rights to use the leased object will be subject to amortization and interest will be charged on the liabilities. This will generate greater costs at the initial stage of the lease, even if the parties have agreed on fixed annual payments. Recognition of leases on the lessor’s side will in most cases remain unchanged due to the maintenance of the breakdown between operating leases and financial leases.
Clarifications to IFRS 15 – revenue from contracts with customers1 January 2018      1987/2017The clarifications provide guidelines concerning the identification of the obligations to fulfil benefits (determining in which instances the promises set forth in a contract constitute “separate” goods or services that should be settled separately), accounting for intellectual property licenses (determining in which situations revenues from intellectual property licenses should be settled “over a certain period” and in which situations “at a given point in time”) and the distinctions between a principal and an agent (stating more precisely that a principal under a given determination controls a good or service prior to turning it over to a client). Changes to the standard also include additional practical solutions facilitating the implementation of the new standard.
Amendment to IFRS 2 – Classification and valuation of share-based payment1 January 2018289/2018The amendment provides guidance harmonizing accounting requirements for share-based payments settled in cash which adopt the same approach as that applied in the case of share-based payments settled in equity instruments, and contains an exception to IFRS 2 and clarification of situations where share-based payments settled in cash are changed to share- based payments settled in equity instruments due to changes in contractual provisions.   The Group is currently analyzing the impact of these changes on its consolidated financial statements.
Amendment to IFRS 4 – Application of IFRS 9 ‘Financial Instruments’ together with IFRS 4 ‘Insurance Contracts’1 January 2018          1988/2017In accordance with the amendment to IFRS 4 issued by the International Accounting Standards Board on 12 September 2016, insurance companies may defer the implementation of IFRS 9 until the entry into force of IFRS 4 Phase II concerning insurance contracts, but by no later than 1 January 2021, however the PZU Group may not take advantage of this exemption due to the significant share of banking activity. The Commission of the European Union has also allowed financial conglomerates to defer application of IFRS 9 by insurance entities in the conglomerates, provided that no financial instruments are transferred between insurance and banking entities within the conglomerates. The report includes information on insurance companies that continue to apply IAS 39 and the disclosures required under IFRS 7 are provided separately for the insurance entities applying IAS 39 and for other entities applying IFRS 9.   The PZU Group has decided not to take advantage of the possibility mentioned in the regulation.
Amendments to IFRS 2014- 20161 January 2018182/2018The amendments pertain to: IFRS 1 – waiver of exemptions for first time adopters as regards certain disclosures; IAS 28 – as regards the election by specified entities to measure at fair value through profit or loss interests in associates and joint ventures in accordance with IFRS 9.   The amendments did not affect the PZU Group’s consolidated financial statements.

  • Not approved by the European Commission:

Name of standard/ interpretationDate of issue by the International Accounting Standards BoardDate of entry into effect for annual periods starting (according to the International Accounting Standards Board)Commentary
Amendment to IAS 40 – Transfers of Investment Property8 December 20161 January 2018The amendment clarifies when the entity should transfer properties under construction to or from the investment property category in the event of change of the nature of the use of such property in situations other than specifically listed in IAS 40.   The amendment will not affect the PZU Group’s consolidated financial statements.
IFRIC interpretation 22 – Foreign Currency Transactions and Advance Consideration8 December 20161 January 2018The interpretation clarifies that the exchange rate should be applied in recognizing a transaction denominated in a foreign currency in accordance with IAS 21 if the client makes a non-refundable payment of an advance consideration for delivery of goods or services. The interpretation will not affect the PZU Group’s consolidated financial statements.
IFRIC 23 interpretation – Uncertainty over Income Tax Treatments7 June 20171 January 2019The interpretation is to be applied to the determination of taxable profit, tax loss, tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.   The interpretation will not affect the PZU Group’s consolidated financial statements.
Amendment to IFRS 912 October 20171 January 2019According to the current version of IFRS 9, certain options, which force a lender to accept reduced compensation for granting financing (in the case of a negative compensation payment) do not pass the SPPI test; accordingly any instruments containing such options cannot be classified as measured at amortized cost or at fair value through other comprehensive income. According to the amendment, the positive or negative sign of the prepayment amount will not be important; this means that, depending on the interest rate in effect when the agreement is terminated, payment can be made to a party resulting in prepayment. This compensation must be calculated in the same manner for both a penalty for prepayment and also for a gain earned on prepayment.   The PZU Group is currently analyzing the impact of this amendment on the consolidated financial statements.
Amendment to IAS 28 – Long-term shares in associates and joint ventures12 October 20171 January 2019According to the amended IAS 28, long-term shares in associates and joint ventures for which the company does not apply the equity method, the applicable standard is IFRS 9, also with regard to impairment.   This amendment will not have any material effect on the PZU Group’s consolidated financial statements.
Amendments to IAS 19 Employee Benefits7 February 20181 January 2019The amendment contains clarifications for the guidelines in case of a plan amendment, curtailment or settlement during the reporting period. The amendments require entities, after such an event, to use updated actuarial assumptions to calculate current service cost and net interest for the remaining part of the reporting period. The amendments also clarify how the plan amendment, curtailment or settlement affects the requirements related to the limit on the defined benefit asset. The IASB has decided that the scope of these amendments does not cover the settlement of “significant market fluctuation” (in euro). The amendments apply to plan amendments, curtailments or settlements that will take place on or after 1 January 2019, with the possibility of earlier application.
Amendments to IFRS 10, IFRS 12 and IFRS 28 – Sale or transfer of assets between the investor and an associate or a joint venture11 September 2014Deferred until an unspecified dateThe main consequence of the amendment is the recognition of total profit or loss in a situation where the transaction concerns an organized business (regardless of whether it is located in a subsidiary or not), while partial gains or losses are recognized when the transaction relates to separate assets that do not form an organized business, even if they are located in the subsidiary.   The amendments did not affect the PZU Group’s consolidated financial statements.
Annual improvements to IFRS 2015-201712 December 20171 January 2019The amendments pertain to: 1st IFRS 3 - the amendments clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business; 2nd IFRS 11 - the amendments clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business. 3rd IAS 12 - the amendments specify that any income tax consequences of dividends (i.e. profit distribution) should be recognized in the profit and loss account, regardless of how the tax arises; 4th IAS 23 - the amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings The amendments will have no significant effect on the PZU Group’s consolidated financial statements.
IFRS 17 – Insurance contracts18 May 20171 January 2021The purpose of the standard is to establish the uniform accounting principles for all types of insurance contracts, including the reinsurance contracts held by the insurer. Introduction of this unified standard will ensure comparability of financial reports between different entities, states and capital markets.   At this stage, it is not possible to estimate the effect of application of IFRS 17 on the PZU Group’s comprehensive income and equity.

In summary, in the opinion of the PZU Group, the introduction of the above standards and interpretations (except for IFRS 9) will have no material effect on the accounting principles applied by the PZU Group.

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