Slides
Page 1
PZU/Pekao Group reorganization Transaction structure, capital impact and dividend policy Warsaw, 12th June 2025
Page 2
Transaction structure | two-stage transaction designed to address identified challenges 2 #1 STAGE: Establishment of PZU (HoldCo) through division of PZU SA insurance business into an operating company (OpCo), while retaining PZU SA as a holding company with the existing shareholder structure 2# STAGE: Merger of PZU (HoldCo) (as target company) with Pekao. Shareholders of PZU SA (HoldCo) will receive shares in Pekao currently held by PZU, as well as newly issued shares of Pekao 1. Pro forma shareholder structure based on conservative estimates assuming share prices of Pekao and PZU remain at levels as of June 10, 2025 i.e. 179.70 PLN and 62.94 PLN respectively. Total pro forma market cap was calculated based on combined market cap of Pekao and PZU, excl. PZU’s stake in Pekao. At this stage, final post-transaction shareholder structure cannot be precisely determined Source: market data as of June 10, 2025 Current structure #1 Stage: PZU split / establishment of HoldCo #2 Stage: HoldCo merger with Pekao1 Pekao / PZU (HoldCo) State Treasury & PFR Free Float [~27]% [~73]% PZU Life PZU P&C (OpCo) 100% 100% State Treasury PZU Free Float 66% PZU SA (HoldCo) PZU Life PZU P&C (OpCo) 100% 100% PFR Pekao Free Float PZU SA State Treasury PZU Free Float 34% PZU Life PFR Pekao Free Float 66% Alior 100% 32% 13% 20% Further optimization of the stake in Alior (i.e., divestment or merger with Pekao) should be considered separately The diagram below is focused solely on the reorganization of PZU and Pekao, and doesn’t address Alior Bank 67% Alior 34% Alior 67% 13% 20% Pekao Operations regulated by banking law Operations regulated by insurance law Legend: Pekao Operations regulated by banking law, enabling the use of the so-called Danish Compromise
Page 3
Capital impact | potential transaction releases PLN ~15-20bn of capital 3 Current excess capital 10.7 Impact of merger under DC Pro forma excess capial +4.8 – 7.0 Potential optimization of Alior Pro forma excess capital after merger with Pekao or sale of Alior 3.9 14.6 19.5 – 21.6 +15.6 - 17.7 Illustrative estimated capital impact of the PZU/Pekao group reorganization and the application of Danish Compromise Pekao total excess capital over 14,5% TCR, PLN bn, 3Q24 PZU OpCo total excess capital over 180% SCR, PLNbn, 3Q24 1 2 3 4 5 Pekao excess capital above 14.5% TCR currently stands at PLN 3.9bn Purchase of 100% PZU in all-stock deal under the Danish Compromise (assuming Alior is kept at PZU level but DC is not applied to Alior) releases additional PLN 10.7bn of excess capital for Pekao This adds up to a total of PLN 14.6bn excess capital Potential optimization of Alior may release additional capital of up to PLN 7.0bn Hence, pro forma Pekao / PZU SA (HoldCo) post Alior optimization would have a total of up to ~PLN 21.6bn in excess capital Assuming PLN 8.2bn of excess capital (above 180% Solvency II ratio) at PZU OpCo level can be extracted post transaction, potential maximum of ~PLN 3.0bn1 of capital can be released at Pekao / PZU SA (HoldCo) Thus, resulting in total of up to ~PLN 24.6bn excess capital post transaction (TCR), % 1 2 3 4 5 6 16.9% 19.9% 22.5 – 23.4% 1. Calculated as PLN 8.2bn excess capital (post removal of Alior and Pekao stakes from EoF and SCR) at PZU level, risk-weighted at 250%, multiplied by the target capital ratio of 14.5%. Source: company information, market data as of May 23, 2025 PZU’s excess capital after potential transaction 8.2 6 TCR = (TC + issuance of Pekao merger shares +/- purchase price allocation +/- badwill/goodwill - other adj.) / (RWA + PZU (OpCo) @250%RW) Excess capital of Pekao and PZU cannot be summed up
Page 4
Dividend Policy | Potential transaction strengthens exceptional and unique dividend profile of both institutions 4 Combined entity will ensure predictable and stable dividend payouts while maintaining adequate level of equity and development of operational activities Dividend Policy Dividend Policy ≥50% of net profit to be paid out as dividends in 2025-2027 50-75% of net profit to be paid out as dividends in 2025-2027