PZU took a notable hit to Q4 investment earnings following the global bond market sell-off. The sum of investment income and banking sector net interest earnings came to PLN 686 mln, 23% below consensus, down 36% from the prior quarter on a PLN 491 mln net on realization and impairments of investments.

Premium growth continued at a double digit annual pace with gross written premium collection up 12.6% year on year on very strong gains in property and casualty segments. Net earned premiums were up by a stronger 23% year on year.

The mass market property and casualty segment continued to drive insurance earnings. Q4 operating profits were up 2.4 times to PLN 266.7 mln. On net earned premium growth of nearly 26% year on year, above claims growth, the combined ratio for the segment fell 7 pps to 92%, nearly enough to offset deterioration in corporate P&C.

Corporate P&C suffered a massive rise in its combined ratio to over 100% on a surge in claims to 2.5 times the prior year level. Segment EBIT fell 83% to PLN 29 mln.

Life insurance benefitted from a PLN 216 mln reversal on provisions as PZU updated assumptions following a decline in benefits awarded for permanent health impairments in recent years, management said. Segment EBIT rose by PLN 237 mln with an adjusted margin up 0.9 pps to 24.1%, management claimed in its earnings presentation.

But life insurance proved slow-growth in the group segment, with gross written premiums up 1.1%. The relatively tiny individual segment noted premium growth near 16%.

The group result mixes in the 29.22%-owned Alior Bank, consolidated since December 2015, skewing y/y comparisons.