Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : PZU SA Supervisory Board Report for 2022

Attachment to Resolution No. URN/78/2023

adopted by the PZU SA Supervisory Board on 10 May 2023

PZU SA SUPERVISORY BOARD REPORT FOR 2022

1. Composition of the Supervisory Board

As at 1 January 2022, the following persons sat on	•	Józef Wierzbowski - Supervisory Board
the PZU SA Supervisory Board:		Member,
• Paweł Mucha - Supervisory Board Chairman,	•	Maciej Zaborowski - Supervisory Board
• Paweł Górecki - Supervisory Board Deputy		Member.
	Chairman,	On 27 October 2022, the Supervisory Board elected
• Robert Śnitko - Supervisory Board Secretary,	Robert Jastrzębski to the position of the
•	Marcin Chludziński - Supervisory Board	Supervisory Board Chairman. Accordingly, the
	Member,	composition of the PZU SA Supervisory Board was
• Agata Górnicka - Supervisory Board Member,	as follows:
•	Robert Jastrzębski - Supervisory Board	•	Robert Jastrzębski - Supervisory Board
	Member,		Chairman,
•	Radosław Sierpiński - Supervisory Board	• Paweł Górecki - Supervisory Board Deputy
	Member,		Chairman,
•	Elżbieta Mączyńska-Ziemacka - Supervisory	• Robert Śnitko - Supervisory Board Secretary,
	Board Member,	•	Marcin Chludziński - Supervisory Board
•	Krzysztof Opolski - Supervisory Board		Member,
	Member,	• Agata Górnicka - Supervisory Board Member,
•	Józef Wierzbowski - Supervisory Board	•	Elżbieta Mączyńska-Ziemacka - Supervisory
	Member,	•	Board Member,
•	Maciej Zaborowski - Supervisory Board	Krzysztof Opolski - Supervisory Board
	Member.	•	Member,
On 31 August 2022, Mr. Paweł Mucha tendered his	Radosław Sierpiński - Supervisory Board
resignation from the function of a Supervisory	•	Member,
Board Member. On 1 September 2022, the PZU SA	Piotr Wachowiak - Supervisory Board
Shareholder Meeting appointed Piotr Wachowiak	•	Member,
to the Supervisory Board. Accordingly, the	Józef Wierzbowski - Supervisory Board
composition of the PZU SA Supervisory Board was		Member,
as follows:	•	Maciej Zaborowski - Supervisory Board
• Paweł Górecki - Supervisory Board Deputy		Member.
	Chairman,	The independence criteria set out in § 20 sec. 8 of
• Robert Śnitko - Supervisory Board Secretary,	the PZU SA Articles of Association, set out in the Act
•	Marcin Chludziński - Supervisory Board	of 11 May 2017 on Statutory Auditors, Audit Firms
	Member,	and Public Supervision were satisfied by Robert
• Agata Górnicka - Supervisory Board Member,	Jastrzębski, Paweł Górecki, Marcin Chludziński,
•	Robert Jastrzębski - Supervisory Board	Agata Górnicka, Elżbieta Mączyńska-Ziemacka,
	Member,	Krzysztof Opolski, Robert Śnitko, Piotr Wachowiak
•	Elżbieta Mączyńska-Ziemacka - Supervisory	Józef Wierzbowski and Maciej Zaborowski.
	Board Member,	No PZU SA Supervisory Board Member have any
•	Krzysztof Opolski - Supervisory Board	actual or material relations with any shareholder
	Member,	holding at least 5% of the total vote in the
•	Radosław Sierpiński - Supervisory Board	Company.
•	Member,	As at 31 December 2022, the composition of the
Piotr Wachowiak - Supervisory Board
	Member,	PZU SA Supervisory Board remained unchanged.

1. Activity of the Supervisory Board

During the reporting period, the Supervisory Board	provisions of the Articles of Association and the
carried out its activity on the basis of the following	Rules and Regulations, the Supervisory Board held
regulations: the Commercial Company Code, the	properly convened and prepared meetings, while
Insurance and Reinsurance Activity Act, other	maintaining a high attendance level.
generally applicable laws, the Company's Articles	During the financial year, the Supervisory Board
of Association and the Rules and Regulations of the	held seventeen meetings on the following dates:
Supervisory Board. In compliance with the	•	20 January 2022,

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• 4-7February 2022,
• 25 February 2022,
• 3-23March 2022,
• 23 March-7 April 2022,
• 7 April 2022,
• 27 April 2022,
• 18 May 2022,
• 1-9June 2022,
• 28 June 2022,
• 28-29July 2022,
• 24-31August 2022,
• 28 September 2022
• 27 October 2022,
• 23 November 2022,
• 16 December 2022,
• 21 December 2022.

The Supervisory Board made its decisions in the form of resolutions or opinions forwarded to the PZU SA Management Board or Shareholder Meeting.

In the reporting period, the Supervisory Board adopted 183 resolutions, including 10 resolutions by circulation (the list of resolutions forms Attachment 1 to this Report).

Most resolutions of the Supervisory Board, with the exception of Resolution Nos. URN/30/2022, URN/33/2022, URN/139/2022, URN/153/2022 and URN/158/2022, were adopted unanimously while maintaining the quorum required by the applicable laws.

The agendas of the Supervisory Board meeting prepared by the Chairperson of the PZU SA Supervisory Board covered all business to be dealt with by the Supervisory Board in accordance with its powers and included additional issues that the Management Board or Supervisory Board members deemed important.

All meetings were attended by a majority of PZU SA Supervisory Board members. The absence of individual persons at Supervisory Board meetings was caused mainly by important official duties.

After the adoption of Resolution No. 5/2017 of 8 February 2017 by the PZU SA Extraordinary Shareholder Meeting to define the rules for setting the compensation of Supervisory Board Members of Powszechny Zakład Ubezpieczeń Spółka Akcyjna, the adoption of resolutions justifying absence was not required (list of attendance at the meetings of the Supervisory Board forms attachment 2 to this report). Supervisory Board meetings were held in hybrid form - with the possibility of participation by means of remote communication.

In compliance with § 26 sec. 1 of the Rules and Regulations of the PZU SA Supervisory Board, invitations to attend its meetings in 2022 were sent to PZU SA Management Board members, PZU Group Directors, Managing Directors, Directors of the Head Office Departments and representatives of advisory companies and law firms cooperating with the Company within the framework of its various ongoing projects, who provided comprehensive explanations and submitted all documents regarding the Company's business. Also, the PZU SA Supervisory Board's meetings were attended by representatives of the auditor, KPMG Audyt sp. z o.o. sp. k.

Outside its meetings, the Supervisory Board was continuously informed about key aspects of the Company's business by e-mail (current and periodic reports prepared due to PZU SA's status of a public company listed on the Warsaw Stock Exchange were sent to the Supervisory Board members on an ongoing basis).

The cooperation between the PZU SA Supervisory Board and the Management Board proceeded properly with the aim of increasing the Company's value and out of concern to secure its interests. The information and materials provided by the Management Board were prepared in a clear and reliable manner, their content consistent with the requirements adopted by the Supervisory Board.

1. Material issues addressed by the PZU SA Supervisory Board

During the financial year ended 31 December 2022,	familiarized itself with other matters presented by
the PZU SA Supervisory Board addressed all	the Management Board.
matters falling under its powers in accordance	Material issues addressed by the PZU SA
with the Company's Articles of Association. Within	Supervisory Board in 2022:
the framework of its activities, the Supervisory	• ongoing assessment of the financial and
Board actively supported the Management Board	economic standing and market position of the
in the pursuit of the Company's strategic	Company and the PZU Group and their major
objectives, examined the Management Board's	strategic initiatives and plans for 2022,
motions regarding various issues that require the	• ongoing monitoring of the implementation of
consent of the Supervisory Board in accordance	the financial plan of PZU SA and the PZU
with the Company's Articles of Association and	Group for 2022,

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• monitoring the implementation status of the
  PZU Group Strategy "#PZU Potential and growth - We care about the most important things in life. PZU Group Strategy in 2021-2024
• appointment of members of the Company's Management Board, including for a new term of office beginning 1 January 2023 and spanning three full financial years from 2023 to 2025,
• suitability assessment of Management Board Members;
• assessment of PZU SA's consolidated financial statements for the year ended 31 December 2021 and recommendation to the PZU Ordinary Shareholder Meeting to approve them,
• assessment of the Management Board report on the activity of the PZU Group and PZU SA in
  2021 and recommendation to the PZU SA Ordinary Shareholder Meeting to approve it,
• assessment of the Management Board's motion on the distribution of PZU SA's net profit for the year ended 31 December 2021 and recommendation to the PZU Ordinary Shareholder Meeting to approve it,
• assessment of the PZU SA Group's consolidated financial statements for the year
  ended 31 December 2021 and recommendation to the PZU Ordinary Shareholder Meeting to approve them,
• acceptance of the PZU SA Supervisory Board report on its assessment of PZU SA's Financial Statements for the year ended 31 December 2021, the Consolidated Financial Statements of the PZU SA Group for the year ended 31
  December 2021, the Management Board Report on the Activity of the PZU Group and
  PZU SA in 2021 and the Management Board's motion to distribute PZU SA's net profit for the year ended 31 December 2021,
• approval of PZU SA's Solvency and Financial Condition Report (SFCR),
• approval of the PZU Group's Solvency and Financial Condition Report (SFCR),
• approval of the PZU Group's Risk Management
  Strategy,
• adoption of the diversity Policy for Members of PZU SA Corporate Bodies,
• selection of an audit firm to audit and review financial statements and to audit reports on solvency and financial condition of PZU SA and the PZU Group for the period of five financial years 2024-2028 with an option to extend the contract for two more financial years 2029-2030,

• adoption of the PZU SA Supervisory Board report on the activity of the PZU SA Supervisory Board as a governing body of the Company in 2021,
• ongoing monitoring of the execution of strategic projects,
• ongoing risk monitoring, including the level of the actuarial risk, market risk, credit risk, operational risk and compliance risk
• ongoing investment activity monitoring,
• monitoring of acquisition projects, which includes making relevant decisions,
• determining the principles for the provision of information by the PZU SA Management Board resulting from the Commercial Company Code,
• in connection with the changes in the PZU SA Supervisory Board - electing the Supervisory Board Chairperson and expanding the composition of the Audit Committee,
• ongoing monitoring of work of the following
  Committees: the Audit Committee, the Nomination and Compensation Committee and the Strategy Committee of the PZU SA

Supervisory Board.

During the reporting period, within the framework of ongoing monitoring of risks, the Supervisory Board was presented with the key changes to PZU SA's legal environment, leading to analysis and discussion of the challenges and risks present in PZU SA's regulatory environment. In particular, the Supervisory Board dealt with the following issues related to changes in PZU SA's existing legal and regulatory environment or the need to fulfill new obligations:

• Act Amending the Commercial Company Code and certain other acts of 9 February 2022;
• draft Act amending certain acts in connection with commitment to develop financial market and protect investors on that market;
• amendments to the Labor Code Act, including in terms of implementing into the national legal order Directive 2019/1152 of 20 June
  2019 on transparent and predictable working conditions in the European Union (the Information Directive) and Directive
  2019/1158 of 20 June 2019 on work-life balance for parents and caregivers and repealing Council Directive 2010/18/EU (the Work-Life Balance Directive).
• revision of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II);

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• International Financial Reporting Standard 17
  "Insurance Contracts" (IFRS 17);
• draft Act on Protection of Whistleblowers;
• Regulation of the European Parliament and of the Council on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, and (EU) No 909/2014 ("DORA");
• Act of 18 November 2020 on Electronic Service;
• Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector, entered into force;
• Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, amending Regulation (EU) 2019/2088;
• Commission Delegated Regulation (EU) 2021/1257 of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products;
• Commission Delegated Regulation (EU) 2021/1256 of 21 April 2021 amending Delegated Regulation (EU) 2015/35 as regards the integration of sustainability risks in the governance of insurance and reinsurance undertakings;
• Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 with regard to regulatory technical standards specifying the

details of the content and presentation of the information in relation to sustainability indicators.

With a view to properly performing its supervisory duties in the Company, the Supervisory Board established certain advisory and consultative committees. In 2022, three such committees operated within the PZU SA Supervisory Board:

• Audit Committee,
• Nomination and Compensation Committee,
• Strategy Committee.

Audit Committee

The Audit Committee was appointed by resolution of the PZU SA Supervisory Board of 3 June 2008 to

increase the effectiveness of supervisory activities performed by the Supervisory Board with regard to monitoring the Company's financial reporting, financial audit activities in the Company and effectiveness of internal control, internal audit and risk management systems in the Company. Moreover, the scope of the Audit Committee's activities may include other matters entrusted to it by the Supervisory Board. The obligation to establish an Audit Committee in PZU SA as a public-interest entity, follows from the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision.

The Audit Committee includes at least three members. Most members, including the chairperson, satisfy the independence criteria laid down in the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision. At least one Audit Committee member must hold knowledge and qualifications in accounting or audit of financial statements. Detailed tasks and principles governing the appointment and operation of the Audit Committee are laid down in the PZU SA Articles of Association, Rules and Regulations of the PZU SA Supervisory Board, the Rules and Regulations of the PZU SA Supervisory Board Audit Committee and the pertinent resolution of the Supervisory Board which, in selecting members of the Audit Committee, takes into account the competences and experience of candidates in respect of the matters entrusted to the Committee.

As at 1 January 2022, the PZU SA Supervisory Board's Audit Committee functioned in the following composition:

1. Krzysztof Opolski - Committee Chairperson,
2. Marcin Chludziński - Committee Member,
3. Robert Śnitko - Committee Member,
4. Maciej Zaborowski - Committee Member.
   Krzysztof Opolski, Robert Śnitko and Maciej Zaborowski were designated as independent members within the meaning of Article 129 Section 3 of the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision. Marcin
   Chludziński, Krzysztof Opolski and Robert Śnitko were designated as members holding qualifications in accounting or auditing financial statements. All Audit Committee Members were named as members who have knowledge and skills in the industry in which the Company operates.
   No PZU SA Supervisory Board Audit Committee Member have any actual or material relations with any shareholder holding at least 5% of the total vote in the company.

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