PZU Insurer Plans $1.53 Billion Dividend as Expansion Continues

PZU SA, Poland’s largest insurer, proposed a dividend of 4.66 billion zloty ($1.53 billion) from last year’s profit, the highest payout since the company went public in 2010.

The insurer, which last month agreed to buy four units from RSA Insurance Group Plc in the biggest foreign acquisition by a Polish financial company, already paid 20 zloty a share as an advance dividend in November and will return to shareholders an additional 34 zloty a share, it said in a regulatory statement today. PZU also announced a purchase of two health-care companies from state-controlled refiner PKN Orlen SA for 45.7 million zloty, it said in a separate filing.

The payout leaves the company with “sufficient” capital for further expansion, especially as there are no “big acquisition” targets in central and eastern Europe at the moment, Marta Jezewska-Wasilewska, an analyst at Wood & Co. in Warsaw, said by phone today.

State-controlled PZU has become one of the most profitable financial companies in Poland and stepped up expansion plans since Chief Executive Officer Andrzej Klesyk took the post in 2007. PZU, which in 2012 announced plans to spend as much as 7 billion zloty on acquisitions, bought a stake in Polish health-care provider EMC Instytut Medyczny SA in December and last month agreed to buy RSA’s insurance units for 360 million euros ($494 million) to expand in the Baltic states.

Two Tranches

The dividend payout will be done in two even tranches, one in October and one in January, to help the company meet regulatory requirements, PZU said.

Its first-quarter net income declined to 760.4 million zloty from 837.9 million zloty a year earlier, it said in the statement today. This compares with 764.4 million-zloty mean estimate of seven analysts surveyed by Bloomberg.

Gross premiums fell 1.8 percent to 4.35 billion zloty, while claims paid in the period declined 2.6% to 2.66 billion zloty. Income on investments rose to 535.2 million zloty from 428.8 million zloty.

PZU plans to sell 300 million euros to 500 million euros of senior bonds this year to pay for RSA units, Chief Financial Officer Przemyslaw Dabrowski said at a news conference in Warsaw today. The insurer keeps plan to sell subordinated debt and is in talks with the Polish financial-market supervisor on legal changes to allow such an offering, Dabrowski said.

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