1.8 Outlook

[GRI 102-15]

The Group identified significant events that impacted its operations in 2021. The continuing COVID-19 pandemic, resulting in a continuous process of adapting to dynamic changes in the environment, was material to our operations.

Sopockie Towarzystwo Ubezpieczeń ERGO Hestia SA

From the perspective of the insurance portfolio, important aspects included the persistence of strong price competition in the motor insurance market combined with a reduced frequency of motor claims compared to the pre-pandemic period. There were also dynamic changes in the macroeconomic environment, including rising inflation and sharp interest rate hikes in the last quarter of 2021. As regards distribution, significant events included the implementation of a new sales platform, ERGO Biznes, which significantly facilitates the process of distributing insurance dedicated to entrepreneurs. In the context of the management system, the Company considers it important to have received the Supervisory Authority’s approval to use the internal model to determine the solvency capital requirement for reporting purposes.

Photo: Wojciech Radwański

Sopockie Towarzystwo Ubezpieczeń na Życie ERGO Hestia SA

An increase in claims in the group insurance segment was observed. Dynamic changes were also observed in the macroeconomic environment, including rising inflation and sharp interest rate hikes in the last quarter of 2021. The company continued its portfolio growth strategy based on biometric products.

More on risk management HERE

Risks to sustainable development – political and supervisory

In the view of the regulators, the financial sector should be proactive in promoting sustainability and be at the centre of the fight against climate change. Further regulatory obligations are likely to be imposed, particularly in the area of mandatory disclosures. The European Insurance and Occupational Pensions Authority has set ESG as a priority for supervisory action for 2022-2024.

Climate change resulting in increased frequency and severity of weather events

The insurance industry is directly exposed to physical risks: increased claims resulting from more frequent and more severe weather events. Climate change implies potential losses due to catastrophic risks. The frequency of catastrophic events is higher, the changes are noticeable globally from a portfolio-wide perspective. The current pace of climate change allows the business to adapt to changes in the environment.

Risks related to changes in the economic environment

The risks in this category relate to changes in ERGO Hestia’s economic environment that directly or indirectly affect operations and results. The main factors that increase the severity of risks related to the economic environment include: high inflation affecting various aspects of the Companies’ business (e.g., increased wage and cost pressures), changes in interest rates, an increase in overall debt resulting in a deterioration of the economic situation and, in particular, a simultaneous adverse change in several factors. The uncertain situation in Ukraine has increased volatility in financial markets and uncertainty about macroeconomic forecasts, particularly regarding inflation and interest rates.

Changes in the labour market

Talent shortage is a global and strategic risk. On the Polish labour market, we identify a limited supply of highly specialised experts, especially in the IT industry. ERGO Hestia takes a number of measures to prevent the risk, including: organising bootcamps (mainly IT) aimed at retraining employees (acquisition of new competences enabling employees to work in areas with limited availability of candidates on the labour market), EH’s presence at job fairs and conferences, EH’s activity on IT industry recruitment forums, EH’s organisation of IT open days.

Opportunities that may impact the performance and operations of both Companies

Acquisition of new customers

By operating in line with the principles of Responsible Business and creating new green products, we have increased the share of customers in our portfolio who are increasingly choosing environmentally friendly products and services.

Friendly partnership

Our stakeholders have a great influence on the activities we undertake daily. For our part, we want to use the tools and expertise available to us to provide information and education on new legal developments (in Polish and Union law). We are a partner providing advice on innovations.

Climate neutrality

We calculate, we reduce, we compensate. We are convinced that the development of our business can be reconciled with the minimisation of negative climate impacts through our commitment to environmental projects.

Staff development

By creating a space for employees to reveal and develop their potential, we attract the best specialists, also in fields beyond insurance or finance, giving them freedom of action, managerial support and tools.

Improved financial performance

The ERGO Hestia Group is the largest insurance company in Poland established under the conditions of a market economy. By accurately predicting economic changes and adjusting our offers, products and services, we are ready to continue operating effectively in an ever-changing market.

1. About us