Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : Consolidated text of suitability assessment rules

Attachment to the resolution adopted by the PZU SA Shareholder Meeting on 7 June 2023

Rules for assessment of suitability of the PZU SA Supervisory Board and Audit Committee
Table of contents
General provisions	2
Scope and coverage	2
Definitions	2
Types of Suitability Assessment	3
Types of Suitability Assessment and prerequisites for conducting it	3
Competencies in the Suitability Assessment process	4
Adequate composition of the Supervisory Board and Audit Committee	5
Composition of the Supervisory Board and Audit Committee	5
Suitability Assessment criteria	5
Suitability Assessment criteria - catalog	5
Competencies	6
Assurance	6
Independence of a Supervisory Board member	8
Independence of Judgment and commitment of sufficient time to perform the function of a
Supervisory Board member	8
Performance of Suitability Assessment	9
Primary individual Suitability Assessment - scope	9
Primary individual Suitability Assessment - formal requirements	9
Secondary individual Suitability Assessment - scope	9
Secondary individual Suitability Assessment - formal requirements	10
Collective Suitability Assessment - scope	10
Processing of personal data by PZU	10
Suitability Assessment	11
Suitability Assessment results	11
Archiving of Suitability Assessment	12
Notification to KNF	12
Attachments:	12

Chapter 1

General provisions

§ 1

Scope and coverage

The rules for assessment of suitability of the PZU SA Supervisory Board and Audit Committee, hereinafter referred to as "the Rules", define the rules and methodology of the primary Suitability Assessment of Supervisory Board and Audit Committee member candidates, secondary Suitability Assessment of Supervisory Board and Audit Committee members, and a collective Suitability Assessment of the PZU SA Supervisory Board and Audit Committee.

• 2
  Definitions

The terms and abbreviations used in these Rules have the following meanings:

1. BCM - Compliance Department; an organization unit within the PZU's structure, which is responsible, among others, for systemic management of compliance risk, including compliance of the Company with the law, internal regulations and accepted standards of conduct, systemic oversight over the function of compliance with the law in accordance with the Solvency II Directive and the KNF's guidelines or recommendations, as well as cooperation with the regulator;
2. BZA -Management Board Office; an organizational unit within the PZU's structure, which is responsible, among others, for providing corporate services to the Management Board and the Supervisory Board of PZU;
3. Form - Suitability Assessment form filled out by the Person Being Assessed in the suitability assessment process; a template of the Form is published on the PZU's website;
4. KNF - Polish Financial Supervision Authority;

1. Nomination and Compensation Committee - a committee appointed and functioning within the PZU Supervisory Board;
2. Competencies - the knowledge (resulting from education of the Person Being Assessed, training, certifications or professional levels and otherwise acquired during the professional career), experience (acquired by performing specific functions or holding specific positions) and skills required to perform the function;
3. Commercial Company Code - the Commercial Company Code Act of 15 September 2000;
4. Methodology - the Methodology for assessing suitability of the members of the corporate bodies of regulated entities, developed by KNF and available on KNF's website;
5. Independence of a Supervisory Board member - a situation, in which the independence requirements set out in the PZU Articles of Association are satisfied and there are no links or relations of the Person Being Assessed with PZU or PZU Management Board that have or even may have influenced the objective and balanced assessment of PZU's situation by a PZU Supervisory Board member when exercising oversight over the activity of PZU and therefore would restrict his or her capacity to make decisions independently;
6. Independence of Judgment - a pattern of behavior required of all Supervisory Board members to ensure that they are actively engaged in their duties, make their own reasonable, objective and independent decisions and opinions in the performance of their duties as Supervisory Board members; this includes any issues relating to potential or already existing conflicts of interest, as well as the behavioral traits and skills of the persons being assessed, which are manifested in their behavior, such as courage, assertiveness, ability to ask the correct questions, challenging decisions in a constructive manner, ability to make their own reasonable, objective and independent decisions and opinions, and to engage in constructive discussion;
7. Suitability Assessment - an assessment conducted in order to find whether the Person Being Assessed or the body meets the requirement of suitability, in particular whether he/she/it has adequate Competencies, gives an Assurance of the proper performance of the assigned responsibilities, commits sufficient time to the assigned responsibilities and whether he/she/it meets the criterion of the Independence of Judgment;
8. Person Being Assessed - candidate for Supervisory Board member, candidate for Audit Committee member, Supervisory Board member, Audit Committee member;
9. Assessing Body - respectively:
10. 1. Shareholder Meeting, in the case of PZU SA Supervisory Board members, except in the case specified in letter b,

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1. 1. State Treasury, as regards assessing the individual suitability of a Supervisory Board member prior to his or her appointment to the Supervisory Board, either for the first time or for another term of office, on the basis of the statement referred to in § 20(7) of the Articles of Association,
   2. Supervisory Board, in the case of Audit Committee members;
2. PZU - Powszechny Zakład Ubezpieczeń Spółka Akcyjna with its registered office in Warsaw;
3. Reputation - observance of professional standards of ethics and integrity;
4. Assurance - the attribute of professionalism and impeccable character, understood as good repute, personal traits, ethical standards, including past conduct, honesty and integrity of a person and the ability to perform assigned duties in a prudent and stable manner;
5. Training - actions elevating the level of skills, knowledge or competence of Supervisory Board members in a continuous or one-off manner;
6. Act - Act of 11 September 2015 on Insurance and Reinsurance Activity;
7. Act on Statutory Auditors - Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision;
8. Attachment - a questionnaire constituting part of the Form, to be filled out by the Person Being Assessed in the Suitability Assessment process; a template of which is published on the PZU's website;
9. Proportionality Principle - the principle according to which the organization and functioning of the PZU Supervisory Board should be adapted to the specifics of PZU's business, including the nature of the business (legal form and line of business), the scale of business (including the number of contracts, the number of the insured, the amount of technical provisions or written premium, the number of employees, the position of PZU in the financial sector) and the complexity of its activities (including the number and complexity of insurance products it offers).

Chapter 2

Types of Suitability Assessment

§ 3

Types of Suitability Assessment and prerequisites for conducting it

1. Suitability Assessment consists of:

1. the primary individual Suitability Assessment, which is conducted:
2. 1. before a person is appointed as a Supervisory Board member,
   2. before a Supervisory Board member is appointed to the Audit Committee, to verify fulfillment of the criteria for Audit Committee members,
   3. before submitting of a motion to change the geographic range or the line of business of PZU, in case of simultaneous changes in the composition of the Supervisory Board,
   4. in connection with PZU receiving information about the filing of a notice of intention to purchase a qualified stake in PZU (under Article 82 of the Act) or to become the parent company of PZU (in case of simultaneous changes planned in the composition of the Supervisory Board);
3. the secondary individual Suitability Assessment, which is conducted:
4. 1. periodically, at least once a year, while this assessment also includes the assessment of Audit Committee members,
   2. in the event of a significant change of PZU's corporate governance rules affecting the content of the Suitability Assessment criteria or assessment of their fulfillment,
   3. before a Supervisory Board member is appointed for the next term of office of the Supervisory Board,
   4. in the event of a change in statutory or regulatory requirements regarding the function of a Supervisory Board member or an Audit Committee member,
   5. in the event that circumstances come to light which may affect Suitability Assessment, especially in the event of identified cases of: potential conflict of interest, criminal charges or charges in proceedings for fiscal offenses or causing significant financial losses or substantial breach of the responsibilities by Supervisory Board members, in particular in respect to Reputation,
   6. in the situation when a Supervisory Board member is given additional competencies or takes on additional functions and positions outside of PZU, provided that in such a case the assessment is made only with respect to sufficient time commitment and occurrence of a conflict of interest,
   7. in case of regular or flagrant instances of negative secondary assessment, whether individual or collective, of Management Board members, providing that in such a case the assessment is made only with respect to the Assurance given by Supervisory Board members in terms of appointing or keeping

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such persons in the Management Board;

1. 1. collective Suitability Assessment of the Supervisory Board, which is conducted:
   1. before the Supervisory Board is appointed for a new term of office, irrespective of whether the composition of the Supervisory Board has changed,
   2. in connection with PZU receiving information about the intention to purchase a qualified stake in PZU (under Article 82 of the Act) or to become the parent company of PZU - in case of simultaneous changes planned in the composition of the Supervisory Board;
   3. before any changes are made in the composition of the Supervisory Board, in particular changes involving appointment, dismissal, resignation or suspension of members (or immediately after those changes, if for reasons beyond the control of PZU the assessment could not have been made earlier, in particular when a Supervisory Board member tenders his/her resignation with immediate effect),
   4. in the event of a significant change in the PZU's business model, risk appetite or risk strategies or a significant change in the organizational structure of PZU, as referred to in § 2 section 2 of PZU's Articles of Association or at the level of the PZU group, understood as a disposal or acquisition of regulated entities, within the meaning of the Act of 21 July 2006 on Supervision over the Financial Market,
   5. in the event that any circumstances come to light that may affect the collective Suitability Assessment of the Supervisory Board,
   6. in the event of a significant change of PZU's corporate governance rules affecting the content of the Suitability Assessment criteria or assessment of their fulfillment,
   7. in the event of a significant change of Suitability Assessment of individual Supervisory Board members;
   1. collective Suitability Assessment of the Audit Committee, which is conducted:
   1. upon appointment and any change in the composition of the Audit Committee, in which case the Suitability Assessment is conducted to verify whether an appropriate number of Audit Committee members meet the independence criteria referred to in the Articles of Association and have the knowledge and skills in accounting or auditing of financial statements and in the insurance industry, including relevant education,
   2. in the event of a significant change of Suitability Assessment of individual Audit Committee members,
   3. in the event that any circumstances come to light that may affect the collective Suitability Assessment of the Audit Committee.
2. If more than one prerequisite triggering the necessity of conducting the Suitability Assessments mentioned in sec. 1 arise simultaneously, the Suitability Assessment type with the widest scope should be conducted.
3. If a secondary Suitability Assessment is triggered by an event referred to in sec. 1 item 2(f) or (g) then the Assessing Body will focus on assessing the situation or event that triggered the Suitability Assessment, i.e. if certain aspects have not changed since the previous Suitability Assessment, they may be omitted from that Suitability Assessment.
4. The Suitability Assessment of Supervisory Board member candidates, Supervisory Board members and the Supervisory Board is conducted immediately, no later than on the date of the next Shareholder Meeting.
5. Persons subject to the Suitability Assessment are obliged to notify the Assessing Body of any changes in the fulfillment of the suitability criteria in the Rules.
6. The assessment of the individual suitability of a Supervisory Board member prior to appointment on the basis of the statement referred to in § 20 sec. 7 of the PZU SA Articles of Association is made by the State Treasury. The provisions of the Rules with respect to the assessment referred to in the first sentence shall apply accordingly.

§ 4

Competencies in the Suitability Assessment process

1. The Shareholder Meeting:
2. 1. adopts and amends the Rules;
   2. conducts an individual Suitability Assessment of Supervisory Board member candidates, Supervisory Board members and a collective Suitability Assessment of the Supervisory Board, pursuant to the report referred to in § 17.
3. The Supervisory Board:
4. 1. conducts an individual Suitability Assessment of Audit Committee member candidates, Audit Committee

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members and a collective Suitability Assessment of the Audit Committee;

1. 1. approves the proposed individual Suitability Assessment of Supervisory Board member candidates, Supervisory Board members and a collective Suitability Assessment of the Supervisory Board prepared by the Nomination and Compensation Committee;
   2. cooperates with the KNF in respect to the implementation of the Rules.
2. The Nomination and Compensation Committee:
3. 1. analyzes the documentation required to conduct the Suitability Assessment;
   2. proposes the primary individual Suitability Assessment of candidates for Audit Committee and Supervisory Board members, the secondary individual Suitability Assessment of Audit Committee and Supervisory Board members, and the collective Suitability Assessment of the Audit Committee and Supervisory Board and submits them to the Supervisory Board;
   3. cooperates with the Assessing Body and the KNF in respect to the implementation of the Rules.
4. The Management Board deploys the Rules and cooperates with the KNF in respect to their implementation.
5. BZA:
6. 1. provides explanations to and assists Persons Being Assessed in completing the Forms and Attachments;
   2. verifies the completeness of the completed Forms and Attachments;
   3. provides the necessary Training for Supervisory Board and Audit Committee members;
   4. archives documents related to the implementation of the Rules.
   5. cooperates with the Assessing Body and the KNF in respect to the implementation of the Rules;
   6. in consultation with BCM, updates the templates of the Forms and Attachments, publishes them on the PZU website and promptly informs the Supervisory Board of any such change.
7. BCM corresponds with the KNF with respect to the implementation of the Rules and provides the KNF with information on the current composition of the Supervisory Board and results of the Suitability Assessment after it receives information or documents from BZA.

Chapter 3

Adequate composition of the Supervisory Board and Audit Committee

§ 5

Composition of the Supervisory Board and Audit Committee

1. The composition of the Supervisory Board and the Audit Committee is appointed in such a way as to enable them to exercise professional supervision over the activities of PZU, in accordance with their competencies, and to provide effective support to the Management Board and to act in a proper manner.
2. Members of the Supervisory Board and the Audit Committee should have the knowledge, skills and professional experience that are necessary for the proper performance of the tasks assigned to the Supervisory Board or the Audit Committee, taking into consideration the requirements stemming from the applicable law and the PZU Articles of Association.
3. Members of the Supervisory Board should offer an Assurance of proper performance of the assigned tasks and responsibilities; this refers in particular to their Reputation and ability to perform the assigned tasks and responsibilities in a proper, prudent and stable manner.
4. During recruitment for the Supervisory Board, candidates should be proposed who, due to their integrity, ethics, willingness to work, independence and character traits, are able to duly perform the responsibilities of a Supervisory Board member and uphold the public image of PZU.

Chapter 4

Suitability Assessment criteria

§ 6

Suitability Assessment criteria - catalog

A primary or secondary individual Suitability Assessment includes the process of reviewing Supervisory Board member candidates and Supervisory Board members based on the following criteria:

1. Competencies;
2. Assurance, including Reputation and credibility;
3. Independence of a Supervisory Board member;
4. Independence of Judgment, including lack of conflicts of interest and commitment of sufficient time to perform the function of a Supervisory Board member.

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