46.1 Granting of sureties or guarantees for loans by PZU or its subsidiaries

In 2017, neither PZU nor its subsidiaries granted any sureties for a loan or borrowing or guarantees to any single entity or any subsidiary of such an entity where the total amount of outstanding sureties or guarantees would be the equivalent to at least 10% of PZU’s equity with the exception of the transaction described below.

Mandate contract on periodic granting of insurance guarantees

On 8 November 2017, PZU executed a mandate contract with Alior Bank on periodic granting of insurance guarantees constituting unfunded credit protection as defined in the CRR Regulation (the “Guarantee Agreement”). In addition, PZU executed a framework mandate contract on periodic granting of counter-guarantees securing the performance of PZU’s obligations to Alior Bank.

The subject matter of the agreement is to define the rules for PZU to grant guarantees within the assigned exposure limit, as requested by and for Alior Bank. The maximum exposure limit for the guarantees granted under the contract is PLN 5 billion. The limit is renewable, which means that when the guarantees granted within the limit expire, the limit is renewed by the “released” amount reduced by possible amounts disbursed from the guarantee. The maximum term of validity of the guarantee granted under the agreement is 3 years plus the time for reporting claims. Alior Bank’s share in due and payable credit receivables is 10%.

The fee for extending the guarantee will depend, among other things, on the amount of the indemnity, the quality of the portfolio secured by the guarantee, the portfolio amortization and the premium for the counter-guarantee.

The guarantee contract contemplates contractual penalties that may be due to PZU from Alior Bank in the event of Alior Bank’s breaching certain obligations stemming from the guarantee contract. The guarantee contract does not rule out the possibility of pursuing claims exceeding the sum total of the contractual penalties.

The framework mandate contract on periodic granting of counter-guarantees defines the rules for granting counter- guarantees ordered by PZU and issued to Alior Bank. The available limit of the counter-guarantee is PLN 2.6 billion. The available limit will be reduced each time when each counter-guarantee is extended, by the guaranteed amount specified in the counter-guarantee; the available counter-guarantee limit is renewable, which means that the limit is renewed when a counter-guarantee expires.