Poland's largest insurer, PZU, reported a 69 percent fall in net profit in the second quarter due to reduced capital and claims related to the spring flooding.

While analysts had expected the group's profits to fall y/y, they had not expected such a drastic drop. The state-owned insurer made zł.362 million in Q2 compared to zł.539.8 million expected by a Bloomberg poll of analysts.

By contrast, it turned a profit of zł.1.164 billion during the same period last year.

Damage wrought by the floods in May and June forced PZU to pay out or set aside reserves amounting to zł.549 million.

Moreover, the group's capital was cut in half after it paid out a zł.12.75 billion dividend in November as part of its deal to end a long-running ownership dispute with Dutch insurer Eureko.

The payout allowed the insurer to debut on the WSE in May in an initial public offering which proved to be the largest in Europe for over two years.

Declines on stock markets also impacted PZU's performance, driving down investment income by 67 percent. The blue-chip WIG20 index on which PZU is listed fell nine percent in Q2.