5 May 2021

Counter-proposal to resolution of 37th general meeting

In accordance with the rules of the Ljubljana Stock Exchange and article 300 of the Slovenian Companies Act (ZGD-1), the management board of Sava Re d.d., with respect to the

37th general meeting of shareholders of Sava Re d.d., Ljubljana,

 to be held on Tuesday, 25 May 2021, at 3pm in the Janus Hall of the Austria Trend Hotel Ljubljana, Dunajska 154, 1000 Ljubljana, informs all shareholders that, on 19 April 2021, it received a counter-proposal from the shareholder Vseslovensko Združenje Malih Delničarjev (Pan-Slovenian Shareholder Association, VZMD), Hrenova 13, 1000 Ljubljana, which is the owner of two POSR shares,

regarding resolution 3.1 under meeting agenda item 3: Appropriation of distributable profit and granting of discharge to the management and supervisory boards for 2020, as presented below.

I. Counter-proposal of the shareholder

Proposed resolution no. 3.1:

“The distributable profit of EUR 23,806,703.97 as at 31 December 2020 is to be appropriated as follows:

EUR 20,147,004.80 is to be appropriated for dividends. The dividend is EUR 1.30 gross per share and is to be paid on 10 June 2021 to the shareholders entered in the shareholders’ register as at 9 June 2021. The remaining distributable profit of EUR 3,659,699.17 is to be left unappropriated.

The proposal for the appropriation of distributable profit is based on the number of own shares as at 31 December 2020. On the date of the general meeting, the number of shares entitled to dividends may change as a result of disposals of own shares. Should the number of own shares change, adjusted figures for appropriation of the distributable profit will be proposed to the general meeting of shareholders, while the dividend per share of EUR 1.30 remains unchanged.”

Explanation provided by the shareholder:

“At VZMD we believe it proper and desirable that the company allocate the majority of its distributable profit for distribution. As the proposer, we believe that the company is capable of paying such a dividend to its shareholders without adverse impacts or otherwise impeding its plans.

In 2019, Sava Re grew its distributable and net profit year on year; nevertheless, it paid no dividends in 2020, contrary to the assurances given by the company’s representatives in general meetings over the past years as well as the company’s adopted dividend policy of increasing dividends by 10% annually. In addition, Sava Re has set itself a goal that in the period 2020–2022, it would annually distribute between 35% and 45% of the net profit of the Sava Insurance Group. The amount proposed for distribution represents just over 35% of the Group’s net profit.

In the light of certain repeated recommendations, requests and even across-the-board orders of some institutions and associations on the non-payment of dividends, VZMD again emphatically states that the decision on dividend distribution is exclusively within the powers of the owners. We have also called upon these institutions and associations who have circulated such notices to publish relevant analyses and information supporting their positions.

As of the time of writing this proposal, we have received no serious analyses that could justify these decisions, which may result in extremely far-reaching, harmful consequences. On the contrary: time has proven that during the corona crisis the company performed even better and could have easily paid out dividends last year, i.e. in respect of 2019!”

II. Position of the management board regarding the counter-proposal to proposed resolution no. 3.1

The management board of Sava Re d.d. opposes the proposal of VZMD regarding the payment of a dividend of EUR 1.3 gross per share because it believes that the proposal of the management and supervisory boards, which is in line with the recommendations of the Insurance Supervision Agency (Agency), is appropriate. To summarise: on 5 March 2021, Sava Re received a letter from the Agency stating that, due to the uncertain situation regarding the spread of the Covid-19 pandemic and the associated uncertain consequences for the economy and the insurance sector, the Agency expected that, until 30 September 2021, insurance undertakings, reinsurance undertakings and pension companies suspend dividend payments. Furthermore, the recommendation of the Agency set certain criteria for companies where, contrary to the recommendation, the management and supervisory boards decide to propose the appropriation of the distributable profit prior to the above date, and required such companies to demonstrate compliance with the principle of prudence in their decisions. On 2 April 2021, Sava Re received another letter from the Agency amending the recommendation of 5 March 2021 regarding the payment of dividends. To prove its ability to pay dividends in 2021, Sava Re compiled documents for the Agency to demonstrate its financial stability, solvency, liquidity and resilience to stress scenarios (including Covid-19 impacts). Based on the Agency’s criterion, the dividend must not exceed the average dividend paid in the period 2017–2019, which is EUR 0.85 per share. Furthermore, the Agency set a condition that, in order to pay dividends, companies must have made a profit in both the 2019 and 2020 financial years, with the parent companies taking into consideration the financial position of both the parent as well as the group of companies they control when deciding on the payment of dividends. The Sava Insurance Group generated a net profit of EUR 50.2 million and EUR 56.4 million in 2019 and 2020, respectively. While Sava Re made a loss in 2020, this is due to a recommendation (issued in 2020) to insurance companies, including Sava Re’s subsidiaries, to use a very cautious approach regarding the payment of dividends. If Sava Re had been paid dividends by its subsidiary insurance companies in 2020, it would not have posted an operating loss.

***

The full wording of the counter-proposal of VZMD is available at the Company’s headquarters in Ljubljana, Dunajska 56, every working day between 9am and 3pm from the day of the general meeting notice to the day of the general meeting, and in electronic form on the official website of the Ljubljana Stock Exchange d.d., via the Ljubljana Stock Exchange SEOnet information system (http://seonet.ljse.si), on the Company’s official website (http://www.sava-re.si) and on the Ajpes website (http://www.ajpes.si).

 

Attachment:

Counter-proposal of VZMD

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