Sava Re Group: Premiums up 3.7% and net profit of EUR 14.2 million
Pursuant to the Rules of the Ljubljana Stock Exchange, d.d., Ljubljana, and the Market in Financial Instruments Act, Sava Re, d.d., Dunajska 56, 1000 Ljubljana makes the following announcement:
In its regular session yesterday, the supervisory board of Sava Re, d.d. was presented with the unaudited financial results of the Sava Re Group and Sava Re, d.d. for the first half of 2018.
In the first half of 2018, the Sava Re Group generated high premium growth both in Slovenia and in its international markets. Gross premiums written increased by 3.7% year on year to EUR 308.6 million. Premium growth was driven by non-life insurance in Slovenia (7.3% growth), non-life insurance abroad (16.0% growth) and life insurance abroad (11.7% growth). Reinsurance operations wrote 7.1% less gross premiums year on year as the result of interim dynamics, dollar to euro exchange rate developments, and the cancellation of certain contracts that did not meet profitability targets. In line with expectations, there was a decline in Slovenian gross life insurance premiums written of 6.3%, reflecting a substantial number of policy maturities. Thus in the first half of the year, the Group wrote 59.4% of the target premium income for the full year 2018.
In the first six months, the Sava Re Group generated a net profit of EUR 14.2 million, down 17.2% year on year. This decline was mainly due to loss events that occurred in the second quarter of the year. The costliest was a hailstorm that hit the south-east of Slovenia (town of Črnomelj), which led to claims of EUR 4.6 million for Sava Re.
The expense ratio deteriorated owing partly to the larger share of acquisition costs for reinsurance premiums, and partly as the result of the decline in Slovenian life insurance premiums owing to more maturity benefit payments, while the sale of new life policies pushed up acquisition costs against relatively flat other operating expenses. We estimate that the expense ratios for individual segments will approach planned figures by the end of the year.
Assuming there are no further major loss events in the second half of the year, we estimate that the planned profit for 2018 can still be achieved, despite the weaker first half result.
The Group continues to make good progress on its strategy and is developing into a modern, digital, socially-oriented and sustainable insurance group. In the first half of 2018, it put special emphasis on investing in environmental and sustainability investment projects, specifically in infrastructure funds and projects of local companies exploring energy efficient schemes and renewable energy sources.
In July 2018, after its regular annual rating review, rating agency Standard & Poor’s raised its long-term issuer credit and issuer financial strength ratings on Sava Re and Zavarovalnica Sava to ‘A’ with a stable outlook. According to the rating agency, Sava Re demonstrated high capital adequacy over an extended period, both under the rating agency’s capital model and under Solvency II, which was further supported by a stable dividend policy. The rating agency believes that the Group is benefitting from its acquisitions in the markets where it was already present, thereby strengthening its market position. The Company believes that the improved rating will assist it in delivering on its strategy of selective and profitable growth in international reinsurance markets.
The document Unaudited financial report of the Sava Re Group and financial statements of Sava Re, d.d. for the six months to 30 June 2018 is attached.