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19 August 2021

Half Year 2021 results: Net profit exceeds €43m and 82% of 2021 annual target

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, Ljubljana makes the following announcement:

At its regular meeting yesterday, the Sava Re supervisory board was presented with the unaudited financial results of the Sava Insurance Group and Sava Re for January–June 2021.

In the first half of 2021, the Sava Insurance Group generated EUR 363.7 million in operating revenue and a net profit of EUR 43.5 million. Operating revenue and net profit represented 53.1% and 82.1%, respectively, of the full-year targets. The management board expects that the Group’s net profit for the year will exceed the EUR 60 million mark, up 13% from the original annual target, despite the reinsurance-related catastrophic loss events that have occurred after the close of the half year.

Gross premium growth of 10.9%

The Group wrote EUR 414.5 million in gross premiums in the first half of the year. This 10.9% year-on-year premium growth was predominantly driven by the Slovenian life business (96.8% growth) as a result of the acquisition of Vita, which contributed EUR 54.7 million in gross premiums written to the Group in this half year.

In the first half of the year, the Group’s operating revenue grew by 14.7%, which – in addition to the impact of Vita already mentioned – was influenced by higher gross premiums of the reinsurance segment and by revenue from freedom of services (FoS) business; that is, policies written last year but recognised in 2021 because of their policy date. Otherwise, the Group strongly reduced the volume of FoS business in 2021. Operating revenue also grew because the pensions and asset management segment performed better as the result of favourable trends in financial markets and good sales of financial products by the Group’s non-insurance companies.

Improved profitability in most operating segments

Profitability was supported by a more favourable claims experience thanks to a lower loss rate in the motor business, the inclusion of Vita in the Group and improved performance of most operating segments, whereas last year’s half-year profitability was boosted by one-off income of EUR 6.8 million arising from the acquisition of Vita.

The net expense ratio improved by 2.3 p.p. year on year, chiefly because of growth in the life business.

Persistent low-yield environment in financial markets

The investment process and the Group’s investment portfolio remained largely unchanged this year. The half-year 2021 return on the investment portfolio was 1.7%, up 0.2 p.p. year on year. The increase was mainly due to lower expenses for fair value changes on FVTPL assets, as a result of more favourable trends in financial markets year on year.

Digital transformation, technology upgrades & customer at the centre

As part of its 2020–2022 strategy, the Group has embarked on large-scale projects aimed towards digital transformation and customer-centricity. The Group is also undergoing significant technological upgrades to support the digital transformation and to develop an even more modern and flexible IT system. The results of these intensive developments have been wrapped up into a short video. It presents activities carried out and planned to achieve the strategic goals and is available at https://www.sava-re.si/en-si/investor-relations/strategy/.

Sustainable development

The Sava Insurance Group adopted a sustainable development strategy for 2020–2022, embarking on the path of introducing environmental, social, and governance criteria into its decision-making processes. Accordingly, during the strategy period, the focus will be on implementing these criteria in a number of areas: asset management, insurance and reinsurance underwriting, development of insurance services and purchasing. The Sava Re management board adopted a sustainable investment policy in June 2021, which highlights the problem of greenhouse gas emissions and efforts to reduce their impact on climate change. The Group has become a signatory to the Principles for Responsible Investment and the United Nations Global Compact. In accordance with the Regulation on Sustainability-Related Disclosure in the Financial Services Sector (SFDR), the Sava Insurance Group posted relevant sustainability-related disclosures pertaining to its investment processes on its website on 30 June 2021. In line with its adopted strategy, the Group supports social responsibility projects, with particular emphasis on corporate volunteerism. The Group reported on the implementation of its strategy in its 2020 sustainability report posted on its website on 8 April 2021. The Group’s sustainable investment policy and its sustainability report for 2020 are available at https://www.sava-re.si/en-si/sustainability/.

Estimated net profit for the year

The management board estimates that the Group’s revenue and profit targets will be reached by the end of the year, the latter even exceeded.

In the third quarter, the net profit will be affected by some major catastrophic loss events: storms and floods in Western Europe (especially Germany and Belgium) and in China, and wildfires and hailstorms in Greece and the Adriatic region. According to preliminary estimates, the total impact of these loss events will exceed EUR 10 million at the Group level.

Since some major losses (that did not realise in the first half of the year) are always factored into the annual plan, the Company estimates that the Group’s net profit for the year, based on currently known loss events and other assumptions, will exceed EUR 60 million, up 13% from the original annual target.

The documents “Unaudited financial report of the Sava Insurance Group and financial statements of Sava Re d.d. for the six months to 2021” and “Presentation of results 1–6/2021” are attached hereto.

Attachments:

Financial report for 1–6/2021

Presentation of results 1–6/2021