Annual Report 2021

Marko Jazbec, predsednik uprave

Letter from the chairman of the management board

Dear Shareholders, Business Partners and Employees,

The flexibility and responsiveness to the needs and expectations of our clients that enabled the Sava Insurance Group to adapt its business to the challenging conditions at the onset of the pandemic also bore fruit in 2021. For yet another year, despite the still-challenging circumstances, we successfully and resolutely followed our mission and vision, pursuing the goals we had set for this strategic period.

Customer satisfaction and customer relations are central in our strategic plan and inform the business decisions we adopt based on it. The Sava Insurance Group companies provide a full range of financial services, from non-life, life, and supplementary pension insurance to asset management, and health and assistance services. Through the slogan “Among good people”, we communicate their increasingly stronger collaboration and, more importantly, our customer-centric orientation as our overarching value and key advantage.

Record profit and a 15.8% return on equity

The Group generated a record net profit of EUR 76 million in 2021.

With operating revenue increasing to EUR 733 million, also owing to the growing contribution of the Group’s non-insurance companies, the improving quality of our portfolio, favourable claims experience, cost containment and exceeding return on investment, the Group generated a record net profit of EUR 76 million in 2021, which is substantially higher than the previous year and far more than we planned. As a result, we achieved a 15.8% return on equity, which is more than four percentage points above the plan.

Excellent results were achieved across all operating segments, which continue to build our business through customer centricity, digitalisation and the overhaul of our IT systems. In 2021, we continued to develop multi-channel communication, upgraded our portal and mobile solutions, strengthened our cooperation with banks, promoted internet sales, and introduced paperless business communication. We developed new micromobility, assistance and health products, adapted our bancassurance products for our partner banks’ customers, and expanded the services we offer for small- and medium-sized enterprises. With the introduction of advanced technologies in various work processes, we continue to develop and integrate predictive analytics and artificial intelligence. Non-life insurance remains the strongest pillar of our Group, and with the full-year integration of Vita’s business, life insurance further consolidated its position as the second-largest operating segment. Reinsurance activities were aimed at ensuring quality growth while taking into account the situation in individual markets and striving to further diversify the portfolio. Through growth in new premium contributions and favourable trends in financial markets, we generated excellent results in pensions and asset management, which is becoming an increasingly important operating segment for us. Good results were reflected in all indicators, higher assets under management, revenue and profitability. In terms of investment management, despite the low interest rate environment and without compromising the level of security and the liquidity of assets intended to cover liabilities under insurance contracts, we achieved a good investment return of 1.8%, which is higher than the previous year’s return and above the plan.

Exceptional growth in the share price

In 2021, the share price rose by 51%.

2021 was a very good year for Sava Re shares, which started 2021 at EUR 18.50 and ended it at EUR 27.90. In 2021, the share price rose by 51% and was far higher than the rise in the value of the European insurance index (SXIP), which gained 15% in the same period, and higher than the Ljubljana Stock Exchange Index SBITOP, which grew by 39%. We are pleased that the Sava Re share price reflects the ambitious plans of the Group and its excellent performance, and that the gap between the book value of the Sava Re share and its market price is now narrower.

In 2021, Sava Re paid out a dividend from the 2020 profit in the amount of EUR 0.85 per share, which was consistent with the recommendations of the Insurance Supervision Agency applicable at the time. Given that the Sava Insurance Group was also successful in 2021, the management and supervisory boards will propose that a dividend be also paid out in 2022. The proposed dividend per share of EUR 1.50 represents a 76.5% increase from the previous year’s dividend, providing shareholders with a dividend yield of around 6%, in addition to a higher share price.

“A” credit ratings reaffirmed

Sava Re’s capital soundness and solvency was reaffirmed last year with the “A” credit ratings by S&P Global Ratings and AM Best. The reaffirmed credit ratings reflect high capitalisation and liquidity, above-average operating performance of the Group over the last several years and effective risk management.

Providing for the community, employees and quality of life

The Sava Insurance Group continues to grow in its social responsibility and invests considerable effort in providing for a better quality of life.

Sustainable operations and social responsibility remain important aspects of the Group’s business and will remain at the forefront over the course of the next strategic period as well. Last year, we adopted a sustainable investment policy, which highlights the problem of greenhouse gas emissions and efforts to reduce their impact on climate change. Thereby we self-imposed restrictions on investing in industries that do not comply with sustainability criteria, increasing the share of sustainable investments in our investment portfolio to 12% last year. We performed a substantive assessment of the insurance and reinsurance portfolio in terms of ESG criteria, developed guidelines for responsible underwriting in non-life insurance, and started integrating sustainability in the development of new products. In the middle of the year, we published disclosures on the Company’s website regarding the integration of the sustainability aspect in investment processes, and we signed the United Nations Global Compact agreement and the United Nations Principles for Responsible Investment.

In line with its values and mission, the Sava Insurance Group continues to grow in its social responsibility and invests considerable effort in providing for a better quality of life. We increased the total resources committed to the environment. The Group is also aware of its responsibility to employees and has made it a fundamental goal of its sustainable development strategy to be recognised as a socially responsible and attractive employer in the region. Our customer centricity was thus complemented with our “Never Alone” project, which focuses on our employees, whose satisfaction and commitment constitute the drivers of our development.

I would like to take this opportunity to thank our shareholders, customers, employees and other stakeholders for their support and the trust they have placed in us. We will continue to invest our efforts in improving quality at all levels of our business while ensuring a high degree of financial strength and profitability of the Group. We know that only with the support of all our stakeholders can we realise our mission to ensure security and quality of life through commitment and constant progress, and our vision to build a customer-centric, modern, digital, community-minded and sustainability-oriented insurance group. Even the most daring story can come true “among good people”.