Annual Report 2022

Marko Jazbec, predsednik uprave

Dear Shareholders, Business Partners and Employees,

The previous financial year was marked by rising geopolitical tensions and tightening global economic conditions. While the Covid-19 pandemic began to loosen its grip, Russia’s war of aggression against Ukraine began in February 2022. This led to an increase in energy prices and pushed up inflation, resulting in a higher key interest rate and higher required yields in financial markets, and it presented the Sava Insurance Group with new challenges. Although our business with Russia had not been substantial, and the sanctions, therefore, did not have a significant impact on the results, inflation began to be reflected in the increased value of claims, as well as in higher labour, information technology and other costs. At half year, it was clear that the insurance industry could no longer delay the much-needed adjustment of its pricing policy.

In 2022, the Group continued to strengthen its business in foreign markets, achieving strong premium and profit growth.

An advanced risk governance framework, timely action, capital strength and customer focus across all stages of the sales and post-sales process enabled the Sava Insurance Group to achieve virtually all the goals set in its 2022 business plan. The Group generated a net profit of EUR 68.2 million, which is 13.7% above the plan, achieving a remarkable 14.9% return on equity. At EUR 774.1 million, the Group increased its business volume in terms of gross premiums written by 6.1%, mainly driven by its non-life and reinsurance business. In 2022, the Group continued to strengthen its business in foreign markets, achieving strong premium and profit growth. As expected, the Group’s combined ratio increased as the pandemic subsided. At 90.7%, it was much better than planned. This was largely due to cost efficiency, as costs grew more slowly than premiums. Financial investments suffered from unfavourable conditions in the financial markets in 2022; consequently, the return on the investment portfolio, at 1.3%, was below target and lower than the previous year. Sava Re’s capital strength and solvency were reaffirmed last year with an “A” credit rating from S&P Global Ratings and AM Best.

In 2022, the Group continued to make solid progress in its development strategy of digital transformation and customer-centric business processes.

In 2022, the Group continued to make solid progress in its development strategy of digital transformation and customer-centric business processes. Its key development activities were focused on the consolidation of customer support processes at contact centres and the introduction of centralised multi-channel solutions across several Sava Insurance Group companies. We enhanced our digital and self-care solutions for customers and improved the user experience. The SavaNet portal, which currently includes data from Zavarovalnica Sava, Sava Pokojninska and Sava Infond, has undergone several improvements based on customer requests and ideas. While implementing advanced technologies, we continued to develop and introduce machine learning into various work processes to reduce process time and improve our customers’ experience.

We expanded and upgraded our product range in view of our customers’ needs and expectations. In non-life insurance, we offered products with strong sustainability credentials, as well as products targeted at individual policyholder segments and products that promote online sales and bancassurance. As part of the expansion of the Group’s life insurance product range, in 2022 the Group focused on further developing and improving protection policies and unit-linked life products, with which it entered the Serbian market. In international markets, we successfully expanded our bancassurance business by establishing a new collaboration and by strengthening business with banking partners.

Sustainability has become an integral part of our daily operations and decision-making. At the end of the year, the Group thus adopted a sustainable development policy, which governs the sustainability management system and underlines the principles of responsible management in all business areas. In addition to developing products with a sustainability component, we are reinforcing this aspect of our business operations in other areas as well. We developed the guidelines for the responsible underwriting of environmental, social and governance risks in non-life insurance, which were implemented in several Group companies during the year. We increased our sustainability investments to EUR 218 million in 2022, representing 14.9% of the total investment portfolio. We updated the sustainable investment policy by integrating a sustainability risk management perspective into the investment process and by more consistently integrating the principles of the UN Global Compact into the investment process. We paid particular attention to the many legislative developments in the context of the European Union’s efforts to achieve carbon neutrality by 2050, and implemented the activities necessary to meet the requirements in a timely manner.

In the Sava Insurance Group, we recognise our responsibility to our employees and the wider community. We have made it a strategic goal for the Group to be recognised by our stakeholders as a socially responsible and attractive employer in the region. The members of the Sava Insurance Group therefore have strong links with their local environment. We support local communities through sponsorships, donations and prevention projects, and our employees have embraced corporate volunteering by taking part in our Heart for the World initiative. In 2022, the initiative thus resulted in numerous activities throughout the Group that promote our corporate responsibility towards our natural and social environment.

At the end of 2022, the Sava Insurance Group successfully completed the strategic period in all areas of its business. I would like to take this opportunity to thank our employees, shareholders, customers and other stakeholders for their support and trust. With the new 2023–2027 strategy, adopted at the end of 2022, we continue to implement our mission and vision. Through commitment and constant progress, we ensure security and quality of life. We are building a customer-centric, flexible and sustainability-oriented insurance group. A big thank you to all our colleagues who have helped us achieve our goals so far. We believe that among good people the ambitious goals we have set ourselves for the new strategy period can be achieved.