The ratings reflect Sava Re's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Sava Re's strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), liquid investment portfolio, prudent reserving and good internal capital generation collectively contribute to an overall balance sheet assessment of very strong. Additionally, the company exhibits low reliance on reinsurance and sound financial flexibility, with access to both equity and debt markets.
Sava Re has a track record of generating strong and stable operating results, indicated by a five-year (2016-2020) weighted average return-on-equity ratio of 12.5% (as calculated by AM Best). Consistent reporting of operating profits over the past five years has been driven by sound life and non-life underwriting performance, supplemented by healthy investment income. At year-end 2020, the company reported a combined ratio of 93.9% with a five-year average combined ratio 93.8% (as calculated by AM Best). The 2020 result was negatively impacted by EUR 10.8 million in COVID-19-related losses; however, this was offset by lower claims frequency in some lines of business, particularly motor. The group originates approximately 71% of its non-life gross written premiums in Slovenia where its leading competitive position and prudent underwriting helps generate strong and relatively stable underwriting earnings.
Sava Re benefits from a strong position in its core domestic market of Slovenia, where it is the second largest player and holds an approximately 20% market share in terms of gross written premiums. The group's insurance business is dominated by premiums written in Slovenia; however, the company has been actively expanding in the West Balkan markets. AM Best expects to see further geographical diversification in the medium term in both the direct and reinsurance segments, as the group continues to prudently develop its position in the international reinsurance market.