S&P affirms 'A' ratings on Sava Re and Zavarovalnica Sava, outlook stable

10 June 2024 — Andrei VICTOR
S&P Global Ratings informed on its website that it had affirmed the “A” long-term financial strength and issuer credit ratings on Sava Re with a stable outlook. The ratings are based on the Agency’s updated capital model with revised criteria for analysing insurers’ risk-based capital dated 15 November 2023.

In its report, the Agency states that the Sava Insurance Group continues to demonstrate capital buffers that meet the risk-based capital requirements in an extreme stress scenario at a 99.99% confidence level.

In addition to Sava Re, the largest subsidiary, Zavarovalnica Sava, has also maintained its high financial strength rating of “A” with a stable outlook.

Also contributing to maintaining strong capitalisation is the fact that the new capital model fully recognises the level of the Contractual Service Margin (CSM), which totalled EUR 149.4 million for the Group at the end of 2023. The audited amount of the CSM is also fully disclosed in the notes to the financial statements in the annual report, in accordance with International Financial Reporting Standard 17. The previous model took into account only part of the expected future profit of the life insurance portfolio.

In its report, the Agency highlights that the key strength of the Sava Insurance Group is its strong market position in Slovenia, where the Group ranks second, with some additional diversification through reinsurance in the international reinsurance markets. The second strength is the large capital buffers mentioned above. The third strength identified by the Agency is the Group’s prudent underwriting, conservative reinsurance protection and prudent investment strategy. On the risk side, the Agency notes that the Group has less geographic diversification of revenue compared to its higher-rated peers, with the majority of revenue generated in Slovenia.