SAVA Re, 1H2015: 34% increase in profit driven by the non-life business

27 August 2015 — Daniela GHETU
The international reinsurance and non-Slovenian insurance business were the main drivers of the increase in income saw by the SAVA Group in 1H2015. GWP amounted to EUR 276.7 million, over 3% up y-o-y, while the net profit increased by 33.9%, to EUR 17.1 million, exceeding the budgeted figure for the first six months. The largest contributions to the profit figure came from Slovenian non-life insurance business, followed by Slovenian life business and reinsurance business. 

In 2015 the SAVA Re Group has been making exhaustive preparations for the changed regulatory environment of Solvency II scheduled to come into force on 1 January 2016. Quantitative calculations of eligible own funds and solvency capital requirements at 31 December 2014 revealed that both the SAVA Re Group as well as the EU-based SAVA Re Group companies are well capitalized and have adequate capital in accordance with the Solvency II methodology. Thus at 31 December 2014, the Solvency ratio at the SAVA Re Group level stood at 192%. 

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Reinsurance business

GWP for the reinsurance business grew by 31.6% y-o-y in Slovenia and by 20% on the foreign markets were SAVA Re operates, to a total EUR 55.74 million. Premiums from Slovenia consist of only non-group business, which is why the amount is relatively small. Gross premiums written in this segment grew due to growth in international markets, with the largest growth contribution coming from South Korea (approximately € 8 million).

Consolidated gross reinsurance claims rose by 12.3 % in the first six months of 2015 year-on-year, to EUR 25.8 million, reflecting the growth of this operating segment. International gross claims paid grew slower than gross premiums written, indicating a favourable gross loss ratio (the paid loss ratio improved by 3.5 p.p. year-on-year).

The net incurred loss ratio for the reinsurance segment stood at 77.5 % at mid-year 2015, a deterioration by 18.6 pp year-on-year. Excluding the impact of exchange differences, the ratio would have stood at 65.0 %, a deterioration of only 7.9 pp. The deterioration is due to a favourable development of 2014. There have been no special impacts from releases of provisions in the first half of 2015.

Non-life insurance business

The non-life insurance segment recorded a better result in 1H2015 than in the same period last year. The main driver of this improvement is improved technical performance of Zavarovalnica MARIBOR and SAVA Montenegro (both companies improved their results year-on-year). The investment result of Slovenian non-life insurers declined by EUR 0.5 million as a result of lower realized gains on sales of investments and falling interest rates, while the investment result of the non-Slovenian insurers decreased by EUR 0.2 million also mainly due to lower interest rates on the domestic and international markets.

Gross non-life insurance premiums from Slovenia declined by 0.8 % to EUR 151.28 million, due to less premiums written by Zavarovalnica TILIA (as a result of earlier booking of certain transactions in December 2014 instead of January 2015, terminated cooperation with its largest agency and loss of several major clients). SAVA Re insurers abroad (except in Croatia and Kosovo) wrote more gross premiums than in the same period last year, generating a 4.5 % growth rate, to EUR 26.47 million.

Total unconsolidated gross non-life insurance premiums were approximately on the same level year-on-year. The largest absolute decline in gross premiums written was recorded by Velebit osiguranje (mainly due to the decline in MTPL rates) and Zavarovalnica Tilia (loss of several major policyholders, terminated cooperation with largest external agency and renewal of some policies as early as December 2014). The Serbian non-life insurer recorded the highest absolute premium growth due to increased motor third-party liability rates on the market.

Gross claims paid for Slovenian business in the first half 2015 were of EUR 80.65 million, by 2.7% lower as compared with 1H2014 due to the decline in gross claims paid of Zavarovalnica MARIBOR (claims paid in the period 1H2014 were impacted by ice damage claims). Zavarovalnica TILIA recorded an increase in MTPL claims (larger international claims) and general liability claims (major non-life claim). Gross claims paid for international business increased primarily due to the increase recorded by the Serbian insurer (especially in MTPL, land motor vehicle, and fire and other natural forces) and the Montenegrin non-life insurer (some major claims relating to MTPL, especially passenger vehicles).

Life insurance business


Life insurance premiums from Slovenia were lower in both Zavarovalnica TILIA as well as in Zavarovalnica MARIBOR, mosrly because new business was not sufficient to offset expired business (through maturity or terminations). Thus, the consolidated life insurance GWP amounted to EUR 40.47 million.

Gross premiums written by the Group's life insurance companies outside Slovenia declined only in the Kosovan life insurer, while they increased in Croatia and Serbia. The highest growth in life premiums was recorded by the Croatian insurer, up 14.5% y-o-y.

Gross claims paid for life insurance grew by 7%, to EUR 25.32 million. In Slovenian business the growth is due to increased claims by Zavarovalnica MARIBOR (more maturities) while Zavarovalnica TILIA recorded a decline in gross claims paid. International gross claims paid rose in all non-Slovenian Group companies. The largest growth in gross claims from among foreign insurers was recorded by SAVA zivotno osiguranje as a result of a large number of redemptions caused by the difficult economic situation in Serbia (redundancies, public sector wage cuts and pension cuts).

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