At the same time, the company generated EUR 674.9 million in operating revenue, up 15.5% y-o-y, while return on equity was 13.3% "and is 1.3 p.p. above the target return set in the strategy for 2020-2022".
SAVA Re representatives said the increase in net profit was driven by good results in the life and non-life insurance segments, partly offset by the challenging claims experience in international reinsurance business. "Higher profitability was also driven by the acquisition of Vita, which generated EUR 9.9 million in one-off income from the excess of the fair value of the net assets acquired over the purchase price".
The net expense ratio improved by 2.1% y-o-y, which was primarily driven by the inclusion of Vita in the Group but also by growth in most other operating segments and measures to contain costs taken by the Group to ease the negative financial impact of Covid-19 on operations.
In terms of premiums, during 2020, the Group wrote EUR 679.7 million in GWP, an increase of 13.6% over the previous year, as follows: "The growth in gross premiums written was contributed by Slovenian life business (53% growth), mostly attributable to the acquisition of Vita, Slovenian non-life insurance business (8% growth), reinsurance business (18% growth), non-Slovenian life insurance business (9% growth), whereas non-Slovenian non-life premiums shrank by 6% year on year".
At the "claims chapter", gross claims paid in the Slovenian non-life segment declined significantly, primarily in motor insurance, reflecting a lower claims frequency. On the other hand, there were more claims in the reinsurance segment and significantly more major losses, many also related to the Covid-19 pandemic. Thus, "the 2020 result was impacted by Covid-19-related claims, amounting to EUR 10.8 million. The increase in net claims incurred in FoS business is also related to the pandemic. The Group set aside claims provisions for potential legal expenses and claims because of the uncertainties surrounding new court and regulatory practices regarding non-life business interruption coverage of pandemic-related claims written in the Republic of Ireland and Great Britain. In this regard, the Group reserved EUR 6.4 million at the end of 2020. Despite the difficult conditions during the year, the Group's incurred loss ratio remained at the 2019 level".