TRIGLAV Group, 1Q2016: The record low interest rates environment strongly affected the Group's profit, while technical profitability indicators improved

26 May 2016 — Daniela GHETU
The challenging conditions in the Group's insurance markets and the record low interest rates environment affected the financial results of the TRIGLAV Group in Q1 2016: while GWP volume decreased slightly, the return on financial investments fell by 74% y-o-y affecting the Group's profit. However, TRIGLAV's technical result improved, reflecting the overall stability of the Slovene insurer.

"In the first three months of 2016, the Group performed well in core insurance business as reflected by its impoved combined ratio despite the demanding and highly competitive conditions on insurance markets, under which the Group operates. In terms of financial investments, the entire insurance industry, including the TRIGLAV Group, has been operating in record low interest environment, resulting in lower return on financial investments. Such environment was expected and based on the Q1 2016 performance we estimate the annual net profit before tax of the Group to be in the budgeted range," Andrej SLAPAR, President of the Management Board of Zavarovalnica TRIGLAV d.d., said.

In terms of core insurance business, the Group performed well as clearly reflected by the combined ratio as a measure of profitability in non-life insurance operations. Both the TRIGLAV Group and Zavarovalnica TRIGLAV as the parent company improved their combined ratio. The combined ratio of the Group was 91.4%, whilst that of the parent company stood at 82.3% as at the reporting date.

In 1Q 2016, the TRIGLAV Group posted a total of EUR 259 million in consolidated gross insurance and co-insurance premiums (1% less y-o-y; the 2015 data also include the data for the Czech insurer). Compared to the same period of 2015, the premium of the parent company in Slovenia was 1% lower (EUR 172.5 million), whereas that of TRIGLAV, Zdravstvena zavarovalnica rose by 2% and that of Skupna pokojninska druzba by 9%. In the other five countries of the Adria region where the Group operates, all insurance subsidiaries of the Group (excluding the Banja Luka insurer) recorded premium growth compared to the corresponding period of the previous year.

Compared to the corresponding period of 2015, gross claims paid by the TRIGLAV Group were down by 1% to EUR 147.3 million, while those of the parent company fell by 2% totalling EUR 95.7 million. In the reporting period, no major loss events were recorded.

The Group's operations were significantly affected by the return on financial investments, which was 74% lower compared to the previous year (50% lower return on financial investments of the parent company), primarily as a result of lower net interest income, reduced net effect of revaluation and lower net gains on the sale of financial assets. With consistent implementation of its business policy measures, the TRIGLAV Group ended the first quarter of 2016 with a net profit of EUR 23 million and generated a profit before tax of EUR 28 million. The lower profit of the Group compared to the respective period of 2015 is predominantly a result of a lower return on investments, which was expected.

A high level of financial stability is maintained by the TRIGLAV Group, which is reflected in a 4% increase in total equity capital to EUR 735 million and 1% higher insurance technical provisions totalling EUR 2,632 million.

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