Moreover, premium growth of as much as 10% was generated from life insurance. Combined ratio is favourable and lower than its target long-term strategic average value, according to the Group's statement. This year, the environment of low or zero interest rates continues to persist on the financial markets. In Slovenia and the Adria region, no visible improvement in the situation is expected by the leading financial/insurance group in the short term.
Profitability. The Company recorded solid operating results in the first three months of 2017. Net profit of the Triglav Group totalled EUR 22.3 million (Q1 2016: EUR 22.6 million), whilst profit before tax equalled EUR 25.5 million (Q1 2016: EUR 28.2 million).
"With the new strategy, the Triglav Group has been transforming into a group that develops new ways of doing business as the foundation of its responsible long-term development, while at the same time operating profitably and safely. Greater focus will be on putting the clients and their needs at the centre of all our activities. We are satisfied with our performance in the first three months of 2017. Compared to the same period last year, the Group increased its insurance portfolio, acquired new clients, increased the scope of insurance coverage with existing policyholders and achieved solid operating results. Taking into account the business conditions anticipated until the end of the year, we estimate that the annual profit before tax of the Triglav Group will be within the planned range of EUR 70-80 million," said Andrej SLAPAR, President of the Management Board of Zavarovalnica Triglav.
Premium growth recorded in all insurance markets and segments. In the reporting period, consolidated gross insurance and co-insurance premiums totalled EUR 281 million, which is EUR 22 million or 8% more than in the respective period of 2016. The Group recorded premium growth in all insurance segments. In the largest segment, i.e. the non-life insurance segment, premium was up by 8%, whilst health insurance premium experienced an increase of 13%. This year, an improved trend in life insurance premium was observed, as the growth of as much as 10% was achieved thanks to retained sums paid out on the maturity and higher premium payments.
Premium growth was recorded in all seven insurance markets of the Group. In Slovenia, the insurance premium of Zavarovalnica Triglav was 8% higher compared to the respective period of 2016, whilst that of Triglav, Zdravstvena zavarovalnica and Skupna pokojninska druzba increased by 13% and 1% respectively. The premium on markets outside Slovenia recorded an average growth of 15%. The highest premium growth of 38% was seen in the Serbian market.
Loss developments, favourable combined ratio. No mass loss events occurred in the first quarter of 2017. Gross claims paid were up 3% compared to the corresponding period of last year but only as a result of the increase in the insurance portfolio itself and higher claim frequency. Because of the higher claims ratio, the combined ratio increased to 92.7%. Such value is favourable and lower than its target long-term strategic average value.
Return on financial investments affected by interest rates. This year, the Group has continued to operate in the environment of low or zero interest rates and a high volatility of stock markets. No visible improvement in the situation is expected in the short term. The quarterly results indicate higher returns on financial investments of the Triglav Group than last year, which however is primarily the consequence of one-off events recorded last year. The Group continues to follow the main guidelines of its existing investment policy. Its portfolio predominantly consists of prime government bonds, while the shares of individual investments are adjusted in line with the investment policy.
Financial strength and stability. As at the reporting date, total equity capital of the Triglav Group increased by 2% to EUR 759.6 million, whilst insurance technical provisions equalled EUR 2,740.6 million, up 3%. Considering the set strategic guidelines, the capital level of the Group adequately exceeds the target level of the risks underwritten by the Group. In compliance with Solvency II legislation, the details on the financial performance, solvency and capital adequacy of the Group as at the 2016 year-end will be disclosed in the Solvency and Financial Condition Report, which will be published within the period specified by law, i.e. by 1 July 2017.
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