Sava Insurance Group

2021 audited results

26 April 2022

Group results
Segment reporting
Financial investments
Unconsolidated data
Financial statements

Group results

Highlights of 2021

Growth in operating revenue of 7.6%

Record net profit of €76.2 million, which exceeds planned net profit by 43.7%

Net expense ratio of 29.0% (last year 29.5%)

Net combined ratio (excluding FX differences) of 88.3% (last year 93.9%)

All segments ended the year with a profit, except for the "other" segment, which includes subordinated debt expenses

Improved performance of non-life segments due to favourable claims development, improved performance of the pensions & AM segment due to higher inflows and favourable conditions on the stock markets with a positive impact on the amount of AUM

S&P and AM Best "A" ratings, stable outlook, affirmed

Record profit for the year

Gross result	Net result
€93.5 m	€76.2 m	Plan achieved
2021/20: +38.1%	2021/20: +35.1%

Development of consolidated GPW

Consolidated gross premiums written in 2021 €729.9 m

2021/20: +7.4%

Development of consolidated GPW by insurance market

MS = market share

* 1–9/2021 since the data for whole year 2021 is not published yet.

** 1–12/2020 – no newer data available.

Growth of operating revenue

Combined ratio within target range

Net combined ratio: all expenses (other than from investments) as percentage of total income (other than from investments) – calculated for the non-life and reinsurance segments.

High return on equity

Equity	ROE
€504.1 m	15.8%	Plan achieved
2021/20: +9.5%	2021/20: +2.5 p.p.

Assets structure

Assets €2,658.3 m 2021/20: +7.7%

million €	2020	2021
Financial and investments investment property	1 446 3 ,	1 487 0 ,
of policyholders who bear the risk Assets investment	411 2	517 4
Receivables	153 9	149 9
under investment Assets contracts	158 8	172 8
Reinsurers' share of technical provisions	42 6	57 8
Other assets	254 5	273 4
Total assets	2 467 3 ,	2 658 3 ,

Liabilities structure

Liabilities €2,658.3 m

2021/20: +7.7%

million €	2020	2021
Technical provisions	1 233 3 ,	1 237 5 ,
Technical of policyholders who bear the provisions risk investment	409 6	524 2
Equity	460 2	504 1
liabilities Investment contract	158 6	172 7
Liabilities from operating activities	58 4	54 8
Subordinated liabilities	74 8	74 9
Other liabilities	72 3	90 3
Total liabilities	2 467 3 ,	2 658 3 ,

Growth in assets under management

Development of return on investment portfolio

* Excluding FX differences and expenses of subordinated debt.

Growth in book value of share

Ownership structure

* Fiduciary account.

** Sava Re was informed on 2 June 2016 that Adris Grupa, together with its subsidiaries, holds 19.04% of shares of Sava Re's share capital (21.15% of all shares with voting rights) in fiduciary accounts.

	31/12/2021
Share capital (€ million)	71.9
Market capitalisation (€ million)	432.4
Trading symbol	POSR
No. of shares	17,219,662
No. of own shares	1,721,966
No. of shareholders	4,274

Investor type	Local investor	Foreign investor
Insurance undertakings and pension companies	18.3 %	0.0 %
Other financial institutions*	18.0 %	15.8 %
Republic of Slovenia	13.9 %	0.0 %
Individuals	10.7 %	0.1 %
Investment companies and mutual funds	2.6 %	0.1 %
Other non-financial corporations	2.9 %	1.0 %
Banks	0.0 %	16.6 %
Total	66.4 %	33.6 %

* Within other financial institutions SDH holds 17.7% of all shares.

Dividend policy

Dividend policy: 10% average increase in dividend per year; distribution of between 35% and 45% of the net profit of the Sava Insurance Group.
Sava Re did not pay any dividends in 2020 because of increased Covid-19-related risks identified and due to special caution in response to recommendations by the Insurance Supervision Agency. The amount of the 2020 dividend paid out in 2021 was limited on the recommendation of the Insurance Supervision Agency.
Proposed dividend payout in 2022 in respect of the 2021 profit: proposed dividend payment of €23,246,544.00 or €1.50 gross per share. The general meeting of shareholders is scheduled to be held on 23 June 2022.

Capital adequacy

€ million	31/12/2020
Eligible own funds	567.8
Solvency capital requirement (SCR)	287.4
Solvency ratio	198 %


€ million	31/12/2021*
Eligible own funds	601.3
Solvency capital requirement (SCR)	304.4
Solvency ratio	198 %

* The assurance report with limited assurance of the auditor KPMG has not been issued by the publication date of this report.

Detailed data on capital adequacy of Sava Insurance Group for the year 2021 will be posted in the solvency and financial condition report for 2021 (Group SFCR), which will be posted on 19 May 2022 on Sava Re's website and and published through the Ljubljana Stock Exchange.

Segment reporting

Results by operating segment – reinsurance

Proportional business up by 11%, nonproportional by 2%
UWY 2021 premiums are down by 2% (€2.0 million); prior UWY premiums grew by €7.3 million (mainly proportional reinsurance)

• Improvement of underwriting result in 2021 due to lower net claims incurred – several major claims were reported in 2021, but due to reinsurance protection the technical result in 2021 was better. The poor result in 2020 was further affected by Covid-19 claims, while in 2021 this effect was negligible.

Higher investment result, excluding FX differences, driven by higher gains on disposals and higher dividends from financial investments
Higher net expense ratio due to growth of proportional business, which is characterized by higher commission rates

Results by operating segment – non-life Slovenia

Lower volume of FoS business (down €25.0 million)
Gross premiums written, excl. FOS, up by €16.7 million; growth in personal motor business due to more policies sold and in property business reflecting increased premiums of large clients due to more objects insured and larger sums insured, as well as more home owners policies sold

Improved UW result mainly due to cancellation of FoS business
Favourable technical result due to lower claim frequency because of Covid-19 (2020 and 2021)

• Better result driven by higher income from alternative funds compared to 2020

Results by operating segment – non-life international

Growth of gross premiums written on Serbian, North Macedonian, Montenegro and Kosovo insurance market (13 %; in 2020 decline due to Covid-19)
Croatian premiums fell by 22% as part of efforts to improve portfolio performance

• Improved UW result mainly because of the better result achieved by the Croatian branch of Zavarovalnica Sava

• Lower investment result due to lower gains on sale of investments and lower interest income

Results by operating segment – life Slovenia

Vita included in Group as from 31 May 2020; consolidated gross premiums written in 2020 of €46.1 million, in 2021 €96.6 million
18% growth in new annual premiums written

• Net expense ratio lower reflecting full-year consolidation of Vita

• Rise in net investment income both due to the full-year consolidation of Vita and higher gains on sale of investments at Zavarovalnica Sava

Results by operating segment – life international

High growth in Kosovo and Serbia (37% and 20%, respectively), while Croatian branch of Zavarovalnica Sava faced a drop by 39% due to reduced sales through banks
New annual premiums up by 26%

• Lower expense ratio mainly due to increased premium income at Serbian and Kosovo life insurers and partly due to savings at the Croatian branch of Zavarovalnica Sava

• Investment result lower because of net foreign exchange differences of the Croatian part of Zavarovalnica Sava (in 2020 net FX gains, in 2021 net FX losses)

Results by operating segment – pensions and asset management

Growth of annuity portfolio in line with the number of policyholders meeting eligibility requirements and the impact of switching from other providers
Higher income reflecting increased assets under management (most notably at Sava Infond) because of higher inflows and favourable financial market movements

• Increased operating expenses due to growth in business volume and increased assets under management

26 Group results • Segment reporting • Financial investments • Unconsolidated data • Financial statements

Financial investments

Structure of investment portfolio

million €	31/12/2020	31/12/2021
bonds Government	660 8	718 5
bonds Corporate	618 9	592 1
Cash and cash equivalents	0 74	0 74
Infrastructure funds	27 4	44 5
Shares	38 6	36 0
funds Mutual	38 3	35 9
Deposits & CDs	22 4	18 6
Real funds estate	14 3	15 8
Investment property	16 1	14 3
Other	24 4	31 8
Total investment portfolio	1 535 3 ,	1 581 4 ,

Share of corporate bonds down by 2.9 p.p., reflecting maturities and sales, resulting in a higher share of government bonds. Increase in the share of infrastructure funds due to capital call-ups (+1.0 p.p.).

Group exposure by region

Compared to 2020, the exposure to Slovenia decreased and the exposure to EU countries increased. Exposure to other regions has not changed significantly compared to 2020.

The decrease in exposure to Slovenia is mainly due to the disposal of listed shares and the maturity of government bonds.

The reason for the increase in the exposure to EU countries is primarily investment in government securities.

Group exposure by industry

The lower exposure to the banking sector reflects maturities of covered and corporate bonds, which were reinvested in government securities. This in turn increased the exposure to the government sector.

* Includes direct investments in real-estate and property funds. Corporate bonds classifed as real estate under GICS are also included.

Maintaining good rating profile despite Covid-19 pandemic

Investment grade assets accounted for 84.5% of fixed-rate investments, up by 1.6 p.p. compared to 2020.

A-rated assets shrank as the result of maturities of government bonds and downgrading related to Covid-19; BB-rated assets declined because of the upgrading of some Slovenian banks to BBB, resulting in an increase in BBB-rated assets.

Unrated assets increased by 2.0 p.p. compared to 2020 because of the increased percentage of cash in the investment portfolio, which is of a short-term nature.

Investment income by type

million €	2020	2021	Absolute change
effective income interest Interest at rate	16 2	16 8	0 7
Change fair value of in FVPL assets	2 5	1 3	-1 2
disposal of Gains FVPL assets on	0 0	0 0	0 0
disposal of other Gains IFRS categories asset on	4 9	7 8	2 9
from Income associates	0 1	0 8	0 6
from dividends Income	2 2	3 6	0 7
foreign exchange Net gains	0 0	4 4	4 4
Other income	2 0	1 6	-0 3
Total income	27 9	36 4	8 5
Total income , excluding exchange differences	27 9	32 0	4 1

Interest income at the effective interest rate was €0.7 million higher compared to 2020. The reason is that Vita's return was included in consolidation only for 6–12 in 2020 (first consolidation on 31 May 2020).

Gains on disposal were €2.9 million higher in 2021. Due to the lower exposure to certain equity investments, a part of the portfolio was sold, and thus profits were realised that had previously been shown in the revaluation surplus.

Income from dividends was slightly higher in 2021, mainly due to the lifting of certain restrictions imposed by regulators and higher dividends from alternative funds.

Investment expenses by type

million €	2020	2021	Absolute change
Interest expense	3 0	3 0	0 0
Change fair value of in FVPL assets	2 3	0 9	-1 4
disposal of Losses FVPL assets on	0 0	0 0	0 0
disposal of other categories Losses IFRS asset on	1 4	0 3	-1 1
from Loss investments in associates	0 6	0 0	-0 6
Other investment impairments	1 1	0 2	-0 9
foreign exchange losses Net	8 4	0 0	8 -4
Other	0 8	1 6	0 7
Total expense	14 0	6 0	-8 0
Total excluding exchange differences expense,	9 2	6 0	-3 2

The change in fair value of FVPL assets was lower by €1.4 million (in 2020, it mainly relates to subordinated bonds of Slovenian companies).

Other expenses: upon the first consolidation of Vita's HTM portfolio, the Group recognised a gain due to the revaluation of the portfolio to fair value. The effect of the difference between fair value and amortised cost is gradually decreasing (in 2021, €0.9 million effect on expenses).

Net inv. income of and return on investment portfolio

€ million	2020	2021	Absolute change
Net investment income relating to the investment portfolio	13.9	30.4	16.5
Net investment income of the investment portfolio, excluding FX differences	18.7	26.0	7.3
Return on the investment portfolio, excluding FX differences and subordinated debt expense	1.6%	1.8%	0.2

Net investment income relating to the investment portfolio consists of net investment income relating to financial investments, the result of investments in associates and net investment income relating to investment property.

Unconsolidated data

Slovenian insurance business – non-life (non-consolidated)

Data for Vita are shown for all years, although Vita has been included in the consolidated accounts since June 2020.

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Slovenian insurance business – life (non-consolidated)