Pozavarovalnica Sava

Earnings Release • Mar 10, 2017

Performance of the Sava Re Group and the Company Sava Re, d.d. in 2016

Ljubljana, 9 March 2017

In 2016 the Sava Re Group reached a major goal by merging all its EU-based insurers, it generated premium growth and an improved pre-tax profit.

The Sava Re Group closed the year 2016 with a profit before tax of € 40.7 million, an improvement of 1.4 percent over the prior year. The after-tax profit was € 32.9 million, which is 1.3 percent below the year-on-year figure because of tax effects. The increase in the pre-tax profit was mainly due to the underwriting result of international reinsurance business, which improved the segments' profit before tax figure by € 4.5 million (2016: € 8.6 million; 2015: € 4.1 million). The profit of non-life business in Slovenia was lower, mainly due to the hailstorm event that hit the portfolio of Zavarovalnica Sava. At the Sava Re Group level, this event had a negative impact of € 6 million on profits (€ 5 million impact on incurred claims and reinstatement premium of € 1 million). Despite this catastrophic event, the profit generated by this segment was offset by other improvements and was only € 3 million below the prior year figure (2016: € 21.3 million; 2015: € 24.3 million). Furthermore, the Group achieved a better result with international non-life insurance business, mainly as a result of an improved net investment income (2016: € 2.3 million; 2015: € 1.6 million). The life insurance business altogether produced a marginally lower profit than in 2015 (2016: € 10.3 million; 2015: € 12.1 million).

Group gross written premiums in 2016 amounted to € 490.2 million, up by 0.8 percent year-on-year. This growth was driven by the non-life insurance business, which grew by € 5.8 million (2.3 per cent) in the Slovenian insurance market and by € 3.1 million (5.9 per cent) in the markets outside Slovenia. However, there was a decline in international reinsurance premiums but with an increase in the profitability of the operating segment. The Group's life insurance premiums continued to decline modestly in the Slovenian insurance market (-0.2 per cent), but grew by 10.9 per cent on international insurance markets.

In 2016 the Group's net combined ratio (excluding the effect of exchange rate differences) improved by 0.3 percentage points to 94.6 per cent, and is 0.2 percentage points better than planned. The Company estimates this movement as very good, especially in view of the realised catastrophic event in 2016 and the larger cost burden due to the merger of its EU-based insurers.

For the year 2016, the Group generated a return on equity of 11.3 per cent, which is better than the Group's long-term goal.

The profits earned will allow the Group to follow its dividend policy and planned increase in regular dividend per share.

Key Figures – Unaudited Data of the Sava Re Group and Sava Re, d.d.
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(€)	Sava Re Group		Sava Re
	2016	2015	2016	2015
Gross premiums written	490,205,154	486,264,557	147,426,893	151,982,421
Year-on-year change (%)	0.8 %	3.9 %	-3.0 %	15.7 %
Net premiums earned	458,101,526	447,559,605	133,428,875	125,479,297
Year-on-year change (%)	2.4 %	2.3 %	6.3 %	10.2 %
Gross claims paid	269,445,796	271,503,134	85,165,592	89,689,537
Year-on-year change (%)	-0.8 %	6.3 %	-5.0 %	27.8 %
Net claims incurred	268,393,776	273,129,823	81,781,565	86,680,582
Year-on-year change (%)	-1.7 %	6.2 %	-5.7 %	33.9 %
Net incurred loss ratio	58.6 %	60.5 %	61.3 %	69.1 %
Net incurred loss ratio, excluding the effect of	58.2 %	59.5 %	60.2 %	66.3 %
exchange differences
Operating expenses, including reinsurance commission	155,830,879	145,261,469	44,475,032	37,623,325
income
Year-on-year change (%) Net expense ratio	7.3 % 34.0 %	1.1 % 32.5 %	18.2 % 33.3 %	1.9 % 30.0 %
Net combined ratio	95.0 %	95.8 %	94.9 %	99.2 %
Net combined ratio, excluding the effect of exchange
differences	94.6 %	94.9 %	93.6 %	96.7 %
Net inv. income of the investment portfolio	24,612,812	26,985,847	27,684,549	15,634,555
Return on the investment portfolio	2.4 %	2.7 %	6.0 %	3.5 %
Net inv. income of the investment portfolio, excluding
exchange differences	23,122,262	23,706,782	26,323,674	12,407,054
Return on the investment portfolio, excluding exchange	2.2 %	2.4 %	5.8 %	2.8 %
differences
Profit/loss, net of tax	32,918,213	33,365,451	32,873,817	16,191,902
Year-on-year change (%)	-1.3 %	6.9 %	103.0 %	-27.6 %
Profit/loss before tax	40,669,987	40,097,971	34,977,140	16,739,349
Year-on-year change (%)	1.4 %	2.9 %	109.0 %	-34.7 %
Comprehensive income	37,660,245	27,618,054	33,693,737	14,814,031
Year-on-year change (%)	36.4 %	-32.5 %	127.4 %	-44.0 %
Return on equity	11.3 %	12.0 %	12.3 %	6.2 %
	31/12/2016	31/12/2015	31/12/2016	31/12/2015
Total assets	1,671,189,179	1,607,281,060	568,147,764	570,886,710
% change on 31 Dec. of prior year	4.0 %	10.5 %	-0.5 %	4.3 %
Shareholders' equity	297,038,327	286,401,678	270,355,622	263,679,403
% change on 31 Dec. of prior year	3.7 %	5.5 %	2.5 %	2.1 %
Net technical provisions	1,109,770,895	1,070,781,309	208,003,567	204,875,596
% change on 31 Dec. of prior year	3.6 %	4.3 %	1.5 %	10.3 %
Book value per share	19.17	17.38	17.44	16.00
Net earnings/loss per share	2.08	2.02	2.08	0.98
No. of employees (full-time equivalent basis)	2,487.97	2,540.28	94.58	82.95

*The net incurred loss ratio and the net combined ratio of the group are calculated based on the reinsurance and non-life insurance operating segments.