Pozavarovalnica Sava

Interim / Quarterly Report • Aug 23, 2019

a 1H 2019 results Sava Insurance Group

22 August 2019

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Highlights 1H 2019

Growth in GPW of 9.1 %; growth in total income of 7.6 %

Net profit of €22.6 m, which is 52.5 % of net profit planned for 2019, and ROE of 12.5 %

Net combined ratio (excl. FX) of 94.6 % just above upper end of planned range (93.6–94.1%)

In June 2019, Sava Re acquires 85% of asset manager Sava Infond, with the remaining 15% held by Zavarovalnica Sava.

Events after 30 June 2019

v

Sava Re signs deal to purchase Diagnostični Center Bled d.o.o. to acquire joint control over the company through ZTSR d.o.o., a Sava Re and Zavarovalnica Triglav joint venture.

"A" rating (stable outlook) affirmed by rating agency S&P

Key figures ̶Sava Insurance Group

€ million	1-6/2018	1-6/2019	Plan 2019	Change
				2019/2018
Gross premiums written	308.6	336.8	> 555	9.1%
Net expense ratio*	33.2%	31.4%	32.4 ̶33.0%	-1.8 p.p.
Net combined ratio** (excluding FX differences)	97.3%	94.6%	93.6 ̶94.1%	-2.7 p.p.
Return on financial portfolio (excluding FX differences)	1.9%	2.3%	1.7%	+0.4 p.p.
Net profit/loss	14.2	22.6	at least 43	59.3%
Annualized ROE	9.9%	12.5%	> 12%	+2.6 p.p.
	31/12/2018	30/6/2019	P 31/12/2019
Shareholders' equity	340.2	360.7		6.0%
Total assets of the investment portfolio	1,082.8	1,097.7		1.4%
Funds for the benefit of policyholders who bear the inv. risk	215.9	222.9		3.2%
Assets in pension company savings funds	638.2	691.2		8.3%

* The expense ratio includes data for the reinsurance, non-life and life operating segments.

** The combined ratio covers only the reinsurance and non-life insurance segments.

Consolidated profit before tax by segment

Consolidated gross premiums written by class of insurance

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Results by operating segment – reinsurance

• Growth of non-proportional reinsurance premiums mainly on Asian markets (organic growth ofthe business and new contracts)

• Poorer technical result due to weaker development of premiums and claims of older underwriting years

• Income from partial repayment of business bondsimpaired in the past(+ €0.4 million)
• Higher dividends from financial investments (+ €0.2 million)
• Higher income from investment property (+ €0.2 million)

8

Results by operating segment – non-life Slovenia

• Larger volume of motor business (increased number of policies and higher average premium with individuals) and property business (different dynamics of underwriting)

• Fewer larger claims in 2019
• Lower operating costs

• One-off income from reevaluation of investment in Sava Infond in the amount of€2.7 million

9

Results by operating segment – non-life international

• v • Inclusion of the non-life insurer ERGO in Croatia into the Group (from 1 April 2019); 11.0% growth if ERGO is excluded
• Largest growth seen in Croatian branch (amended conditionsfor motor business)

• Higher net claims incurred by Croatian and Serbian non-life insurance companies due to increased loss burden and some larger motorliability claims
• Inclusion of Croatia-based ERGO into the Group (since 1 April 2019)

10 Group performance • Segment reporting • Investment structure and return • POSR share • Solvency position • Plan 2019

Results by operating segment – life Slovenia

• v • Premiums from new business more than sufficient to fully compensate for lost premiumsrelating to maturing life policies
• Increased accidentinsurance premiums
• New production at 100.5 % of last year's production; growth in traditional and risk business,decline in unit-linked

• Net expense ratio stays approx.the same
• Favorable development oftechnicalresult

• Lower interest income due to lower interest rates in capital markets and lower capital gains

Gross premiums written by class of insurance

Results by operating segment – life international

• High growth in the Serbian life insurer (+34%, increased productivity of sales network)and Kosovanlife insurer(+10%) • Decrease in gross premiums of the Croatian branch due to lost premiums relating to

maturing life policies

• Significantly improved expense ratio as a result of high premium growth with decline in other operating costs(by 0.9%)

• Lower expenses from negative exchange rate differences in Croatia

12

Results by operating segment – pension business

• v • More policyholders opting for pension annuities uponretirement
• Inclusion of company based in North Macedonia into the consolidated accounts from 31 March 2018
• Growth in other (technical) income reflecting the movement of assets under management presented below

• Inclusion of company based in North Macedonia into the consolidated accounts from 31 March 2018
• Increase in operating expenses of the Slovenian pension company (excl. expenses attributable to funds)of4.7%

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Structure of the investment portfolio

Decrease in the percentage of government bonds of 3.5 p.p.: decrease as a result of maturing of A-rated government bonds with partial reinvestment in corporate bonds (their percentage increased by 1.0 p.p.) and partial increase of cash and cash equivalents (their percentage increased by 1.4 p.p.)

Net inv. income of and return on the investment portfolio

€ million	1H 2018	1H 2019	Absolute change 2019 - 2018
Net investment income relating to the investment portfolio	10.1	12.9	2.8
Net investment income of the investment portfolio, excluding FX differences	10.3	12.2	1.9
Return on the investment portfolio, excluding FX differences (%)	1.9%	2.3%	+0,4 p.p.

• Return on the investment portfolio, excluding FX differences, amounted to €12.2 million in 1H 2019, which is €2.2 million more than in the same period last year, and represents 2.3 % return on the investment portfolio, as a result of one-off investment income from revaluation of Sava Infond. Excluding this impact, the return on the investment portfolio was approximately the same as last year.

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Shareholders and share trading

Book value per share €23.27 1H 2019 / 1H 2018: up 14.4%

Sava Re share price performance vs SBI TOP benchmark

18

	30/6/2019
Share capital (€ million)	71.9
Market capitalisation (€ million)	287.6
Trading symbol	POSR
Number of shares	17,219,662
Number of own shares	1,721,966
Number of shareholders	4,151

* Custody account. 0,00

** On 2 June 2016, Sava Re received a notice from Adris Grupa, d.d., Vladimira Nazora 1, 52210 Rovinj, Croatia via its legal representative Rojs, Peljhan, Prelesnik & partnerji, o.p., d.o.o., advising the Company of a change in major holding in Sava Re. Adris grupa, including its subsidiaries with fiduciary accounts, held 3,278,049 POSR shares, representing 19.04 % of issued and 21.15 % of outstanding shares.

Dividend policy

Sava Re aims to ensure that its shareholders see a 10% growth in dividends but that the dividend distributiondoes not exceed40%of the Group's net profitin the period 2017–2019.

When designing any dividend proposal,the company willtake into account:

• 1. the estimated excess of eligible own funds oversolvency capitalrequirement under Solvency II
• v 2. the Group's own risk and solvency assessment
• 1. capitalmodels of rating agencies Standard&Poor's andAM Best
• 1. approved annual and strategic plans of the Group and the company
• 1. new development projectsthat would engage additional capital
• 1. otherrelevant factors affecting the financial condition ofthe company

Dividend policy

The 2019 dividend yield was calculated using the average market share price in the reporting period (January 1 2019 – June 30 2019).

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Capital adequacy

€ million	31 Dec 2017 (audited)
Eligible own funds	451.4
Solvency capital requirement (SCR)	205.0
Solvency ratio	220 %

v € million	31 Dec 2018 (audited)
Eligible own funds	471.9
Solvency capital requirement (SCR)	216.7
Solvency ratio	218 %

The Sava Re Group's Solvency and financial condition report 2018 (Group SFCR) was posted on the Sava Re website and that of the Ljubljana stock exchange (Seonet) on 3 June 2019.

Contents

• Sava Insurance Group Performance
• Sava Insurance Group Segment reporting
• Sava Insurance Group Investment structure and return
• Sava Insurance Group POSR share and dividend policy
• Sava Insurance Group Solvency position
• Sava Insurance Group Plan 2019

Plan 2019 – main targets (consolidated)

€ million	2017	2018	2019 plan
Group
Operating revenues	492.4	540.5	> 4.5% growth
Profit or loss, net of tax	31.1	43.0	at least €43 m; > 10% growth based on 2018 estimate
Return on equity	10.1%	13.1%	> 12%
v Return on investments*	2.0%	1.7%	1.7%
Re/insurance part (+ annuities)
Gross premiums written	517.2	546.3	> €555 m
Net premiums earned	470.9	504.7	> €515 m
Net expense ratio (reins. + non-life + life)	32.6%	33.1%	32.4–33.0%
Net incurred loss ratio* (reins. + non-life)	60.5%	57.0%	59.2–59.7%
Net combined ratio* (reins. + non-life)	95.6%	92.9%	93.6–94.1%

* Excluding the effect of FX differences.

Consolidated gross premiums written and revenues of non-insurance companies

* Total income excl. investment income

Thank you for your attention.

Disclaimer

Forward-looking statements

This document may contain forward-looking statements relating to Sava Re's expectations, plans or goals, which are based on assumptions made by Sava Re management. By their nature, forward-looking statements involve risk and uncertainty. As a result, actual developments, in particular performance, may differ materially from the expectations, plans and goals set out in this document; therefore, persons should not rely on forward-looking statements.

Duty to update

Sava Re assumes no obligation to adjust any forward-looking statements or other information contained in this document to future events or developments.

Annex

Group exposure by region

Lower exposure to Slovenia in 1H2019 is in line with investment policy; larger exposure to EU memberstates.

Group exposure to Slovenia

(€ million)	31/12/2018		30/6/2019		Change
Type of investment	Amount	Structure	Amount	Structure
Deposits	0.9	0.1%	12.8	1.1%	1.0%
Government bonds	155.3	13.3%	94.2	8.0%	-5.3%
Corporate bonds	23.4	2.0%	28.3	2.4%	0.4%
Shares	15.1	1.3%	15.8	1.4%	0.1%
Mutal funds	0.7	0.1%	2.5	0.2%	0.2%
Cash and cash equivalents	40.6	3.5%	40.2	3.4%	-0.1%
v Other	16.5	1.4%	16.7	1.4%	0.0%
Total	252.5	21.7%	210.5	18.0%	-3.7%

Exposure to Slovenia decreased by 3.7 p.p. in 1H 2019.

The largest contribution to reduced exposure to Slovenia was a decline in the value of government bonds owing to maturities in the reporting period.

Group exposure by industry

Lower exposure to government securities resulting from maturity of government securities.

Larger exposure to banking sector is short-term based on increased allocation to cash and cash equivalents.

Group rating profile

Maintaining a good rating profile in 1H 2019

Investment grade assets represent 79.8% of fixed income investments and are lower compared to the end of 2018.

The A-rated category declined reflecting maturities of government bonds. Increase in the percentage of BBB group is due to better ratings of Croatian government bonds (from BB+ to BBB-) and the inclusion of ERGO in the portfolio. Increase in the percentage of unrated assets reflects increased allocation to cash and cash equivalents (short-term).