Pozavarovalnica Sava

Investor Presentation • May 20, 2020

1Q 2020 results Sava Insurance Group

19 May 2020

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Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

Highlights of 1Q 2020

Growth in GPW of 15.1%

Growth in operating revenue of 16.2%

Net profit of €10.3 million (cca. 23% of the lower limit planned for 2020)

v ROE of 10.6%

Net combined ratio (excl. FX) of 93.3% in line with target

Completed acquisition of Diagnostic Centre Bled through ZTSR joint venture in March 2020

Covid-19 pandemic declared in Q1 with large impacts on lives and global capital markets

Key figures ̶Sava Insurance Group

€ million	1-3/2019	1-3/2020	Plan 2020	Change 2020/2019
Group
Operating revenues	128.2	149.0	> 610	16.2%
Gross premiums written	171.6	197.5	> 620	15.1%
Net expense ratio*	31.9%	30.4%	33 ̶34%	-1.5 p.p.
Return on financial portfolio*	1.8%	1.4%	1.3%	-0.4 p.p.
Net profit/loss	10.9	10.3	> 45	-5.6%
Annualized return on equity v	12.2%	10.6%	> 11%	-1.6 p.p.
Reinsurance and non-life insurance
Net combined ratio** (excl. FX)	93.0%	93.3%	< 94%	+0.3 p.p.
	31/12/2019	31/3/2020	P 31/12/2020
Shareholders' equity	384.8	377.5		-1.9%
Total assets of the investment portfolio	1,157.8	1,137.9		-1.7%
Assets held for the benefit of policyholders who bear the inv. risk	231.3	200.0		-13.5%
Assets in pension company savings funds	743.0	718.6		-3.3%
AUM at Sava Infond	376.6	317.2		-15.8%

* Impact of exchange rate differences excluded. The return on financial portfolio does not include the cost of subordinated debt.

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

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Consolidated profit before tax by segment

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Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

Results by operating segment – reinsurance

• Growth in non-proportional and proportional reinsurance premiums mainly on Asian markets (organic business growth)

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• Deterioration in underwriting result due to increased claims burden from business growth, development of previous contract years and one major fire claim

• Investment result excluding FX differences similar as in the same period last year

Results by operating segment – non-life Slovenia

• Larger volume of FOS business (up €7.9 million)
• v • Larger volume of non-FOS business (up €8.4 million) mainly in property insurance due to different underwriting dynamics with one large insurer; decline in motor liability as a result of measures taken due to the Covid-19 pandemic

• Stronger technical result mainly due to higher premiums

• Higher expenses from change in fair value and loss on disposal of investments in the FVTPL group (up €0.3 million) and lower interest income (up €0.2 million)

Results by operating segment – non-life international

• v • Increase in motor insurance premiums in Croatia, which is solely due to the acquisition of ERGO Osiguranje (included in the Group on 31 March 2019), otherwise cleaning of the portfolio
• Growth in other non-life insurance premiums due to the acquisition of new policyholders in Serbia
• Growth in health insurance in Kosovo as well

• Stronger technical result mainly due to higher premiums

• Investment result flat year on year

Results by operating segment – life Slovenia

• v • Premiums from new business insufficient to fully offset lost premiums relating to maturing life policies
• 20% growth in annual premiums

• Net expense ratio up 1.9 p.p. due to growth in operating costs with premiums being lower as previous year

• Higher expenses from change in fair value and loss on disposal of investments in the FVTPL group (up €0.3 million) and lower interest income (up €0.3 million)

Results by operating segment – life international

v • High growth in Croatia (partially from inclusion of ERGO Životno Osiguranje in the Group as of 31 March 2020) and in Serbia resulting from increased efficiency of own sales network

• Significantly improved expense ratio as a result of high premium growth, which exceeded growth in operating costs

• Increase mainly due to other investment income of Croatian branch

Results by operating segment – pension business

• v • More policyholders opting for pension
  • Loss due to significantly unfavorable developments in the financial markets (and the consequent situation at the end of March 2020) and setting of provisions for failure to achieve the guaranteed return of a Slovenian pension company

annuities upon retirement • Growth in other (technical) income despite lower assets in pension savings funds

• Increase in operating costs entirely due to amortisation of a list of customers, which was formed as an intangible asset of the group after Sava Penzisko joined the group

Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

Investment portfolio and AuM

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Structure of the investment portfolio

	31/12/2019	31/3/2020
Investment portfolio (€ million)	1,157.8	1,137.9
Government bonds	46.6%	42.3%
Corporate bonds	34.1%	34.8%
Cash and cash equivalents	6.5%	8.9%
Deposits & CDs	4.0%	4.1%
Mutual funds	3.0%	2.9%
Infrastructure funds	1.7%	1.9%
v Shares	1.4%	1.5%
Investment property	1.5%	1.3%
Real estate funds	0.3%	0.3%
Other	0.8%	1.9%
Total investment portfolio	100.0%	100.0%

• Decrease in the percentage of government bonds of 4.2 p.p. as a result of maturing of AAA and AA-rated government bonds

• Increase in the percentage of cash and cash equivalents of 2.4 p.p. due to planned strategic investments in 2020
• Increase in the percentage of other of 1.2 p.p. as a result of investing in financial investments in associated companies

Net inv. income of and return on the investment portfolio

€ million	1-3/2019	1-3/2020	Difference 20 - 19
Net investment income relating to the investment portfolio	6.4	2.2	-4.3
Net inv. income of the investment portfolio, excl. FX	5.0	3.2	-1.8
Return on the investment portfolio, excl. FX and SD cost	1.8%	1.4%	-0.4 p.p.

FX = Foreign exchange

SD = Subordinated debt

Return on the investment portfolio, excluding FX differences, amounted to €3.2 million in 1-3/2020, down €1.8 million compared to the same period last year, and represents a 1.4% return on the investment portfolio, excluding FX and subordinated debt expenses.

Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

Shareholders and share trading

Book value per share €24.36 31 Mar 20 / 31 Dec 2019: -1,9%

	31 March 2020
Share capital (€ million)	71.9
Market capitalisation (€ million)	248.0
Trading symbol	POSR
Number of shares	17,219,662
Number of own shares	1,721,966
Number of shareholders	4,104

Sava Re share price performance vs SBI TOP benchmark

Dividend policy

Sava Re has set itself the goal of increasing its dividend by an average of 10% per year over the period 2020−2022, thus distributing from 35% to 45% of the net profit of the Sava Insurance Group each year.

On 31 March 2020, Sava Re received a letter from the Slovenian Insurance Supervision Agency calling on insurance, reinsurance and pension companies to temporarily suspend dividend payments and refrain from making any irrevocable commitments to pay dividends.

Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

Capital adequacy

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

v € million	31 Dec 2019 (audited)
Eligible own funds	522.0
Solvency capital requirement (SCR)	237.7
Solvency ratio	220%

The Sava Insurance Groupʾs Solvency and financial condition report 2019 (Group SFCR) was posted on the Sava Re website and that of the Ljubljana stock exchange (Seonet) on 19 May 2020.

Contents

• Group results
• Segment reporting
• Financial investments
• POSR share and dividend policy
• Solvency position
• Plan 2020

2020 targets (consolidated)

	Realizirano Actual 2018 2018	Realizirano Actual 2019 2019	2020 plan
Skupina Group
Poslovni prihodki Operating revenues	€536.8 million 536,8 mio €	€584.2 million 584,2 mio €	> €610 million
Čisti poslovni izid Profit or loss, net of tax	€43.0 million 43,0 mio €	50.2 million 50,2 mio €	> €45 million
Donosnost lastniškega kapitala (ROE) Return on equity (ROE)	13.1% 13,1 %	13,8 % 13.8%	> 11%
v Donosnost naložb Investment return	1.7% 1,7 %	1,9 % 1.9%	1.3%
(Po)zavarovalni (Re)insurance part del
Kosmate premije Gross premiums written	€544.1 million 544,1 mio €	€598.5 million 598,5 mio €	> €620 million
Čisti merodajni škodni količnik (poz. + prem.) Net incurred loss ratio (reins. + non-life)	57.0% 57,0 %	61,7 % 61.7%	59‒60%
Čisti kombinirani količnik (poz. + prem.) Net combined ratio (reins. + non-life)	92.9% 92,9 %	93,8 % 93.8%	< 94%

* Impact of exchange rate differences excluded. The return on financial portfolio does not include the cost of subordinated debt.

Thank you for your attention.

Disclaimer

Forward-looking statements

This document may contain forward-looking statements relating to Sava Reʾs 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 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.

Appendix

Group exposure by region

Higher exposure to Slovenia in 1Q 2020 due to higher cash and cash equivalents, however still in line with investment policy. Lower exposure to EU member states as the result of Brexit. On the other hand, larger exposure to non-EU members.

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Group exposure to Slovenia

€ million	31/12/2019		31/3/2020		Change
Type of investment	Amount	Structure	Amount	Structure	in p.p.
Deposits	28.9	2.3%	28.0	2.3%	0.0
Government bonds	95.9	7.6%	91.2	7.5%	-0.1
Corporate bonds	32.1	2.5%	32.4	2.7%	0.1
Shares	16.9	1.3%	14.4	1.2%	-0.1
Mutal funds	2.8	0.2%	1.9	0.2%	-0.1
Cash and cash equivalents	52.0	4.1%	98.0	8.1%	4.0
v Infrastructural funds	0.2	0.0%	0.2	0.0%	0.0
Total	241.5	19.1%	278.7	23.1%	3.9

Exposure to Slovenia increased by 3.9 p.p. in 1Q 2020.

The largest contribution to increased exposure to Slovenia was an increase in cash and cash equivalents due to planned strategic investments in 2020.

Group exposure by industry

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

Larger exposure to banking sector resulting from issuing subordinated debt in 2019. 60% of received funds have been invested in short-term investments (cash, cash equivalents and deposits) due to planned strategic investments in 2020.

* Includes direct investments in real-estate and property funds.

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Maintaining a good rating profile in 1Q 2020 despite Covid-19 impacts

Investment grade assets represent 75.4% of fixed income investments which is 2.9 p.p. lower than at the end of 2019.

The share of AAA and AA-rated categories declined reflecting maturities of government bonds and the downgrading of ratings due to Covid-19 impacts. As a result, the share of BBB and BB-rated categories increased.

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