Monday, 09/03/2015

Pursuant to the Rules of the Ljubljana Stock Exchange, d.d., Ljubljana and the Market in Financial Instruments Act, Pozavarovalnica Sava d.d. ("Sava Reinsurance Company"), Dunajska 56, 1000 Ljubljana, hereby announces the following: 

The 2014 results showed for the first time the full effects of the inclusion of Zavarovalnica Maribor into the Sava Re Group. The Slovenian Group insurers accounted for 71 % of Group premium income, which means that these companies are of key importance in achieving the goals set. In 2014 a number of cost optimization activities were running at Zavarovalnica Maribor as well as some changes in business processes and organization. Accordingly, in the year the company saw the first significant benefits from synergistic effects and optimization efforts. 

The Sava Re Group posted a record profit of € 30.5 million in the year. The Company's management board considers this profit to be a very good result and a basis for long-term profit growth on the Group level, after Zavarovalnica Maribor had been included for the first time in the consolidated accounts in 2013. This profit has been achieved despite the natural disaster that hit a major part of Slovenia (ice damage) in January 2014 and had a € 6 million negative effect on the Group profit. Return on equity was 12 %, which exceeds our long-term goal. The profit generated exceeds the planned profit for 2014 by 27 %. The target profit was exceeded because of larger synergistic effects than planned, an exceptionally good combined ratio for international inwards business and a better-than-planned net investment income. 

The Sava Re Group wrote € 468 million in premiums, representing an increase of more than 21 % over 2013. In 2014 a major growth factor was the inclusion of Zavarovalnica Maribor into the Group (included into the consolidated accounts since 1 May 2013). The Group beat its premium target mainly because Zavarovalnica Maribor managed to maintain its premium volume despite the optimisation measures undertaken in the year. 

The unaudited net profit of Sava Reinsurance Company for 2014 totalled € 22.4 million, up 51,4 % from 2013. A major part of profit was generated by inwards reinsurance business written in international reinsurance markets, while a fair contribution also came from the net investment income. The combined ratio of this operating segment was 87.6 %, which is a result of improved risk selection, portfolio diversification as well as the absence of major catastrophe losses. This segment also had a major positive effect on the Group result. 

For 2015 the Group is planning a 1.8 % premium growth. The planned growth is expected to be generated by non-Slovenian insurers (over 10 % growth) and reinsurance business (4 % growth). In the Slovenian insurance market, the non-life segment is to growth by 0.2 %, while the life segment is planning a 2 % decline as this market segment in Slovenia is continuing to shrink. The Group is planning a 10.8 % return on equity for 2015. 

The Group's long-term targets remain: to exceed a premium volume of € 500 million and exceed a 11 % return on equity. Our key directions by operating segment are:

- Insurance business in Slovenia: further cost optimization and improvement in underwriting result by optimizing underwriting and claims handling;

- Reinsurance business in international markets: modest growth while ensuring adequately diversified risk exposure and profitability;

- Insurance business in the Western Balkans: annual growth of over 5 % and positive underwriting results.

The integration of Slovenian Group members has not been concluded yet and therefore remains a priority for the Group. In addition, in the planning period 2015-2019 activities for further expansion of the Group outside Slovenia are planned, primarily targeting the Western Balkan markets. 

Sava Reinsurance Company will pay out dividends in the amount of approximately 30 % of the net profit of the Sava Re Group (consolidated profit) with the management board making adjustments to their proposal for dividend payout taking into account the Company's capitalization, new development projects to engage additional capital, capital requirements for the support of organic growth and other major factors that affect the financial position of the Company. 

Preliminary figures for 2014, the 2015 plan and strategic goals for 2015-2019 are set out in the attached document. 

This announcement will be available on the Company's website at www.sava-re.si, at least five years from the date of the announcement.

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