Pozavarovalnica Sava dd : Sava Re Group Plan for 2016 Exceeded – Ambitious Plans for 2017

Pursuant to the Rules of the Ljubljana Stock Exchange, d.d., Ljubljana and the Market in Financial Instruments Act, Sava Re, d.d., Dunajska 56, 1000 Ljubljana hereby announces the following:

Preliminary figures for 2016

According to preliminary data, the Sava Re Group wrote about € 490 million in gross premiums written in 2016, which is an increase of 0.8 per cent over 2015 and 0.4 per cent more than planned.

The non-life insurance segment in Slovenia comprises Zavarovalnica Sava, which wrote € 256 million in non-life premiums, up by 2.4 per cent over 2015. The growth was mostly driven by commercial lines, motor and credit business. The Slovenian life insurance premiums (comprising Zavarovalnica Sava and Moja naložba) totalled € 80 million in premiums, down 0.2 percent from 2015 owing to an increase in the number of policy maturities in 2016.

Reinsurance operations wrote € 93 million in gross premiums, a decline by 5.4 per cent from the previous year. This decline is a result of lower levels of premium income by cedants from South Korea due to a restructuring of their programmes. Still South Korea remains an important market and our cooperation with our partners in this region is stable and long-term. Apart from this, Sava Re generated solid growth in international markets: in Asian markets (excluding South Korea) 12 per cent growth; in African markets 29 per cent growth and in Latin American markets (excluding Panama) average growth of over 13 per cent.

Non-life insurance premiums outside Slovenia grew by 4.8 per cent to € 55 million, while life insurance premiums outside Slovenia grew by 10.9 per cent to € 7 million. Excluding the Kosovan market, where premium volume continued to shrink slightly in 2016, insurance operations in international markets grew by 8 per cent.

A key objective of the Sava Re Group in 2016 was the successful and timely merger of its EU-based insurers. Thus on 2 November 2016, the merged insurer Zavarovalnica Sava started operating in Slovenia and Croatia. Thanks to an effective advertising campaign, the name was immediately accepted in the Slovenian insurance market and the new brand identified with the key attributes that will support the group's continued operations.

We estimate that the Sava Re Group will end the year with a result that will be close to the planned profit.

Plans for 2017

The 2017 plans are significantly affected by the environment in which the Group operates. It is expected that investment income will continue to decline because of the low interest rates. International reinsurance markets are also challenging as reinsurance rates remain on a relatively low level, further eroding underwriting results. In Slovenia, actions have been taken to improve the profitability of the combined portfolio and to take advantage of synergistic effects, which is expected to improve underwriting results. Still only modest growth is planned for the Slovenian part of the portfolio. Minor growth in insurance premiums is also planned to improve the underwriting results of the portfolios outside Slovenia.

The group is planning to write gross premiums of € 494 million. Growth has been planned primarily in non-Slovenian markets: 4 per cent growth for non-life business and 6 per cent growth for life business. The target combined ratio (non-life and reinsurance business) for 2017 is 95 per cent. The Sava Re Group is planning a net profit of between € 31 and € 33 million and a return on equity of over 10 per cent.

The key direction for 2017 at the group level is client focus and accelerated enhancement of processes across the group to achieve this. The group will focus on organic growth in new reinsurance markets and markets outside Slovenia where it is present. Now that the merged company is operating, an important goal is also to unlock synergistic benefits, which will fully unfold in the coming years.