Pozavarovalnica Sava dd : Strategic Plan of the Sava Re Group for the Period 2017–2019

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 (also the 'Company') announces the following:

For the 2017-2019 strategy period, the Sava Re Group set itself ambitious goals with the following ones in the foreground:

• digitalisation of operations and streamlining of processes in the Group's insurance companies to make solutions simpler and more accessible to clients;
• continuous growth of the Group, both organic and acquisitions-based;
• seeking opportunities in property and infrastructural projects to diversify the investment portfolio;
• closing the gap between book value and market value of shares;
• target return on equity of 10.4 per cent (+/- 0.4 percentage point).

We will develop insurance products tailored to clients' needs and accessible through sales channels most convenient to our clients. We will develop processes and implement tools that will provide our clients with insight into the various phases of handling policies and claims and measure client satisfaction to further improve the user experience.

We are aiming at higher organic growth outside Slovenia and, by the end of 2019, expect to see the share of premium income written by our non-Slovenian subsidiaries increase compared to the business generated in Slovenia. Sava Re reinsurance operations will continue to look for growth opportunities in emerging markets; however, overall growth will also depend on price trends in international reinsurance markets. Additionally, we are planning to strengthen income produced by our new business segments, such as pension and health business along with ancillary insurance services, to account for 5 per cent of total income. In the strategy period, organic growth will continue to be secondary to our primary goal of maintaining appropriate technical performance as measured by combined ratios. We envisage a three-year average combined ratio of under 95 per cent for non-life business and a ratio of under 93 per cent for the reinsurance segment. In life insurance business, our target is a return on new insurance business of over 5 per cent (for non-Slovenian companies, over 2.5 per cent).

In addition to organic growth, the Group is planning growth through acquisitions. The Group will seek opportunities for growing its regional presence, and for expanding to business segments, such as pension and health business and ancillary insurance services. The Sava Re Group closed 2016 with a solvency ratio of 204 per cent. This is a capital position that allows it to finance acquisitions through debt, which the Group is currently not taking advantage of.

The Group's asset management objectives include maintaining a high level of security of its invested insurance contract assets, its high liquidity and risk diversification. Furthermore, it will strive for optimum matching of assets and liabilities, specifically relating to life insurance registers. Bearing this in mind, the Group will make a prudent increase in its allocation to investment property and infrastructure projects in this period. The Group set itself the objective of achieving a return on investment of 2 per cent for the strategy period.

In addition, the Group will maintain its solvency ratio between 170 and 230 per cent. As part of its capital management policy, the Group will use part of its surplus funds for growth through acquisitions and partially for organic growth of the Group, while ensuring its shareholders a stable growth in dividends. Annually, the funds to be paid out as dividends will be a maximum of 40 per cent of the Group's annual net profit. The target return on equity for the period 2017-2019 is 10.4 per cent (+/- 0.4 percentage points).

To make its governance more effective and efficient, the Group will continue developing its comprehensive risk management system, further strengthening the link between risk management and decision-making.

In the planning period, insurance companies will have to align their support processes with new insurance directives and new accounting standards.

We are aware that it will be demanding to achieve the goals set. To achieve them, the Group will need to carry out a number of planned activities, which will depend on the commitment of our staff, their high knowledge potential and expertise.