Pursuant to the Rules of the Ljubljana Stock Exchange, d.d., Ljubljana and the Market in Financial Instruments Act, Sava Reinsurance Company d.d., Dunajska 56, 1000 Ljubljana, hereby announces the following:
We hereby publish preliminary results of Sava Reinsurance Company d.d. and the Sava Re Group for 2012, the plan for 2013 and strategic directions for the next five-year period, which have been presented to the Supervisory Board.
The year 2012 was successful for Sava Reinsurance Company as it achieved its strategic targets. In December the Company signed a contract with Nova KBM on the acquisition of the remaining 51 percent of Zavarovalnica Maribor (jointly with the Slovenian Restitution Fund), a move that will strongly consolidate its position in the Slovenian insurance market. In addition, the performance of Group subsidiaries has significantly improved compared to 2011.
In 2012 Sava Reinsurance Company wrote gross premiums of EUR 153 million, thus exceeding its annual target. Also in the past year, the Company - in line with its strategy - lowered its dependence on the domestic reinsurance market and increased the share of international reinsurance business in its portfolio. The loss ratios in 2012 have deteriorated compared to those in 2011, but are still within planned ranges. Major losses that impacted the reinsurance portfolio include the Thailand floods, hurricane Sandy and the floods in Slovenia. There was a small deterioration in the expense ratio of Sava Reinsurance Company compared to 2011. This was due partly to commission expenses based on the favourable loss ratios of the previous year and partly to costs related to the acquisition of Zavarovalnica Maribor.
The January 2013 renewals of reinsurance contracts were conducted under the influence of the rating downgrade and difficult conditions in the reinsurance markets as a result of the Thai floods. Due to the rating downgrade by Standard & Poor's to below A, we have not been able to renew certain reinsurance treaties; however in consequence of the new level A credit rating awarded by A.M. Best, we succeeded in maintaining our position in certain markets. This new credit rating also mitigated the impact of the S&P downgrade on the premium volume. The premium volume generated in the December renewal for 2013 was lower also because after the Thai floods, we tightened conditions for writing reinsurance treaties that do not clearly state exposure limits by country, like other reinsurers worldwide. Previously, some reinsurance treaties covered economic interests abroad, the exposure of which was inadequately priced. The large Thai flood losses, which were mostly paid based on the coverage of interests abroad, necessitated a redefinition of exposure. The third impact on premiums is selective underwriting, which is part of the ordinary underwriting process where certain treaties are not renewed based on poor loss experience over several years. The joint impact of the above mentioned factors was equivalent to a reduced premium volume for 2013 by EUR 10 million.
The Sava Re Group increased its gross premiums written by 5 percent. Growth was generated by reinsurance operations and the growth in the Slovenian insurance market. In some markets where the Group is present, subsidiaries wrote less gross premiums in consequence of giving priority to profitability over growth. As a result of these measures implemented to improve performance across the Group, all Group companies either achieved or exceeded their targets. Preliminary unaudited results show that Group results will be on target.
The attached document includes plans for 2013 and the strategy until 2017 for the Sava Re Group.
This announcement will be available on the Company's website at www.sava-re.si, at least five years from the date of this announcement.