AM Best affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” (Excellent) for Triglav, as well as Pozavarovalnica Triglav Re, a wholly owned subsidiary of Triglav. The outlook for these ratings is stable.
These ratings reflect Triglav’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM). The ratings of Triglav Re factor in its strategic importance to Triglav and its strong integration into the group.
Triglav’s balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment also considers the group’s prudent reserving and good financial flexibility, with access to equity and debt markets. The financial leverage and interest coverage are well within AM Best tolerances. One offsetting factor is the high average guarantees embedded within the group’s life portfolio compared to its peers; however, the sale of most products with guarantees was discontinued in 2019, and the average guarantee rate has been declining steadily.
Furthermore, according to the rating agency, Triglav’s operating performance continues to be strong, as can be seen by a solid five-year (2017-2021) weighted average return on equity (ROE) and a combined ratio of 10.5%, and 94.4%, respectively. During the 6M 2022, the group’s combined ratio and ROE were 89.5% and 11.2%, respectively, despite challenging market conditions. Triglav’s performance is driven by excellent non-life technical earnings in its domestic market. The group’s scale enables it to operate with a low expense base, supplemented by healthy investment income.
Also, the profitability of Triglav’s international operations in the West Balkans remains modest mainly due to intense competitive conditions and high operating costs. Nonetheless, the group continues to demonstrate improvements in earnings derived from this region, as it grows and actively seeks alternative, lower-cost distribution channels.
Triglav benefits from its dominant position in the domestic market, with a 39% GWP market share in 2021. The group is also a strong player in the Adria region, with an app. 22% market share. Triglav has a well-diversified portfolio by product and geography. The rating agency expects growth in premium volume to be moderate over the medium term, reflecting the combination of improving operating conditions in Slovenia, and the highly competitive nature of the international reinsurance market.
Finally, AM Best affirmed that the outlook for these ratings is stable.
