At the current share price, dividend yield is 3.6%
The Supervisory and Management of Sava Re proposed a dividend payment of EUR 13.17m, translating to EUR 0.85 per share. Such a dividend proposal represents a payout ratio of 23.4%. We note that such a payout ratio is below the strategic plan for 2020 – 2022 (payout ratio between 35% and 45%).
However, the company noted that based on the Agency’s strictest criterion, the dividend must not exceed the average dividend paid in the period 2017–2019, which is EUR 0.85 per share.
Furthermore, the Agency set a condition that, in order to pay dividends, companies must have made a profit in both the financial years 2019 and 2020, with the parent companies taking into consideration the financial position of both the parent as well as that of the group of companies they control when deciding on the payment of dividends. The Agency will consider the profitability criterion, taking into account the specificities of the business model. The Sava Insurance Group generated a net profit of EUR 50.2m and EUR 56.4m in 2019 and 2020, respectively. Meanwhile, Sava Re reported a loss in 2020, which they attribute to the this is due to the recommendation (issued in 2020) to insurance companies, including Sava Re’s subsidiaries, to use a very cautious approach regarding the payment of dividends. If Sava Re had been paid dividends by its subsidiary insurance companies in 2020, it would not have posted an operating loss.
Dividend per Share (EUR) and Dividend Yield (%) (2014 – 2021)
Sava Re is compiling documents to demonstrate its financial stability, solvency, liquidity and resilience to stress scenarios (including Covid-19 impacts). The Company has presented evidence to the Agency that it is capable of paying out the proposed dividend as the Group demonstrates a robust solvency position with a solvency ratio of 197% as at 31 December 2020 (the auditor’s assurance report with limited assurance has not been issued as of the publication date of this press release). The Company’s solvency ratio stood at 272% as at 31 December 2020.