According to it, the Group’s operating revenues for 2020 are planned to exceed 4%, and the net profit for the year is planned at a minimum of EUR 45m.
Sava Re published a document on the Ljubljana Stock Exchange in which they announced their 2020 annual plan. According to it, the Group’s operating revenues for 2020 are planned to exceed 4%, and the net profit for the year is planned at a minimum of EUR 45m. Thus, the Group will aim to achieve a return on equity of at least 11%.
The key targets for 2020 are:
Growth in Slovenian non-life gross premiums written is planned at 3%, taking into account the expected slowdown in new vehicle sales.
Life insurance gross premiums written are expected to decrease by 9%, which reflects the large number of policies maturing in the Slovenian life business segment.
Outside Slovenia, the Group expects insurance business to grow organically at rates exceeding the expected growth rates of GDP. The Group’s non-life and life insurers outside Slovenia are planning their gross premiums written to grow by 6% and 15%, respectively.
In 2020, the Group’s non-life insurers will focus in particular on development and expansion of the existing sales network, diversification of their portfolios by means of new products, and strengthening of bancassurance as a sales channel. In their development of insurance products and services, the Group’s life insurers will focus in particular on reducing or abandoning guaranteed rates in 2020 in view of the low interest rates prevailing in the financial markets.
Reinsurance operations expect gross premiums written to grow by 8% in 2020. This will be achieved by growing the volume of business in new markets while maintaining portfolio diversification by both geography and partner.
The Group’s investment policy includes maintaining a high level of security of invested insurance contract assets, as well as ensuring high liquidity and risk diversification. Investment management in 2020 will be affected by the continued low interest rates, and the expected return will be 1.3%. The investment portfolio structure will also remain relatively conservative in 2020, featuring a high share of bonds and other fixed-income investments and a high credit rating profile, with the share of equity securities and infrastructure projects increasing slightly.
Source: Sava Re, InterCapital Research
For 2020–2022, the Sava Insurance Group has the following key growth and profitability targets:
the Group’s operating revenues is planned to grow on average by 4% annually throughout the 2020–2022 strategy period. In 2022, operating revenues will exceed EUR 650m, an increase of more than EUR 60m through the Group’s organic growth. The rate of return on equity is expected to exceed 11% in the strategy period.
Growth of Slovenian insurance business is expected to slow down, which reflects the expected slowdown in new vehicle sales, whereas higher premium growth rates are planned for the reinsurance business, for insurance business outside Slovenia, and for pension and asset management business.
Growth of non-life business in Slovenia and the Adriatic region is expected to exceed 2% and 5% annually, respectively. Regarding life business in Slovenia, gross premiums written are expected to decrease by 5%, whereas new business is expected to grow by more than 2%. When observing life business in the Adriatic region, gross premiums written are expected to grow by 10%, and new business is expected to expand by more than 7%. Reinsurance business is planned to grow by more than 3%.
In this strategy period, organic growth will continue to be secondary to our primary goal of maintaining appropriate profitability as measured by combined ratios, which are envisaged to be under 95% for the insurance and reinsurance business.
The Group’s solvency will be maintained in the 180% to 220% range in the strategy period, which represents the optimal level of capitalization based on the Group’s risk appetite. 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. Furthermore, Sava Re will ensure its shareholders stable growth in dividends, on average by 10% annually, with a payout ratio between 35% and 45%.
