Last week, S&P Global Ratings upgraded the Sava Re Group’s rating to ‘A+’, on improved economic resilience, with a stable outlook. In this article, we bring you an overview of the reasoning behind this decision.
S&P Global Ratings, ‘The agency’, released a report last week in which they upgraded the Sava Re Group’s rating to ‘A+’, with a stable outlook. On 6 June 2025, the agency noted that it had upgraded Slovenia to ‘AA’ to reflect the strength and resilience of its small and open economy, prudent fiscal management, and comfortable external buffers.
Due to Sava Re’s strong link with, and important role for, the Government of Slovenia, the agency has assumed that the insurer will benefit from the sovereign’s improved creditworthiness. Besides this, the agency also noted that the Group’s favorable operating performance in 2024 and Q1 2025, a strong balance sheet with robust capital levels, and that the Group could see profitable growth on the back of positive dynamics in Slovenia and internationally in 2025-2027, also contributed to this rating upgrade action.
As a result of this, the agency raised the rating to ‘A+’ from ‘A’ for their issuer credit and financial strength ratings on Sava Re and Zavarovalnica Sava. Furthermore, the agency raised its ratings on Sava Re’s two junior subordinated instruments. Lastly, the stable outlook reflects the agency’s view that Sava will uphold comparably strong operating results, while the Group will continue to profitably expand domestically and abroad, as well as maintain robust capitalization over the next two years.
Breaking all of this down further, and starting with the rating raise to Slovenia, the agency regards Sava Re as a government-related entity, with a strong link with, and an important role for, the Slovenian Government, and that the Group maintains a moderately high likelihood of receiving government support if needed. They continue to assess at ‘a’ Sava Re’s stand-alone credit rating, but the agency also factored in the rise in Slovenia’s rating into the equation in its latest assessment.
The agency further noted that comparably favorable economic growth in Slovenia in 2021-2024 allowed Sava to capitalize on domestic opportunities and materially scale operations. In the agency’s view, the Group’s Slovenian operations, under Zavarovalnica Sava, which is the 2nd largest insurance company in Slovenia with a market share exceeding 31%, are well-placed to see similar benefits in the coming few years, with continued solid top and bottom-line development, while solidifying the Group’s already very conservative risk profile.
Moving on to the Group’s financial performance, in 2024 and Q1 2025, the agency noted that the Group sustained very strong underwriting and operating performance. This pointed to Sava’s ability over the past few years to reprice decisively and in a timely manner, thereby safeguarding very strong underwriting performance in primary insurance as well as on the international reinsurance market. Furthermore, the combined ratio at the end of 2024 was 91.3%, which was further improved to 83.7% during Q1 2025. Sava also retains very solid new business margins in life insurance, sizable contractual service margins, and healthy fee contributions from its asset and pension management business.
The agency further noted that the Group’s ROE in 2025 was at 14.2%, which improved even more to 17.2% in Q1 2025, comparably favorable among EMEA insurers. In the 2025-2027 period, the agency expects an ROE of 11-12%, in line with Sava management’s targets of net income exceeding EUR 84m in 2025.
Next up, the agency also expects to see moderate growth in markets outside of Slovenia, despite a high degree of uncertainty about the global economy. The Group continues to target moderate growth through gradual business development, both domestically and internationally. In 2024, GWPs exceeded EUR 1bn, growing by 13.5% YoY. The growth came from both domestic and international, driven by non-life, life, reinsurance, and asset management operations. A large part of the growth came from price increases on the Group’s existing business, and only partially from the new business expansion and continued inflows into its asset management. Since the beginning of 2025, growth has moderated, with business volume (combining GWPs and non-insurance revenue) increasing by 6.8% YoY in Q1 2025. In other words, Sava already had a significant price increase in the last couple of years in its insurance and reinsurance operations. The agency expects that, on the back of solid economic conditions in Slovenia, Sava will likely continue to grow modestly this year and beyond.
Also, the agency also touched on Sava Re’s capital position, which it deems remains robust. The Group recorded very strong regulatory solvency levels of 211%-217%, at the end of Q1 2025. The agency expects the Group to remain well above the 99.99% confidence level in their insurance capital model. They also expect that Sava’s capital buffers will become even firmer due to the strong performance and moderate dividend payments. Furthermore, in H2 2024, the Group issued a Solvency II capital-qualifying hybrid capital of EUR 50m. In essence, Sava’s strong balance sheet, robust capital position, and increasing capital levels remain Group strengths that underpin their assumptions of continued gradual business development in the medium term.
Lastly, in regard to the stable outlook, the agency noted this reflects their view that, over the next two years, Sava’s important role in the Slovenian government will remain unchanged. They also expect Sava to remain the 2nd largest insurer in Slovenia and maintain its niche position in the international reinsurance market, which would allow it to source strong earnings while sustaining effective risk management with a robust capital adequacy buffer above their 99.99% benchmark.
In regard to downgrades or upgrades, the agency noted the following:
For an upgrade, they view it unlikely in the next 12-24 months given Sava’s materially more limited geographic diversification than that of higher-rated peers.
On the other hand, a downgrade is viewed as a remote possibility in the next 12-24 months, but might stem from the following:
- A downgrade of Slovenia to below ‘AA’, while Sava’s stand-alone credit profile stays at ‘a’, for example, due to significant and sustained performance volatility of the Group
- Sava’s capital levels materially and protractedly decline below 99.95%, or
- A material disruption to the Group’s business model, occurring, for example, due to an abrupt change in its strategy or ownership
The full report can be accessed here.