IC Market Espresso 15 Oct 2020

 
Triglav Publishes Business Plan for 2021

Yesterday, Triglav published their business plan for 2021, which indicates that the company is expecting quite solid results in the following year. Here you can find the company’s plan in detail.

THE GROUP’S PREMIUM PLANNED BETWEEN EUR 1.2 AND 1.3BN

With a strategic focus on clients, the Group will adapt to the competitive conditions in its markets. The main emphases remain the development of high-quality services aimed at comprehensively addressing the challenges and needs of clients, the innovative development of technologically advanced sales processes, and the development of the sales network by using an omni-channel communication approach to clients. In the claims segment, an increase in the volume of claims is expected due to the growth of the insurance portfolio and other factors, while with regard to major CAT events, similar trends as in previous years are expected and, therefore, the prudently selected reinsurance protection will be maintained. On these bases, backed by continued underwriting discipline, the Group plans to increase the volume of premium and maintain the profitability of its insurance business in its markets.

COMBINED RATIO OF THE GROUP BELOW 95%.

At the Group level, the combined ratio of below 95% is planned, which is in the lower (favorable) end of the range of its average target strategic value of around 95%.

COST-EFFECTIVENESS

The Group will continue to implement streamlining measures in 2021, which will be aimed primarily at reducing the types of costs not directly related to insurance sale. An increase is expected in costs related to insurance sale, a higher degree of digitalization, development and maintenance of information support, and depreciation costs due to past and planned investments in information technology. The planning of staffing levels and labour costs, which account for the bulk of total operating expenses of the Group’s insurance subsidiaries, will follow the strategic guidelines, changes made to the business processes and the requirements identified in individual areas of work.

PROFIT BEFORE TAX PLANNED BETWEEN EUR 85 AND 95M

The planned profit is based on the assumptions of the projected performance of the Group’s both activities, taking into account the anticipated conditions in the financial markets that will affect the rates of return on the Group’s investments.

PROFIT FROM FINANCIAL INVESTMENTS

A prolonged period of low/negative interest rates is expected, which will lead to a further decline in the rates of return on the Group’s investments, excluding unit-linked assets. The investment policies of the Group remain unchanged; the main focus in 2021 will continue to be on ensuring adequate security, liquidity and diversification of investments while achieving adequate profitability. The Group will maintain a conservative investment structure, placing emphasis on fixed-rate investments, and ensure the high quality of the whole investment portfolio. Also in 2021, in some parts of the portfolio, the Group intends to achieve slightly higher rates of return at a lower liquidity of investments by improving the matching of asset-liability maturity. The Group will ensure that the underwritten risks will be in line with the defined risk appetite of Triglav Group.

ASSET MANAGEMENT

The Group will follow the strategic objectives of increasing the volume of assets under management by selling existing savings and insurance products and increasing the assets of investment funds managed by the subsidiary Triglav Skladi.

MAINTAINING HIGH CREDIT RATINGS

The Group will maintain high financial stability and security of the Group in 2021 by ensuring the amount of capital that, in accordance with the set strategic guidelines, adequately exceeds the set level of underwritten risks. The latter and the profitability of its business operations are the basis for the Group to continue to be assigned high credit ratings by the renowned credit rating agencies S&P Global Ratings and AM Best.

Sava Re Proposes EUR 1.05 DPS

At the current share price, dividend yield is 6.4%. Ex-date is 30 November 2020.

Sava Re published the invitation to the general meeting of shareholders which will be held on 16 November 2020 in which the shareholders will be deciding on the appropriation of distributable profit for 2019.

The company proposed EUR 16.27m (of distributable profit of EUR 34.7m) to be paid out as dividends, which translates into a dividend per share of EUR 1.05. At the current share price, dividend yield is 6.4%. We note that such a dividend is in line with our expectations. The dividend proposal was yesterday welcomed by the market, as Sava Re’s share price increased by 4.24% to EUR 17.1 per share.

Note that the ex-date is 30 November 2020.

Sava Insurance Group’s strategic plan for 2020 – 2022 states that the company will ensure its shareholders stable growth in dividends (on average by 10% annually) therefore distributing between 35% and 45% of Sava Insurance Group’s profits.

As a reminder, Insurance Supervision Agency, has given recommendation to insurers on 20 August on suspension of dividends after 1 October 2020 due to deeming the situations in relation to Covid-19 and its impact on the economy and the insurance sector as still uncertain. This recommendation was published by Sava Re on 21 August 2020.

In August, Sava Re announced the intention to pay dividend is in line with the option and conditions set out in the regulator’s recommendation. As stated in the recommendation, the regulator will examine such notification and take appropriate measures in accordance with the law. Back than the company stated that to the extent that the Agency has no reservations regarding such dividend distribution, the management board, subject to approval by the supervisory board, will call a general meeting to consider the proposed distribution of dividends so that dividends may still be paid out this year.

Dividend per Share (EUR) and Dividend Yield (%) (2014 – 2020)