AM Best reaffirmed the Financial Strength Rating of A and the Long-Term Issuer Credit Ratings of “a” of both Zavarovalnica Triglav and Pozavarovalnica Triglav Re. 

Earlier this morning, Triglav Group published a document on the Ljubljana Stock Exchange stating that the AM Best credit rating agency re-affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of both Zavarovalnica Triglav and Pozavarovalnica Triglav Re. The both ratings have a stable medium-term outlook, which reflects the rating agency’s expectations that Triglav Group will maintain very strong balance sheet strength, strong operating performance and the dominant market position both in Slovenia and the region where the Group operates.

According to AM Best, the Group’s balance sheet strength and its operating performance are strong, while the impact of both the business profile and the majority shareholding on the credit rating is neutral. It further points out that the Group’s enterprise risk management is developed and appropriate for its risk profile and operational scope and complexity. AM Best points out that Triglav’s solid operating performance over the years has been driven by the excellent non-life insurance technical earnings in the domestic market and healthy investment income. Besides that Triglav has a well-diversified portfolio by both product and geography. Moreover, outside of Slovenia, Triglav continues to demonstrate improvement in earnings on the basis of additional scale and actively seeking alternative lower cost distribution channels.

In October 2019, GWPs rose by 7.3% compared to last year. GWPs in non-life insurances grew 11.6% YoY, while life insurance decreased -2.1% YoY.

In October 2019, GWP’s rose by 7.3% compared to the same period last year. The total amount of GWPs collected reached HRK 9.1bn (includes insurers located in Croatia and insurers operating in Croatia but based in another EU country).

Total Croatian T12 GWP and Croatia Osiguranje T12 GWP (HRK bn)

The amount of GWPs in non-life insurances, which traditionally account for the biggest portion, grew 11.6% YoY, amounting to HRK 6.4bn. Meanwhile, life insurance continued with a trend where more maturities than premiums contracted were observed so segment has realized a decrease of -2.1% YoY, reaching HRK 2.62bn.

Croatia Osiguranje accounted for 26.4% of the market, as the company’s market share decreased by 2.6 p.p. which, represents an acceleration of the decreasing trend as in market share has decreased for 2.5 p.p. when looking at at GWP in the last 12 months

Croatia Osiguranje market share has decreased by 0.58% MoM, and currently stands at 25.39%. When observing their GWPs in October, they amounted to HRK 2.4bn, which represents a decrease of 2.2% YoY.

Croatia Osiguranje T12 Market Share (%)

In October 2019, Croatia observed 1.1.m tourist arrivals (+11.5%) and 3.79m tourist nights (+12.15%).

According to the Croatian Tourist Board, in October 2019, Croatia observed 1.1m tourist arrivals, representing an increase of 11.5%. Of that, foreign tourist account for 0.93m (+11.95%). Meanwhile, tourist nights amounted to 3.79m, which is an increase of 12.15% YoY. Of that, foreign tourists account for 3.1m (+10.87%).

Tourists from Germany once again recorded the most tourist arrivals and nights, amounting to 0.16m (+13.1%), and 0.82m (+10.2%), respectively. Tourists from UK follow, accounting for 8.59% of all foreign tourist nights. Next come Slovenian tourists who account for 6.4% of the total foreign tourist nights realised.

When observing the arrivals and nights realized by the type of accommodation, one can observe that hotels lead the list with 0.74m arrivals (+9.45%) and 1.8m tourist nights (+4.39%). Private accommodation follows with 0.17m arrivals (+18.49%) and 0.71m tourist nights (+16.57%).

When observing the arrivals and nights realized by county, the county of Split-Dalmatia witnessed the highest arrivals (18.42%) and tourist nights (19.96%). The county of Dubrovnik – Neretva follows accounting for 17.57% of total arrivals and 17.14% of total tourist nights.

In the first 9M of 2019, the Group recorded an increase in sales of 22%, increae in EBITDA of 20% and an increase in net profit of 15%.

In the first nine months of 2019, net sales of Purcari Group were up 22%, reaching RON 138.6m. Romania, Moldova and China contributed most to the growth in absolute figures, increasing 25% YoY, 18% YoY and 72% YoY respectively. The Group maintained double-digit growth in Poland, Ukraine and Belarus, with 19%, 21% and 23% sales increase respectively. In terms of product mix, the premium segment continued to show solid performance, with Purcari brand growing 32% YoY, mainly driven by dynamics in Romania and China. The Bardar, premium brandy brand showed solid performance as well, increasing by 25% YoY.

Cost of sales amounted to RON 69.34m, representing an increase of 22% YoY or RON 12.45m. As a result, the company recorded a gross profit of RON 69.34m, representing an increase of 23%. Meanwhile, the gross margin maintained at 50%, which came on the back of the good product mix dynamics and controlled personnel costs. On SG&A side, the Group continued increase of marketing investments, to build brand equity for future growth. To put things into a perspective, marketing and sales expenses amounted to RON 10.69m, noting an increase of 25% or RON 2.16m.

Total SG&A amounted to RON 39.07m, showing an increase of 26% YoY. Beside the mentioned marketing investments, general and administrative expenses witnessed a 17% increase or RON 2.64m. Also, in the first nine months of 2019, the Group recorded a provision for impairment loss on trade receivables amounting RON 1.09m, before its expected high season in Q4 2019. The management expects significant recovery of impaired trade receivables but decided to adopt a prudential approach in assessing market risks.

The Group’s EBITDA reached RON 46.2m, increasing 20% YoY. The adjusted to one-off IPO related expenses of 2018, EBITDA was up 17% compared to the previous period. The result from operating activities increased by 20% YoY, amounting to RON 39.27m. Such a result was positively influenced by above-mentioned gross profit growth and control over SG&A expenses, despite the recorded provision.

Going further down the P&L, the company recorded an increase in net financial loss by RON -1.95m, which at the end of nine months amounted to RON -5.12m.

In the 9M of 2019, net profit amounted to RON 29.41m, representing an increase of 15% YoY.  

It is also worth mentioning that in early October, Lormier Ventures Limited, a wholly owned subsidiary of Emerging Europe Growth Fund II (managed by Horizon Capital) disposed of all or part of the shares through an accelerated book-building process. In the ABB, Lormier Ventures Limited sold 4.539.223 shares, representing 22.7% of Purcari’s share capital, which made them (as of 31 December 2018) the second largest shareholder, behind Amboselt Universal which owns 25.03%. To read more about it click here.

In the first nine months of 2019, Hidroelectrica recorded an increase in turnover of 2% YoY and a 22% decrease in net profit.

In the first nine months of 2019, Hidroelectrica delivered 11.99 Twh of electricity from its own production in the first nine months, lower compared with 13.81 TWh in the same period in 2018, while total electricity sales reached 12.91 TWh, down from 14.33 Twh in the same period last year.

According to a report by Fondul Proprietatea, which has a 20% stake in Hidroelectrica, in the first 9M of 2019, Hidroelectirca recorded an increase in turnover of 2% YoY, amounting to RON 3.3bn. Meanwhile the company’s gross profit dropped by 1.3% YoY. Net profit amounted to RON 1.3bn, showing a decrease of 22% YoY. Such a result puts the profit margin at 39.4%.

The report stated that the much higher effective tax rate over the first nine months of 2019 was mainly generated by the additional profit tax obligation the company incurred due to the fact that it utilized RON 1.57bn billion of previously untaxed realized revaluation reserves to cover the value adjustments of the historical complex investments.

It is worth noting that Fondul Proprietatea valued its stake in Hidroelectrica at RON 4.14bn at the end of September, which would put the company value at RON 21bn.