Unaudited Report of Triglav Group and Zavarovalnica Triglav d.d. for Q1 2020


Unaudited Report of Triglav Group and Zavarovalnica Triglav d.d. for Q1 2020

In accordance with the Ljubljana Stock Exchange Rules and the applicable legislation, ZAVAROVALNICA TRIGLAV d.d., Ljubljana hereby publishes the following notice:

BUSINESS CONDITIONS AND IMPACT ON THE BUSINESS RESULT. The first quarter of 2020 was marked by the COVID-19 pandemic, which led to a deterioration in the economic situation, a sharp decline on international financial markets, and changed business and financial conditions. By protecting the health of all stakeholders, Triglav Group effectively adjusted its way of doing business to the situation in individual markets. Using an omni-channel sales approach and integrated digital and other remote business solutions, it continued to provide its clients with a comprehensive range of services. Client responses and measurements show that clients are satisfied with the Group's services.    

Triglav Group’s consolidated profit before tax amounted to EUR 26.4 million as at 31 March 2020, a decrease of 12% relative to the corresponding period last year. Profit before tax from the underwriting activities amounted to EUR 15.3 million (index 78). Its decrease is mainly a result of major CAT events, which led to an increase in non-life insurance claims provisions. Profit from financial investments of the insurance business in the amount of EUR 10.8 million is higher than last year in accounting terms (index 132) due to certain adjustments in the structure of the life insurance portfolio, whereas the rates of return on non-life and health insurance investment portfolios decreased, as expected, due to lower gains on the sale of financial investments.

Andrej Slapar, President of the Management Board of Zavarovalnica Triglav d.d., said: "Although the economic situation is deteriorating, it did not have a negative impact on premium income in the first quarter of 2020. We assess that Triglav Group’s insurance and investment portfolios are sufficiently resilient and that the capital position is appropriate to effectively cope with the increased risks arising from the business environment due to the coronavirus pandemic. Major CAT events in the first quarter of the year (an earthquake in Zagreb and hailstorms in Slovenia) decreased year-on-year quarterly profit. Such claims, especially if incurred in the first quarter, cause year-on-year volatility of profit, but we assess that thanks to our annual aggregate reinsurance programme they will not have a significant impact on the achievement of our goals on an annual basis.”

PREMIUM GROWTH AND A FAVOURABLE COMBINED RATIO. Triglav Group posted a total of EUR 348.9 million in consolidated gross written premium, up by 10% relative to the same period last year. Premium growth on the Slovene market was 6%, while on markets outside of Slovenia it stood at 17%. Premium grew in all three insurance segments. An 8% premium growth was achieved in the non-life insurance segment, with growth being recorded in most non-life insurance classes. Health insurance premium grew by 21%, primarily due to an increase in the average premium last year. Due to higher payments and effective sales through the banking channel, life and pension insurance premiums rose by 11%. Major CAT events increased the claims ratio, which deteriorated Triglav Group’s combined ratio, but the latter nevertheless reached favourable 93.9%.

INVESTMENT PORTFOLIO AND ASSETS UNDER MANAGEMENT. Falling financial market prices resulted in negative rates of return on Triglav Group’s EUR 3.1 billion investment portfolio. In these circumstances, Triglav Group maintained a conservative portfolio structure with a 73.6% share of debt securities, mostly invested in the euro area and of high quality, and adjusted the shares of individual investment grades through active investment. In this way, it maintained adequate diversification of the whole investment portfolio, as well as provided additional liquidity by increasing the share of cash (index 164). The situation in the financial markets also had a negative impact on the management of clients’ assets in mutual funds and discretionary mandate assets. The volume of assets under management in the Group’s mutual funds decreased by 15% to EUR 875.6 million relative to the 2019 year-end, while discretionary mandate assets declined by 9% to EUR 74.7 million.  In these challenging conditions, Triglav Group further consolidated its leading position among asset management companies in the mutual fund segment in Slovenia, increasing its market share by 0.3 percentage point to 34.2% in the first quarter of 2020.

COST-EFFECTIVENESS. Total operating expenses of the insurance business amounted to EUR 64.3 million in the first three months of 2020. Their 5% growth is lower than planned and mainly resulted from higher acquisition costs and labour costs due to premium growth. Operating expenses growth lagged behind premium growth, therefore their share in premium dropped by further 0.8 percentage point to 18.4%.

Andrej Slapar, President of the Management Board of Zavarovalnica Triglav d.d., said: “Triglav Group remains committed to its vision to dynamically develop new ways of doing business by employing a client-centric approach as the foundation of the Group’s responsible long-term development, while at the same time operating profitably and safely. We are taking advantage of existing strategically developed solutions, while developing new ones; we remain committed to the main strategic guidelines, including achieving long-term stable economic profitability. We are currently operating in a challenging and very volatile environment with uncertainty about the economic impact of the pandemic and its duration, which prevents us from assessing the fulfilment of the annual plan at this time. For the time being, we anticipate that this will be possible at the publication of half-yearly results.”

The Unaudited Report of Triglav Group and its parent company for Q1 2020 and the Presentation for Investors are enclosed hereto.

This information will be published on the website of Zavarovalnica Triglav at as of 14 May 2020 and will remain available on the Company’s public website for a period of at least ten years.