Unaudited Report of Triglav Group and Zavarovalnica Triglav for H1 2020


Unaudited Report of Triglav Group and Zavarovalnica Triglav for H1 2020

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

HALF-YEAR PROFIT. In the first six months of 2020, Triglav Group posted a consolidated profit before tax of EUR 40.6 million, down by 3% relative to same period last year. Andrej Slapar, President of the Management Board of Zavarovalnica Triglav d.d., said: "Even in these challenging conditions, with a team of over 5,200 employees, we focus on the implementation of our strategic guidelines and ensure that our operations remain profitable and safe. In the first half of the year, premium income recorded growth, whereas the generated profit was adversely affected by the deteriorating situation in global financial markets and partly by major CAT and other one-off events. The pandemic has radically changed the way we do business and we have adapted effectively to this situation. We gave priority to the health of our clients, employees and other stakeholders, continuously provided our services to the clients, and continued to pursue our sustainability goals and solidarity with the environment. The extraordinary situation gave additional impetus to our planned development activities and we assess that we have made an important step towards the Group's digital transformation.”

The part of Triglav Group’s profit before tax, which was earned from underwriting activities, amounted to EUR 34.6 million (index 103) and the part, earned from financial investments, amounted to EUR 5.3 million (index 83). Broken down by insurance segment, 85% of total profit (vs. 89% last year) was generated by the non-life insurance segment. In addition to good results from premium income, it was influenced by lower rates of return on investment and the creation of additional provisions. The profit of the health insurance segment improved on account of premium income and reduced operating expenses, while the total profit of the life and pension insurance segment decreased mainly due to the creation of provisions as a result of the liability adequacy test in the pension insurance segment.

PREMIUM AND COMBINED RATIO. Triglav Group posted a total of EUR 673.4 million in consolidated gross written premium, up by 7% relative to the same period last year. Average premium growth in the Slovene market was 4%, while in markets outside Slovenia it stood at 8%. Organic premium growth continued in the markets outside Slovenia, its share in total written premium climbing to 18.3%. Premium growth was achieved in all three insurance segments: a 17% growth in health insurance, 6% in non-life insurance and 3% in life and pension insurance. The combined ratio of Triglav Group stood at favourable 92.4% as at 30 June 2020.

INVESTMENT PORTFOLIO AND ASSETS UNDER MANAGEMENT. Compared to the same period last year, the situation in the financial markets resulted in a lower return on Triglav Group's extensive investment portfolio worth EUR 3.3 billion. Its value decreased by 5% in the first quarter of 2020, and at the end of the second quarter it returned to approximately the same value as at the end of 2019. The bulk of the portfolio is accounted for by debt securities (a 73.6% share), which are mostly invested in the euro area and are of high quality.

The difficult situation in the financial markets also had a negative impact on the management of clients’ assets in mutual funds and discretionary mandate assets. Compared to the 2019 year-end, assets under management in Triglav Group's mutual funds declined by 4% and amounted to EUR 979.4 million as at the reporting date. Discretionary mandate assets remained at approximately the same level as at the 2019 year-end and amounted to EUR 82.5 million. Triglav Group is the leader among asset management companies in the mutual fund segment in Slovenia; its market share increased by 0.2 percentage point to 34.1% in 2020.

COST-EFFECTIVENESS. Total consolidated gross operating expenses of Triglav Group amounted to EUR 148.4 million, an increase of 1% relative to the preceding year. Insurance business expenses totalled EUR 133.5 million, remaining at approximately the same level as the year before. Their share in gross written premium dropped by 1.3 percentage point to 19.8%.

Andrej Slapar, President of the Management Board of Zavarovalnica Triglav d.d., said: “The spread of the coronavirus with the onset of the pandemic has brought about a deterioration in the macroeconomic environment and great volatility in global financial markets. The high level of uncertainty prevents us from giving a relatively reliable annual profit guidance this year (the profit before tax was planned between EUR 95 million and 105 million). We re-examined the bases and assumptions of the 2020 plan and confirm the assessment made in April that the annual profit before tax will likely be 10–25% lower than planned. Furthermore, we assess that the annual written premium and the combined ratio of the Group will be within the planned figures (around EUR 1.2 billion and below 95% respectively). We are closely monitoring the situation and 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.”

The half-year financial report of Triglav Group and its parent company and the presentation for investors are enclosed hereto.

This information will be published on the website of Zavarovalnica Triglav at as of 18 August 2020 and will remain available on the Company’s public website for a period of at least ten years.