Actual

Unaudited interim financial report of Triglav Group and Zavarovalnica Triglav for January–September 2020

ZAVAROVALNICA TRIGLAV, d.d., Ljubljana

Unaudited interim financial report of Triglav Group and Zavarovalnica Triglav for January–September 2020

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

In the difficult and uncertain situation due to the pandemic, Triglav Group remains focused on its strategic guidelines, including operating profitably and safely. Triglav Group posted a total of EUR 960.9 million in consolidated gross written premium, up by 6% relative to the same period last year, and achieved premium growth in most of its markets. Profit before tax of EUR 62.4 million was 13% lower compared to the corresponding period last year, primarily as the result of the situation in global financial markets and partly due to major CAT events and an increase in provisions as a result of the current business conditions. The combined ratio was favourable at 91.4%. In the current situation of uncertainty, Triglav Group stands by its already published annual profit estimates, while assessing that its insurance and investment portfolios are sufficiently resilient and that its capital position is appropriate to effectively cope with increased risks, as confirmed by the high credit ratings assigned this year.

NINE-MONTH PROFIT. Triglav Group generated a consolidated profit of EUR 62.4 million before tax in the first nine months of 2020 (index 87). The part of Triglav Group’s profit before tax earned from underwriting activities amounted to EUR 60.4 million (vs. EUR 54.7 million in Q1–3 2019), up by 10% relative to last year, and the part earned from investment activities amounted to EUR –0.2 million (vs. EUR 14.9 million in Q1–3 2019) predominantly due to additional provisions in the life and pension insurance segment.

Andrej Slapar, President of the Management Board of Zavarovalnica Triglav, said: “During this year's COVID-19 pandemic, we are even more vigorously implementing our mission to BUILD A SAFER FUTURE. We dynamically adapt our operations in individual markets to measures to protect the health of employees, clients and other stakeholders, while continuously providing services, pursuing our sustainability goals and remaining closely connected to the environment in which we operate. By being committed to underwriting discipline, cost optimisation and intensive sales activities, we increased the volume of our business in the first nine months. We are satisfied with the profit achieved.”

UNDERWRITING ACTIVITIES. Triglav Group posted a total of EUR 960.9 million in consolidated gross written premium, up by 6% relative to the same period last year, and achieved a favourable combined ratio of 91.4%. Premium growth in the Slovenian market was 5%, which is slightly above market average, while in markets outside Slovenia it stood at 6%. Premium increased in all three insurance segments: by 6% in non-life insurance, by 2% in life and pension insurance, and by 14% in health insurance. In addition to major CAT events (hail storms in three markets and the earthquake in Zagreb), the claims experience was also affected by the pandemic. The volume of gross claims paid (EUR 505.0 million) fluctuated by insurance group and insurance class, but in total it remained comparable to the corresponding period last year. Triglav Group formed adequate insurance technical provisions for incurred but not paid claims and for anticipated bonus payments due to lower claims experience in some business segments and decreased economic activity.

INVESTMENT PORTFOLIO AND ASSETS UNDER MANAGEMENT. The situation in the financial markets this year again caused a decrease in interest income and thus lower rates of return on Triglav Group's extensive investment portfolio worth EUR 3.4 billion. Interest income amounted to EUR 41.5 million in the first nine months of the year (index 62). Triglav Group maintains a relatively conservative investment policy and portfolio structure, while actively managing and making minor adjustments to the shares of individual investment grades in order to maintain both the adequate diversification and appropriate security and quality of the portfolio. Due to a further reduction in the general level of interest rates, Triglav Group created appropriate insurance technical provisions in the life and pension insurance segment, which had an impact on the decrease in operating result from investment activities.

Through Triglav Skladi, Triglav Group manages clients' assets in 18 mutual funds in Slovenia, while three funds in Croatia, which were acquired as a result of the acquisition of ALTA Skladi, are in the process of being sold. The assets of Triglav Group's clients which are managed by mutual funds amounted to EUR 1,020 million as at 30 September 2020. The volume is comparable to the level at the 2019 year-end, as Triglav Group set off the impact of the decrease in the value of assets due to the situation in the financial markets with higher net inflows into funds. In 2020, Triglav Group additionally consolidated its position as the leader among asset management companies in the mutual fund segment in Slovenia; its market share increased by 0.4 percentage point to 34.3% relative to 31 December 2019.

COST MANAGEMENT. Both total consolidated gross operating expenses (EUR 222.3 million) and insurance business expenses (EUR 199.3 million) remained at the same level as in the corresponding period last year. The share of insurance business expenses in gross written premium dropped by 1.4 percentage points to 20.7%.

Andrej Slapar, President of the Management Board of Zavarovalnica Triglav, commented on Triglav Group's operations in 2020 and 2021: The uncertain situation in the second half of 2020 continues to prevent us from giving a reliable annual profit guidance, which was projected to be between EUR 95 million and 105 million. We stand by the already published assessment that annual profit will be lower by 10–25% than planned. 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. This is further confirmed by the “A” credit ratings with a stable medium-term outlook Triglav Group was assigned by two renowned credit rating agencies. Based on the selected probable scenario of business conditions, we plan to achieve in 2021 an annual profit before tax of EUR 85–95 million, an increased volume of written premium of EUR 1.2–1.3 billion and the combined ratio below 95%.”

The unaudited interim financial report of Triglav Group and Zavarovalnica Triglav d.d. for January–September 2020 and the presentation for investors are enclosed hereto.

This information will be published on the website of Zavarovalnica Triglav d.d. at www.triglav.eu as of 13 November 2020 and will remain available on the Company’s public website for a period of at least ten years.