ZAVAROVALNICA TRIGLAV, d.d., Ljubljana
Financial report of the Triglav Group for H1 2022
In accordance with the Ljubljana Stock Exchange Rules and the applicable legislation, ZAVAROVALNICA TRIGLAV d.d., Ljubljana is hereby publishing the following notice:
The Triglav Group achieved good results despite challenging business conditions in the first half of 2022. Its total revenue grew by 11% to EUR 861.2 million and the volume of gross written premium increased by 9% to EUR 797.2 million year-on-year. Premium growth was recorded in all insurance segments and in all markets of the region where the Group operates. The half-year consolidated profit before tax of EUR 57.5 million was 2% higher year-on-year as a result of growth in business volume, effective management of inflationary pressures and other impacts from the environment, and negative investment returns. The Group maintained its financial strength with capital adequacy in the target range. It is estimated that the planned annual profit will be achieved; however, it should be stressed that the risks related to the realisation of target profit increased significantly due to negative influences from the business environment. In line with the revised strategy to 2025, the Group carried out a number of activities aimed at promoting client focus, digital transformation and sustainable development.
PROFIT BEFORE TAX. The Triglav Group generated profit before tax of EUR 57.5 million, up by 2% relative to last year. The majority of the profit, i.e. EUR 53.3 million, which stems from underwriting activities, rose by 9%. Profit from financial investments was negative (EUR –4.1 million), whereas profit from non-insurance operations grew to EUR 8.3 million (compared to EUR 3.5 million in H1 2021). Andrej Slapar, President of the Management Board of Zavarovalnica Triglav, said: “In addition to the consequences of the COVID-19 pandemic, this year has been marked by a worsening macroeconomic situation with high growth in general inflation and an unfavourable situation in international financial markets. The Triglav Group was able to deal with the situation effectively thanks to its team of over 5,200 employees. The half-year results confirm the robustness of our business model and the resilience of our underwriting activities and the Group’s solvency position in the face of a deteriorating economic situation. We estimate that 2022 annual profit will be within the initially planned range; however, it should be recognised that the risks related to the realisation of target annual profit have increased significantly due to negative influences from the business environment.”
UNDERWRITING ACTIVITIES. The Triglav Group’s total revenue increased by 11% to EUR 861.2 million year-on-year, of which gross written premium (EUR 797.2 million) rose by 9%. Written premium growth was recorded in all three insurance segments (the highest growth of 11% was achieved in non-life insurance) and in all insurance markets. Premium growth in Slovenia was 5%, which is 1 percentage point above the market growth rate, outside of Slovenia in the markets of the Adria region it reached 12% and in international markets outside the region it stood at 22%. Other insurance income grew by 25% to EUR 32.2 million and the Group’s other income increased by 42% to EUR 31.8 million, of which income from asset management (EUR 15.1 million) rose by 11%.
The increased premium volume resulted in a 15% increase in gross claims paid (EUR 398.1 million), which increased following the end of last year’s pandemic-related restrictions, higher prices of materials and services and major CAT events that occurred mostly in the second quarter (an estimated EUR 21.6 million). The combined ratio in non-life and health insurance reached a favourable 89.5% (compared to 89.6% in H1 2021) primarily as a result of the improved expense ratio due to higher net premium income and lower expenses for bonuses and discounts.
Gross operating expenses increased by 11% to EUR 181.6 million compared to the year before. Insurance technical provisions amounted to EU 3,221.2 million as at 30 June 2022, up by 1% relative to 31 December 2021. Uroš Ivanc, Management Board Member of Zavarovalnica Triglav, said: “As always, we focused on cost-effectiveness. Due to the economic situation, certain costs increased, among them mainly acquisition costs, costs of materials and energy and depreciation due to investment in information technology. We continued with traditionally prudent and conservative reserving. In the first half of last year, due to the uncertainties related to the pandemic, we formed them particularly carefully in the non-life and health insurance segments, which – by returning to long-established provisioning practices this year – had a positive effect on growth in profit before tax from underwriting activities. In the life and pension insurance segment, due to this year’s rising interest rates, we released the part of provisions which were intended to cover future investment guarantees.”
INVESTMENT PORTFOLIO AND CLIENTS’ ASSETS UNDER MANAGEMENT. The unfavourable situation in the financial markets and the impairment of Russian bonds resulted in a negative return of EUR 3,267.5 million on the Triglav Group’s extensive portfolio (EUR –40.4 million). In the first half of the year, the Group did not significantly change the composition of its high-quality and globally diversified investment portfolio. In line with its strategic ambitions in sustainability, the Group increased the volume of sustainable fixed-income investments this year as well, i.e. by 8% to EUR 220.4 million, accounting for 10% of the bond portfolio (compared to 8% as at 31 December 2021).
With regard to the management of clients’ assets in mutual funds and discretionary mandate assets, management fee income increased due to net inflows (it is part of other income in the Triglav Group’s total revenue), whereas negative trends in the financial markets resulted in a 12% decrease in the value of clients’ assets under management relative to the 2021 year-end (EUR 1,360.5 million).
FINANCIAL POSITION. Through appropriate capital and risk management, the Triglav Group maintained a good capital position within the target range of 200–250%. Total equity amounted to EUR 739.9 million, down by 21% relative to 31 December 2021 as a result of the decrease in the fair value reserve due to the rise in interest rates and this year’s high dividend payout. Higher interest rates have a positive effect on the Group’s operations in the long run; however, their rapid growth reduces capital in the short term and increases risks affecting the guaranteed return in pension insurance. The parent company’s market capitalisation as at 30 June 2022 was EUR 813.9 million, down by 3% relative to 31 December 2021 (in the same period, the Ljubljana Stock Exchange index and the European insurance sector index declined by 11%).
SUSTAINABILITY. The Triglav Group continues to integrate sustainable development factors into its operations and participates in select international initiatives in the field of sustainable development and information. Triglav became a signatory to the United Nations Principles for Sustainable Insurance (UN PSI), joined the United Nations Environment Programme Finance Initiative (UNEP FI) and the Partnership for Carbon Accounting Financials (PCAF), and uses GRI and SASB sustainability standards in its reporting. For the second year in a row, Triglav has reported to CDP, an international non-profit organisation, with respect to climate change.
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 d.d. at www.triglav.eu as of 18 August 2022 and will remain available on the Company’s public website for a period of at least ten years.