In the challenging situation of Q1 2022, the Triglav Group’s total revenue grew by 12% to EUR 442.9 million and the volume of gross written premium increased by 10% to EUR 407.1 million year-on-year. Premium growth was recorded in all insurance segments and in all markets of the region where the Group operates. The consolidated profit before tax, amounting to EUR 38.1 million, was 20% higher than in the same period last year, with its growth stemming from underwriting activities and own asset management. The Group maintained its financial strength with capital adequacy in the target range. In line with the revised strategy to 2025, the Group carried out development activities aimed at achieving an improved client focus, digital transformation and other strategic ambitions. The Management Board and the Supervisory Board of Zavarovalnica Triglav propose to this year’s regular annual General Meeting of Shareholders, which will be held on 24 May 2022, to allocate 74% of the Group's net profit for 2021 for dividend payout (EUR 3.70 gross per share).
Profit before tax. Compared to the first quarter of 2021, the Triglav Group increased its profit before tax by 20% to EUR 38.1 million. The majority of the profit, i.e. EUR 30.6 million, stems from underwriting activities, an increase of 16% relative to the corresponding period last year. Profit from financial investments declined by 87% to EUR 0.5 million, whereas the profit of the Group’s non-insurance companies grew to EUR 7.0 million (compared to EUR 1.6 million in Q1 2021). Andrej Slapar, President of the Management Board of Zavarovalnica Triglav, said: “Although the COVID-19 pandemic, which has affected the Triglav Group’s operations for the past two years, is easing, our business environment remains challenging. It has been also shaped by the broader consequences of the war in Ukraine and the sanctions imposed against Russia and Belarus, with which we are fully and consistently complying. In this regard, our exposure to the situation is assessed as limited and low. Despite the challenging situation, we performed well in the first quarter of this year, thanks to the team of over 5,200 employees of the Triglav Group. We achieved sound results in underwriting activities and the management of own assets, while financial investment portfolio returns were negative as expected given the situation. Taking into account the business conditions anticipated until the end of the year, we estimate that we will achieve our planned annual profit before tax.”
Underwriting activities. The Triglav Group’s total revenue increased by 12% to EUR 442.9 million year-on-year. The volume of gross written premium rose by 10% to EUR 407.1 million, other insurance income grew by 22% to EUR 16.5 million and the Group’s other income increased by 81% to EUR 19.4 million.
The Group’s prudent underwriting discipline resulted in premium growth in all three insurance segments: by 11% in non-life insurance, by 9% in life and pension insurance, and by 3% in health insurance. Premium growth was recorded in all insurance markets; in Slovenia it was 5%, which corresponds to the market growth rate, and outside of Slovenia in the markets of the Adria region it reached 13%. The premium volume in international markets, which includes premium written based on the principle of free movement of services and inward reinsurance premium, rose by 30% year-on-year.
Premium growth affected the volume of claims, which increased by 15% and amounted to EUR 196.7 million. Claims experience was also influenced by last year’s restrictions due to the pandemic and higher prices of materials and services. There were almost no major CAT events in the first quarter of 2022. The combined ratio in non-life and health insurance reached a favourable 87.3% as a result of the improved claims ratio due to higher net premium income and the effect of managing insurance technical provisions.
The Group is increasing its volume of business in a cost-effective manner. Gross operating expenses totalled EUR 83.8 million, and their 11% year-on-year increase stemmed mainly from higher acquisition costs, costs of materials and energy and depreciation due to investment in information technology. Insurance technical provisions amounted to EU 3,219.5 million as at 31 March 2022, up by 1% relative to 31 December 2021. Uroš Ivanc, a member of Management Board of Zavarovalnica Triglav, said: “Provisions are the foundation of our balanced insurance business, therefore we are traditionally conservative and prudent in their management. In the first quarter of last year, due to the uncertainties related to the pandemic, we formed them especially 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 rising interest rates, we released a part of provisions in the first quarter, which were intended to cover future investment guarantees.”
Investment portfolio and clients’ assets under management. The Triglav Group’s extensive portfolio of EUR 3,514.6 million was managed in an unfavourable situation in the financial market with declining values of bond and equity investments; moreover, the Group carried out the announced impairment of Russian bonds in its portfolio (the impairment of EUR 6.2 million). In these circumstances, investment returns in the first quarter were negative at EUR –15.9 million.
In Q1 2022, interest rates rose sharply, which predominantly resulted in a decrease in the fair value reserve and, consequently, in comprehensive income. Although higher interest rates have a positive effect on the Group’s operations in the long run, their rapid growth reduces capital in the short term and increases the risk of guaranteed return in pension insurance. The Group did not significantly change the composition of its investment portfolio in the first quarter and managed it in accordance with its relatively conservative investment policy. This also includes strategic ambitions in sustainability, based on which the Group continued to invest in sustainable fixed-income investments. They amounted to EUR 227.3 million as at 31 March 2022, accounting for 9.5% of the bond portfolio.
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). Negative trends in the capital markets reduced the value of clients’ assets under management by 3% relative to 31 December 2021. They amounted to EUR 1,487.4 million.
Financial position. Through appropriate capital and risk management, the Triglav Group maintains a good capital position within the target levels of 200–250%. Total equity amounted to EUR 899.4 million, down by 4% relative to 31 December 2021, primarily as a result of the decrease in the fair value reserve due to the rise in interest rates during the reporting period. Compared to the 2021 year-end, the parent company’s market capitalisation increased by 10% to EUR 918.5 million.
Regular annual general meeting of shareholders of zavarovalnica triglav. At the General Meeting of Shareholders of Zavarovalnica Triglav, which will take place on 24 May 2022, the proposal for the distribution of the Company’s accumulated profit for 2021 will also be discussed. Andrej Slapar, President of the Management Board of Zavarovalnica Triglav, said: “The Management Board and the Supervisory Board propose the dividend of EUR 3.70 gross per share. The proposed dividend amount accounts for 74% of consolidated net profit for 2021 and includes the additional amount provided by the level of the Group’s available capital and arising from the uniqueness or exceptionality of some segments of the Group’s operations in the past two years.”