Transcript Slide 1

Pozavarovalnica Sava, d. d.
Analyst Meeting
Financial report of
Sava Re Group
Six Months to 30 June 2011
August 2011
3
Major events
EVENTS PRIOR TO THE REPORTING DATE

Request of the Securities Market Agency relating to a potential takeover bid for POSR shares

Mateja Treven starts her 5-year term of office as Management Board Member on 3 February 2011

Recapitalisation of the subsidiary Sava životno osiguranje (Serbia) with EUR 0,3m

Claim received from the designers of Sava’s former logo in the amount of EUR 0,4m

Resolution adopted to recapitalise the subsidiary Sava Tabak (Macedonia) with EUR 2,5m

Resolution adopted to recapitalise the subsidiary Velebit usluge (Croatia) with EUR 1,5m

The 24th General Meeting takes place on 29 June 2011
EVENTS AFTER THE REPORTING DATE

Sava Reinsurance Company signs a memorandum of co-operation on setting up a life insurer in Azerbaijan

In July, Velebit usluge is recapitalised with EUR 0,5m

In July, recapitalisation of Zavarovalnica Maribor of EUR 5,9m completed

In July, the controlling company decides to recapitalise Sava životno osiguranje with EUR 0,4m

Increased stake in Zavarovalnica Maribor to 48,68%

General Meeting of Zavarovalnice Maribor called; proposal for dividend payout
4
Results 1-6 2011; Sava Re Group
Index
2011/2010
Realised as
% of plan
266.306.189
101,2
53,9%
3.990.775
8.480.464
145,9
47,1%
93,0%
98,9%
91,5
94,0%
101,9
97,3%
Sava Reinsurance Company
1-6 2010
1-6 2011
Plan 2011
Gross premiums written (EUR)
141.824.962
143.568.044
2.734.450
101,6%
Net profit/loss for the period (EUR)
Net combined ratio
Shareholders’equity (EUR)
31.12.2010
31.6.2011
31.12.2011
154.684.613
157.643.413
162.038.302
-The growth in gross premiums was contributed by the growth in Zavarovalnica Tilia and Illyria (the
Kosovan non-life insurer). Premium income dropped in the Serbian market due to the strategy of limiting
the growth in motor TPL and in Macedonia due to the loss of a large account. Also the the premium
income of the Croatian life insurer dropped as single premium payments were larger in the past and
surrenders are becoming more frequent.
- Results improved mostly because of more favourable loss ratios as a result of more selective
underwriting and achieved growth in profitable busness segments.
5
Key items of the consolidated income statement
Sava Re Group (EUR)
1 - 6 2010
1 - 6 2011
Net premiums earned
109.232.769
117.052.188
107,2
Net claims incurred
67.365.181
66.384.535
98,5
Favourable loss development
Change in other technical provisions
(including change in the tech.provi. for
policyholders who bear the inv.risk)
-3.745.360
-935.030
25,0
Impact of movements of funds of policyholders
who bear the investment risk
Net operating expenses
40.586.833
43.423.439
107,0
Other technical income
3.286.663
2.827.356
86,0
Other technical expenses
3.837.918
5.142.035
134,0
-3.015.860
3.994.505
332,4
Income from investments in associates
3.900.709
2.492.499
63,9
Due to results of ZM & Moja naložba
Ivestment income
9.572.585
7.401.182
77,3
Last year larger capital gains (Sava Re)
Expenses from financial assets and
liabilities
5.051.875
6.459.207
127,9
Net investment income
8.421.419
3.434.474
40,8
Other income
293.084
498.725
170,2
Expenses for bonuses and rebates
389.310
289.221
74,3
1.209.710
-1.305.936
4.099.624
1.042.157
-832.653
6.596.326
86,1
63,8
160,9
2.734.450
3.990.775
145,9
Technical result
Other expenses
Result of other items
Profit/loss before tax
Net profit/loss for the period
Index 11/10
Sava Re; Tilia
Slower growth than premiums earned
1H 2010-foreign exchange differences (Sava Re);
1H 2011-increase in reinsurance commision
Increase due to deteriorated payment behaviour in
markets (impairment losses on premium
receivables)
Drop in funds for the benefit of policyholders,
who bear the investment risk and impairments of
investments.
Note: Investment income includes interest from deposits with cedants
of Sava Reinsurance Company
6
Results 1-6 2011; consolidated income and
expenses
(EUR)
Index
2011/2010
1-6 2010
1-6 2011
Gross premiums written
141.824.962
143.568.044
101,2
Net premium written
Change in net unearned
premiums
126.656.444
126.613.819
100,0
-17.423.675
-9.561.631
54,9
Net premiums earned
109.232.769
117.052.188
107,2
Favourable loss developments in reinsurance and
in the non-life insurance segment
Effect of Sava Re due to fast growth of foreignsoursed business in past year
Structure of GPW 1-6 2011
4,5%
(E UR)
1-6 2010
1-6 2011
Gross claims paid
Net claims paid
Change in the net claims
provision
Net claims incurred
62.413.665
55.820.307
63.109.425
59.423.545
Index
2011/2010
101,1
106,5
11.544.874
6.960.990
60,3
67.365.181
66.384.535
98,5
Reinsurance
business
47,5%
48,0%
Largest imapact from Sava Re as there
were many mid-year renewals
Non-life
business
Life business
Reisurance: +1,6%
Non-life: +1,2%
Life: -2,4%
7
Results 1-6 2011; consolidated expenses
(EUR)
Index
2011/2010
1-6 2010
1-6 2011
NET OPERATING EXPENSES
40.026.471
41.914.581
104,7
Acquisition costs including change in
deferred acquisition costs
20.149.213
22.892.126
113,6
Acquisition costs
23.201.336
23.826.940
102,7
Change in deferred acquisition
costs
-3.052.123
-934.814
30,6
Other operating expenses
20.437.620
20.531.313
100,5
-560.362
-1.508.858
269,3
30,8%
36,6%
30,9%
35,8%
105,7
97,7
Income from reinsurance commission
Gross expense ratio*
Net expense ratio**
* Gross expense ratio = (Acquisition costs + other operating expenses) / gross premiums written
** Net expense ratio = net operating expenses / net earned premiums
8
Results 1-6 2011; premiums and ratios
million EUR
Consolidated GPW
160,0
140,0
120,0
100,0
80,0
60,0
40,0
20,0
0,0
60,0%
45,9%
50,2%
47,4%
44,9%
43,1%
35,6%
50,0%
40,0%
30,0%
22,3%
20,0%
10,0%
0,0%
2006
2007
Slovenia
2008
International
2009
30.6.2010
2010
30.6.2011
International premium as % of total GPW
Net ratios - Sava Re Group
120,0%
100,0%
104,7%
99,6%
80,0%
60,0%
40,0%
63,1%
69,5%
36,5%
35,2%
20,0%
98,3%
61,7%
96,8%
92,5%
61,1%
56,7%
35,8%
35,7%
36,6%
0,0%
2008
2009
Net incurred loss ratio
1)
2)
3)
Net incurred loss ratio = net claims incurred / net premiums earned
Net expense ratio = (operating expenses – commission income) / net earned premiums
Net combined ratio = net incurred ratio + net expense ratio
30.6.2010
Net expense ratio
2010
30.6.2011
Net combined ratio
9
Results 1-6 2011; Sava Re Group investments
by type
Structure 30.6.2011
Structure 31.12.2010
Deposits and CDs
2,0%
5,6%
Bonds
12,1%
34,9%
3,2%
Shares
1,9%
6,6%
11,6%
3,2%
35,6%
Mutual funds
41,1%
42,1%
Other
Strategic shares
(EUR)
Sava Reins Co & Zav.
Tilia are increasing their
fixed-income portfolio
Disposals of investments
by Sava Reins Co & Zav.
Tilia
Added share of profit from
subsidiaries
31.12.2010
30.6.2011
Deposits and CDs
129.563.386
128.116.256
Bonds
149.607.354
154.511.665
Shares
11.482.158
11.835.040
Mutual funds
24.158.534
20.447.788
Strategic shares
42.322.366
44.210.246
Other
6.915.299
7.508.692
Total
364.049.095
366.629.686
Growth of the
investment
portfolio was
mainly driven by
positive cash
flow from
reinsurance
business.
10
Results1-6 2011; Sava Re Group investment
return
370,0
(million EUR)
365,0
366,6
364,0
4,6%
360,0
5,0%
4,5%
4,0%
3,5%
3,6%
3,0%
355,0
351,2
2,7%
350,0
2,5%
2,0%
1,5%
1,0%
345,0
0,5%
340,0
0,0%
30.6.2010
Note: included are interest income/expenses from deposits with cedants of
Sava Reins Co; excluded are gains/losses of policyholders who bear the
investment risk.
(EUR)
Investment income
Investment expenses
Net investment income
Comprehensive income
1 - 6 2010
11.719.988
4.022.861
7.697.127
3.580.291
Impairment of investments (EUR)
Corporate bonds
Shares
Invested assets (million EUR)
2010
21.272.395
8.529.140
12.743.255
4.113.237
1- 6 2011
9.348.725
4.462.052
4.886.673
2.958.803
1 - 6 2010
99.300
2.311.416
1 - 6 2011
0
1.093.342
Mutual funds
0
227.565
Strategic shares
0
1.433.000
2.410.716
2.753.908
Total
31.12.2010
30.6.2011
Realised investment return
Shares Telekom Slovenija
Shares Petrol
Shares Stremput
Perspektiva World Mix
Sava Tabak
1.036.815
54.669
1.859
11
Performance of subsidiaries 1-6 2011
Non-life insurers (EUR)
Zavarovalnica
Tilia - non-life
Sava
osiguranje
Sava Tabak
Sava
Montenegro
Velebit
osiguranje
Gross premium written with coinsurance
39.569.776
5.901.993
8.120.599
5.925.643
4.723.064
4.758.168
Net premiums earned
24.139.226
6.297.484
6.901.077
5.277.436
4.478.577
3.372.425
16,3%
-1,5%
17,5%
-8,2%
-0,2%
13,5%
Gross claims paid (with coinsurance)
18.628.035
3.608.063
3.389.411
3.497.889
2.076.418
1.603.768
Net claims incurred
14.480.309
3.365.001
3.616.056
3.261.174
2.255.114
2.404.338
7.077.948
3.469.696
2.677.012
2.136.435
2.459.779
1.622.755
Technical result
719.239
-700.852
142.000
-873.132
-422.461
-1.099.382
Net investment income
524.797
455.640
79.258
104.642
483.285
192.840
Result of other items (other income and
expenses)
-59.709
-342.150
0
-209.209
-135.273
0
Net profit/loss for the period
668.688
-587.362
-68.581
-977.699
-74.449
-906.542
Net incurred ratio 1-6 2011
60,0%
53,4%
52,4%
61,8%
50,4%
71,3%
Net expense ratio 1-6 2011
29,3%
55,1%
38,8%
40,5%
54,9%
48,1%
Net combined ratio 1-6 2011
89,3%
108,5%
91,2%
102,3%
105,3%
119,4%
Net combined ratio 1-6 2010
91,3%
107,9%
90,0%
105,5%
105,1%
133,2%
Year-on-year change
Net operating expenses
Illyria
12
Performance of subsidiaries 1-6 2011
Life insurers (EUR)
Zavarovalnica
Tilia - life
Sava životno
osiguranje
Illyria Life
Velebit životno
osiguranje
Gross premium written with coinsurance
5.151.499
550.924
264.683
445.805
Net premiums earned
5.100.989
486.317
263.552
439.937
Year-on-year change
-2,4%
70,1%
131,5%
-51,7%
Gross claims paid
2.188.135
0
1.883
58.269
Net claims incurred
(including change in math.prov.)
2.458.894
177.532
112.857
94.497
Net operating expenses
1.426.665
270.470
660.712
787.527
Technical result
1.215.469
38.315
-510.367
-432.449
Net investment income
-1.115.763
65.427
-11.830
116.450
0
0
-2.125
0
Result of other items
Net profit/loss for the period
99.706
76.196
-524.322
-315.999
Pozavarovalnica Sava, d. d.
Key performance indicators for
Sava Reinsurance Company
for the Six Months to 30 June 2011
August 2011
14
Key items of the income statement
Reinsurance Company Sava (EUR)
1 – 6 2010
Net premiums earned
56.533.941 60.419.368
106,9
Net claims incurred
37.888.794 34.676.834
91,5
Change in other technical provisions
(including change in the tech.provi. for
policyholders who bear the inv.risk)
Net operating expenses
-16.673
1 – 6 2011
Index 11/10
19.376.713 20.633.326
106,5
2.681.529
1.850.733
69,0
Other technical expenses
1.288.291
977.815
75,9
644.998
5.982.126
927,5
0
0
4.791.508
3.834.159
0
1.433.000
3.655.975
2.364.529
64,7
1.135.534
36.630
3,2
1.809
251
13,9
0
26.071
158
10
Result of other items
1.651
-25.830
Profit/loss before tax
1.782.184
5.992.929
336,3
Net profit/loss for the period
1.282.168
4.220.401
329,2
Income from investments in associates
Ivestment income
Expenses from investments in associates
Expenses from financial assets and
liabilities
Net investment income
Other income
Expenses for bonuses and rebates
Other expenses
Favourable claims development
0
Other technical income
Technical result
Due to unearned premiums; larger amount of
business written in mid-year renewals
80,0
Growth lower than growth in earned premiums
Impact of dollar movements and increase in
reinsurance commision
Last year larger capital gains
Impairment loss on investment in subsidiary
6,3
Note:
Investment income: includes interest from deposits with cedants of
Sava Reinsurance Company
15
Key ratios for reinsurance business –
entire portfolio
80,0%
70,0%
67,6%
72,5%
75,8%
29,0%
66,2%
67,0%
57,4%
60,0%
28,0%
28,0%
27,1%
27,0%
27,0%
50,0%
26,0%
40,0%
25,4%
24,5%
25,0%
30,0%
20,0%
24,0%
10,0%
23,0%
0,0%
24,9%
22,0%
2007
2008
2009
2010
Net incurred loss ratio
2Q 2010
2Q 2011
2007
2008
2009
2010
Net expenses ratio
Notes: calculation of ratios:
1)
Net incurred loss ratio = (net claims paid + change in net provision for outstanding claims) / (net premium written + change in net unearned premium)
2)
Net expense ratio = (net acquisition costs + change in deferred acquisition cost) / (net premium written + change in net unearned premium)
2Q 2010
2Q 2011