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Analyst Meeting Financial report of Sava Re Group Six Months to 30 June 2011. August 2011. Major events. EVENTS PRIOR TO THE REPORTING DATE. Request of the Securities Market Agency relating to a potential takeover bid for POSR shares.
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AnalystMeetingFinancialreportofSava ReGroupSixMonths to 30 June 2011 August 2011
Major events EVENTS PRIOR TO THE REPORTING DATE • Requestof the Securities Market Agencyrelating to a potentialtakeoverbid for POSR shares • Mateja Treven starts her 5-year term of office as Management Board Member on 3 February 2011 • Recapitalisationof the subsidiary Sava životnoosiguranje (Serbia) with EUR 0,3m • Claimreceivedfrom the designers of Sava’s former logo in the amount of EUR 0,4m • Resolutionadopted to recapitalise the subsidiary Sava Tabak (Macedonia) with EUR 2,5m • Resolutionadopted to recapitalise the subsidiary Velebitusluge(Croatia) with EUR 1,5m • The 24th General Meeting takes place on 29 June 2011 EVENTS AFTER THE REPORTING DATE • Sava Reinsurance Company signsa memorandum of co-operation on setting up a life insurer in Azerbaijan • In July, Velebit usluge is recapitalisedwithEUR 0,5m • In July, recapitalisation of Zavarovalnica Maribor of EUR 5,9m completed • In July, the controllingcompanydecides to recapitalise Sava životno osiguranje with EUR 0,4m • Increasedstake in Zavarovalnica Maribor to 48,68% • General Meetingof Zavarovalnice Maribor called; proposal for dividend payout
Results 1-6 2011; Sava Re Group • 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.
Key items of the consolidated income statement Sava Re; Tilia Due to results of ZM & Moja naložba Last year larger capital gains (Sava Re) Impact of movements of funds of policyholders who bear the investment risk Favourable loss development 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) Slower growth than premiums earned 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
Results 1-6 2011; consolidated income and expenses Largest imapact from Sava Re as there were many mid-year renewals Favourable loss developments in reinsurance and in the non-life insurance segment Effect of Sava Re due to fast growth of foreign-soursed business in past year Reisurance: +1,6% Non-life: +1,2% Life: -2,4%
Results 1-6 2011; consolidated expenses * Gross expense ratio = (Acquisition costs + other operating expenses) / gross premiums written ** Net expense ratio = net operating expenses / net earned premiums
Results 1-6 2011; premiums and ratios • 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
Results 1-6 2011; Sava Re Group investments by type Growth of the investment portfolio was mainly driven by positive cash flow from reinsurance business. 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
Results1-6 2011; Sava Re Group investment return 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.
Key performance indicators for Sava Reinsurance Companyfor the Six Months to 30 June 2011 August 2011
Key items of the income statement Due to unearned premiums; larger amount of business written in mid-year renewals Last year larger capital gains Impact of dollar movements and increase in reinsurance commision Favourable claims development Growth lower than growth in earned premiums Impairment loss on investment in subsidiary Note: Investment income: includes interest from deposits with cedants of Sava Reinsurance Company
Key ratios for reinsurance business – entire portfolio • Notes: calculation of ratios: • Net incurred loss ratio = (net claims paid + change in net provision for outstanding claims) / (net premiumwritten + change in net unearned premium) • Net expense ratio = (net acquisition costs + change in deferred acquisition cost) / (net premiumwritten + change in net unearned premium)