Pozavarovalnica Sava, d. d.
SAVA RE GROUP AND SAVA REINSURANCE
COMPANY
RESULTS 2010
Roadshow Stockholm, May 2011
Pozavarovalnica Sava, d. d.
WHO WE ARE AND OUR PAST DEVELOPMENT
Roadshow Stockholm, May 2011
4
DEVELOPMENT & GROWTH IN TIME
1991 THROUGHOUT
1973
2003 TIME
DEVELOPMENT
Beginnings during Yugoslav
socialist period
1973 – Starts as reinsurance department
of Sava Insurance
1977 – Spin-off from Sava Insurance and
incorporation under the name
Reinsurance Community Sava
1990 – Reorganises as a joint-stock
company under the new Slovenian
Companies Act
1991 – Slovenia declares independence
from Yugoslavia; transition from
socialist system to market economy
Consolidation of Sava Re’s position
in Slovenia and crystallisation of
ownership structure
1991 – 2% of reinsurance premiums
coming from international markets;
decision to expand in international
reinsurance markets
1998 – Acquisition of Zavarovalnica
Tilia; entry into Slovenian direct
insurance market
1999 – Starts to increase minority stake
in Zavarovalnica Maribor to
45,79% as of today
2003 – Unallocated portion of share
capital transferred to SOD, who
becomes 99,9% owner
KEY STORY BEHIND
DEVELOPING REINSURANCE
BUSINESS
INTERNATIONAL INWARDS
PREMIUM FROM NIL IN 1973 TO NIL
IN TIMES OF YUGOSLAV
HYPERINFLATION TO 50,0% IN 2010
OF NON-CONSOLIDATED
REINSURANCE PREMIUM INCOME
5
DEVELOPMENT & GROWTH IN TIME
2004
2008
DEVELOPMENT
THROUGHOUT
TIME
2004
Acquisition-driven expansion to
insurance markets of former
Yugoslavia
2004 – Acquisition of a minority stake in
Osiguranje Helios in Croatia, 2006 –
sale of entire stake in Osiguranje
Helios when there was an indirect
change in control in the majority
shareholder
2006 – Acquisition of majority stakes in
Dukagjini (now renamed Illyria) and
Sava osiguranje; entry into Kosovan
and Serbian non-life insurance markets
2007 – Acquisition of majority stakes in
Sava Tabak and Sava Montenegro,
entry into Macedonian and
Montenegrin non-life insurance
markets
2008
2008
KEY STORY BEHIND
Expansion to life insurance
business and return to Croatia
2008 – 100% owned greenfield Sava
životno osiguranje a life insurance
operation in Serbia
2008 – Now 100% owned greenfield
Dukagjini Life (now renamed Illyria
Life) in Kosovo
2009 – Acquisition of majority stakes in
Velebit osiguranje and Velebit
životno osiguranje; return to the
Croatian non-life and life insurance
market
DEVELOPING INSURANCE
BUSINESS
STARTED AS A REINSURANCE
COMPANY - NOW AN
IMPORTANT REGIONAL
INSURANCE GROUP
2010 PREMIUM
(1)
STRUCTURE:
-
47% REINSURANCE
PREMIUM
-
48% NON LIFE INSURANCE
PREMIUM
-
5% LIFE INSURANCE
PREMIUM
__________________________________________________________________________________________________________________________________________________
Note: (1) Consolidated premium income,
6
INTRODUCTION TO THE SAVA RE GROUP

Overview

10 companies in reinsurance, non-life and life insurance business

Reinsurance relations with numerous players worldwide

Insurance operations in 6 markets of former Yugoslavia

Total consolidated GPW of EUR 259,1m
Maribor
Maribor
Ljubljana
Ljubljana
(1)
Novo mesto
Novo mesto
Reinsurance (GPW: EUR 120,8m)

Largest locally-based non-captive reinsurer in CEE

No.1 reinsurer in Slovenia(2)

37 years of presence in Slovenia and internationally

181 reinsurance clients

Rated by S&P since 2005; current rating (November 2010) A- with a
stable outlook
Slovenia
Serbia
Direct insurance (GPW: EUR 138,3m)

Mostly non-life exposure, life insurance operated through Green-Fields

Operating in direct insurance market since 1998 through Tilia

Substantial long-term equity investment in 3rd largest Slovenian
insurer, Maribor with GPW of EUR 259,6m(3)

Exposure to market potential in countries of former Yugoslavia
through acquisition of 4 subsidiaries in 2006-2007, establishment of
2 life companies in 2008 and acquisition of 2 subsidiaries in 2009
Croatia
Bosnia
Kosovo
Kosovo
Montenegro
Macedonia
__________________________________________________________________________________________________________________________________________________
Notes: (1) As per December 31, 2010
(2) Market share measured on reinsurance GWP in Slovenia
(3) As per December 31, 2010
7
WHO WE ARE TODAY – 3 KEY SEGMENTS
REINSURANCE
SLOVENIA
INSURANCE
SLOVENIA
INTERNATIONAL
INSURANCE
FORMER YU
8
OUR MARKETS
THE SAVA RE
GROUP
SLOVENIA
REINSURANCE
Sava Re
NON LIFE INSURANCE
LIFE INSURANCE
PREMIUM
INCOME 2010
INDEX
(10/09)
Tilia Insurance Company
(Composite Insurer)
99,7% owned by Sava Re
Tilia Insurance Company
(Composit Insurer)
R: EUR 120,8m
NL: EUR 63,7m
L: EUR 10,2m
T: EUR 194,7m
+ 0,4%
+ 2,8%
- 1,5%
+ 1,0%
CROATIA
Velebit osiguranje
56,35% owned by Sava Re
Velebit životno osiguranje
53,35% owned by Sava Re
NL: EUR 8,5m
L: EUR 1,3m
T: EUR 9,8m
+ 20,3%
- 8,0%
+ 17,3%
SERBIA
Sava osiguranje
99,99% owned by Sava Re
Sava životno osiguranje
99,99% owned by Sava Re
NL: EUR 15,6m
L: EUR 0,3m
T: EUR 15,9m
+ 17,5%
+ 936,8%
+ 19,7%
KOSOVO
Illyria
Wholly-owned by Sava Re
Illyria Life
Wholly-owned by Sava Re
NL: EUR 13,1m
L: EUR 0,8m
T: EUR 13,9m
+ 9,8%
+ 492,2%
+ 14,1%
MONTENEGRO
Sava Montenegro
Wholly-owned by Sava Re
NL: EUR 9,7m
T: EUR 9,7m
- 12,6%
MACEDONIA
Sava Tabak
66,7% owned by Sava Re
NL: EUR 15,2m
T: EUR 15,2m
- 8,6%
- Established Company
- Greenfields
COVERING MOST OF THE FORMER YUGOSLAV MARKETS
SLOVENIA – THE GROUP’S MOST IMPORTANT MARKET
LIFE OPERATIONS IN EARLY STAGES
R
NL
L
T
– reinsurance
– non-life
– life
– total
9
OWNERSHIP STRUCTURE OF SAVA RE
SOD (Slovenian
Restitution Fund)
8.0%2.3%
Banks
25.0%
11.3%
Natural pesrons
Insurance Co. & Pension
Funds
15.5%
Investment Co. &
Investment Funds
19.7%
18.2%
Other financial Institutions
Other Companies
5.481 shareholders
75% free float
P/B1 = 0,48
1)
2)
3)
4)
3% foreign investors
POSR (listed on the LJSE since 14 June 2008)
P/E2 = 13,56
P/B = price per share on 31 December 2010 / book value of shares on 31 December.2010
P/E = price per share on 31 December 2010 / earnings per share in 2010
P/GWP = price per share on 31 December 2010 / GPW 2010 per share
ROE = net profit/loss / average equity
P/GPW3 = 0,29
Pozavarovalnica Sava, d. d.
WHERE WE ARE GOING
Roadshow Stockholm, May 2011
11
PERMANENT GROWTH
CAGR
2008 – 2010
GPW million EUR (consolidated)
Slovenia 55,2
2010
Reinsurance
2009
Slovenia 63,7
2008
Slovenia 62,3
International 65,8
To balance
international
and domestic
portfolio
International 56,6
International 50,0
14,8%
Slovenia 63,7
2010
Non-life
insurance
Slovenia 61,9
2009
Slovenia 57,4
2008
Greenfield in
Croatia, high
growth rates on
all markets,
developing health
in Kosovo
International 62,1
International 57,8
International 49,1
12,5%
12,5
2010
Life
insurance
2009
2008
11,4
Greenfields in
Serbia, Kosovo
and Croatia
10,9
7,4%
12
OUR INVESTMENT STORY
REINSURANCE GROWTH ON FOREIGN MARKETS
160
140
(million EUR)
120
100
80
60
40
20
0
2000
2001
2002
2003
SLOVENIA
2004
WESTERN BALKANS
ASIA
2005
MIDDLE EAST
2006
CIS
2007
EUROPE
AFRICA
2008
2009
2010
OTHER
CR foreign business
140%
Asian markets will be the source of our future growth
136%
120%
111%
105%
104%
100%
98%
83%
85%
80%
96%
94%
65%
Underwriting year
(mio EUR)
60%
40%
2001
2002
2003
2004
2005
2006
CR foreign business
2007
2008
2009
2010
2009
Estimation
2011
2010
Asia
9,2
15,6
19,6
Middle East
2,6
3,7
4,8
China, South Korea, Maleysia, Japan, India, Singapore
Israel, United Emirates, Saudi Arabia, Oman
CIS countries
3,6
3,7
4,5
Russia, Armenia, Kazakhstan, Ukraine, Georgia, Moldova
Africa
1,3
1,5
2,0
Nigeria, Tunisia, Ivory coast, Algeria, Togo, Madagascar, Morocco,
South African Republic
13
OUR INVESTMENT STORY
THE WESTERN BALKANS HAVE GROWTH POTENTIAL
THE SAVA RE
GROUP
OUR MARKET SHARES
MARKET PENETRATION &
VOLUME 2010
INSURANCE
CROATIA
2010: NL 0,92%; L 0,39%
2009: NL 0,75%; L 0,40%
2008: NL 0,54%; L 0,31%
TOTAL PREMIUM: EUR 1,2bn
PENETRATION IN GDP: 2,8%
PREMIUM/CAPITA: EUR 284
SERBIA
2010: NL 3,35%; L 0,37%
2009: NL 2,95%; L 0,04%
2008: NL 2,37%; L 0,00%
TOTAL PREMIUM: EUR 550m
PENETRATION IN GDP: 1,9%
PREMIUM/CAPITA: EUR 74
KOSOVO
2010: NL 21,8%; L 100 %
2009: NL 23,7%; L 100 %
2008: NL 19,3%; L 0,00%
TOTAL PREMIUM: EUR 72m
PENETRATION IN GDP: 1,7%
PREMIUM/CAPITA: EUR 33
MONTENEGRO
2010: NL 15,1%
2009: NL 16,6%
2008: NL 18,7%
TOTAL PREMIUM: EUR 63m
PENETRATION IN GDP: 2,0%
PREMIUM/CAPITA: EUR 105
MACEDONIA
2010: NL 14,4%
2009: NL 16,6%
2008: NL 15,6%
TOTAL PREMIUM: EUR 105m
PENETRATION IN GDP: 1,5%
PREMIUM/CAPITA: EUR 53
FORMER YU
(million EUR)
Consolidated GPW
160,0
140,0
120,0
100,0
80,0
60,0
40,0
20,0
0,0
60,0%
43,1%
45,9%
50,2%
50,0%
40,0%
35,6%
30,0%
22,3%
20,0%
10,0%
0,0%
2006
Slovenia
2007
International
2008
2009
2010
International premium as % of total GPW
Sava Re has cleaned the balance sheets & portfolios of its subsidiaries to prepare for future opportunities on these markets
14
OUR INVESTMENT STORY
REGIONAL FOCUS ON THE SLOVENIAN DIRECT MARKET
INSURANCE
SLOVENIA
THE SAVA RE
GROUP
SLOVENIA
SAVA RE AFFILIATE:
Insurance Company Maribor;
3rd biggest on Slovenian
market;
GPW EUR 259,6m
Sava Re share 45,7%
OUR MARKET SHARES
2010: NL 4,4%; L 1,6%
2009: NL 4,3%; L 1,6%
2008: NL 4,2%; L 1,7%
MARKET PENETRATION &
VOLUME 2010
TOTAL PREMIUM: EUR 2,1bn
PENETRATION IN GDP: 5,8%
PREMIUM/CAPITA: EUR 1.047
Increase market share & focus on portfolio profitability
We will try to stabilise our presence on the Slovenian market
Pozavarovalnica Sava, d. d.
2010 WAS A GOOD YEAR
Roadshow Stockholm, May 2011
16
2010 – YEAR OF POSITIVE TURNAROUND
SAVA RE GROUP
- Increase in gross premiums in all business segments
SAVA REINSURANCE COMPANY
- Achieved strategic goal of balance between international
and domestic portfolio
- Adjusting reserving levels to Group policy
- Strengthening of agency networks
- Restructuring of investment portfolio led to positive
investment return
- Implementation of systematic risk management approach
and tools
- Largest growth of foreign reinsurance premium
achieved on Asian market
- Light loss year 2010 with improved combined ratio
- Long-term credit and financial strength rating of A- with
a stable outlook reaffirmed
- Allocation of capital to subsidiaries to support further
development & growth
- Positive investment return and restructuring of
investment portfolio towards reducing market risks
17
2010 – YEAR OF POSITIVE TURNAROUND
•International premium as % of
total GPW (year 2010)
50,2%
•Net combined ratio (2010)
96,1%
Consolidated GPW by operating segment
300,0
229,6
250,0
12,5
119,7
125,8
112,3
120,3
120,8
2008
2009
2010
200,0
(million EUR)
259,1
11,4
10,9
106,4
150,0
251,4
100,0
50,0
• Premium growth in Asian markets in
2010 (compared to 2009) (1)
190,5%
•Realised investment return
(2010)
3,6%
•Profit for the period (2010)
EUR 5,5m
0,0
Reinsurance business
Gross Premium Written = GPW
(1) Calendar-year basis
Non - life business
Life business
•ROE
3,5%
18
2010 – YEAR OF POSITIVE TURNAROUND
( EUR )
Gross premiums written
Year-on-year change
International premium as % of total GPW
Net incurred loss ratio1
Net expense ratio2
Net combined ratio3
Sava Reinsurance Company
2009
2010
147.082.330
142.861.784
9,2%
-2,9%
41,9%
50,0%
68,0%
35,2%
103,2%
60,4%
35,7%
96,1%
75,8%
29,8%
105,5%
66,2%
30,1%
96,3%
-1,4%
3,6%
-2,3%
0,8%
Profit/loss for the period
Comprehensive income
Net earnings / loss per share
-28.216.212
-17.691.584
-3,01
5.520.670
4.113.237
0,59
-12.598.645
-3.744.882
-1,35
7.193.724
6.143.048
0,77
Total assets
Change on 31 December previous year
560.711.611
4,7%
578.385.408
3,2%
404.105.057
1,2%
418.350.613
3,5%
Shareholders’ equity
Change on 31 December previous year
161.677.406
-7,1%
154.684.609
-4,3%
149.995.279
-2,4%
156.138.328
4,1%
Net technical provisions
Change on 31 December previous year
277.337.473
22,2%
307.179.072
10,8%
144.578.495
18,9%
156.415.674
8,2%
ROE (Net profit/loss to average equity)
-16,8%
3,5%
-8,3%
4,7%
16,52
13,83
16,02
129.483.638
8,00
16,68
74.900.152
Realised investment return
Share price at 31 December
Book value of shares
Market capitalisation
1)
2)
3)
Sava Re Group
2009
2010
251.416.588
259.103.050
9,5%
3,1%
45,9%
50,2%
17,27
Net incurred loss ratio = net claims incurred / net premiums earned
Net expense ratio = (net aquisition cost + administrative costs) / net premiums earned
Net combined ratio= (net claims incurred + net aquisition costs + administrative costs) / net premiums earned
Pozavarovalnica Sava, d. d.
SAVA RE GROUP
20
2010 – YEAR OF POSITIVE TURNAROUND
(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%
43,1%
50,2%
40,0%
35,6%
30,0%
22,3%
20,0%
10,0%
0,0%
2006
Slovenia
2007
2008
International
Net ER
Net LR
2009
2010
International premium as % of total GPW
Net ratios - Sava Re Group
67,5%
65,0%
Net CR
69,5%
64,8%
63,1%
106,0%
104,7%
61,1%
100,0%
99,6%
98,6%
45,0%
96,8%
94,1%
33,8%
25,0%
36,5%
35,2%
35,7%
26,6%
2006
98,0%
96,0%
94,0%
92,0%
2007
Net incurred loss ratio
1)
2)
3)
104,0%
102,0%
55,0%
35,0%
50,0%
2008
Net expense ratio
Net incurred loss ratio = net claims incurred / net premiums earned
Net expense ratio = (net aquisition cost + administrative costs) / net premiums earned
Net combined ratio= (net claims incurred + net aquisition costs + administrative costs) / net premiums earned
2009
2010
Net combined ratio
21
INVESTMENT STRUCTURE - SAVA RE GROUP
EUR 335,8m
EUR 364,0m
5,5%
3,1%
10,8%
11,2%
1,9%
11,6%
EUR 304,3m
100%
90%
80%
70%
6,6%
3,2%
9,1%
11,6%
5,1%
5,6%
60%
20,3%
21,1%
19,0%
50%
20,8%
40%
23,4%
23,4%
30%
20%
24,1%
27,0%
31 Dec 2008
31 Dec 2009
10%
35,6%
0%
31 Dec 2010
Deposits and CDs
Government bonds
Corporate bonds
Mutual funds
Strategic shares
Other
(EUR)
Deposits and CDs
Government bonds
Corporate bonds
Shares
Mutual funds
Strategic shares
Other
Total
31 Dec 2008
73.288.273
71.243.900
57.775.899
17.171.723
35.299.560
32.773.009
16.760.036
304.312.400
31 Dec 2009
90.825.019
78.650.190
70.736.066
17.052.682
30.627.902
37.646.480
10.244.391
335.782.730
Shares
31 Dec 2010
129.563.385
75.678.951
73.928.404
11.482.158
24.158.534
42.322.366
6.915.298
364.049.096
22
INVESTMENT RETURN OF SAVA RE GROUP
370,0
4,0%
364,0
360,0
3,6%
350,0
335,8
340,0
(million EUR)
3,0%
2,0%
330,0
320,0
1,0%
304,3
310,0
300,0
0,0%
0,3%
290,0
-1,4%
-1,0%
280,0
270,0
-2,0%
31 Dec 2008
31 Dec 2009
Invested assets
(EUR)
31 Dec 2010
Investment return
2008
2009
2010
Investment income
29.357.293
22.350.395
24.950.660
Investment expenses
33.239.644
23.701.131
10.235.493
Net investment income
-3.882.351
-1.350.736
14.715.167
Pozavarovalnica Sava, d. d.
PLANS 2011
Roadshow Stockholm, May 2011
24
KEY ACTIONS IN 2011
Reinsurance
Insurance
Diversifying and growing
the reinsurance portfolio
Profitability of insurance
portfolio
Profitability of reinsurance
portfolio
Improving the
underwriting process
Capital adequacy
Developing
IT systems
(Solvency II)
Cost control
Upgrading risk control
systems
Strengthening sales
networks
25
STRATEGIC ORIENTATION
Reinsurance
Insurance Slovenia
Insurance W Balkan
Annual average growth on
international markets
> 8%
Tilia to achieve
5%-market share
Growth of non-life
insurance business
(organic growth)
Decreasing premium from
Slovenia to mitigate
double exposure
Combined ratio of 95%
Accelerated growth in
life business
Seeking better governance
solutions for ZM for both
strategic shareholders
Taking advantage of high
growth potential in life
business
Focus on small and
medium size risks
(consistent system of
concluding treaties)
26
PLAN 2011
Sava Re Group
(EUR)
Plan 2011
2010
Plan 2011
Net earned premiums
231.874.029
244.239.929
123.497.230
121.411.427
Gross premiums written
259.103.050
266.984.900
142.861.784
138.093.827
Net incurred loss ratio
60,4%
62,3%
66,2%
71,4%
Net expence ratio
35,7%
32,7%
30,1%
27,7%
Net combined ratio
96,1%
95,0%
96,3%
99,1%
Realised investment return
3,6%
3,9%
0,8%
1,5%
ROE (Net profit/loss to average equity)
3,5%
5,4%
4,7%
3,1%
MID TERM
ROE
TARGET
8-10%
1)
2)
3)
2010
Sava Reinsurance Company
Premium growth of 2,8%
(non-life premium growth of 4,8%,
life premium growth of over 40%,
decrease in reinsurance premium of
3,6%)
Net incurred loss ratio = net claims incurred / net premiums earned
Net expense ratio = (net aquisition cost + administrative costs) / net premiums earned
Net acquisition cost = acquisition costs + change in diferred acquisition cost
3,4% decrease in premium;
Double investment return and
expected improvement of loss
ratios (2010 better than long-term
average)