Strategic focus of the Sava Insurance Group
The strategy of the Sava Insurance Group is based on the pillars as shown below
PILLARS OF BUSINESS OPERATIONS
Slovenia non-life
Slovenia life
Non-life, international
Life, international
FoS business*
Assistance and other supporttive activities
Pensions
Sale of mutual fund units
Health business
Other
Insurance company portfolios
Management of mutual fund assets
Pension portfolios
Organic growth
Acquisitions
Dividend policy
* FoS business. Freedom of Services business. Business written within the European Economic Area based on the freedom of services right to provide services on a cross-border basis.
Key guidelines set out in the strategy:
Digital transformation & placing the customer at the centre
We want to make it easier for policyholders to take out and manage insurance and to file claims, which also includes adapting our services to the needs and wishes of our clients. The new generation of digital customers is accustomed to fast and easy online shopping with as few clicks as possible. The Sava Insurance Group is adapting to this reality; therefore, we have placed our core strategic focus on digital transformation and customer-centred orientation.
IT transformation
Developing a modern and flexible IT system will give us a competitive advantage in the future through the overhaul of our central systems, which includes replacements, upgrades and the introduction of new IT solutions.
Growth through acquisitions
In addition to effective organic growth during the strategic period, the Sava Insurance Group will continue its acquisition activities in the industries and markets where it is already present, and it will also look for growth opportunities in the insurance industry in other EU countries.
Long-term strategic targets:
The long-term objective is to achieve a return on equity of at least 11% at both the Group level and as a 3-year average. The internal calculation of the weighted average cost of capital (WACC) of the Sava Insurance Group as at 31 December 2019, which includes the subordinated debt, totals 7.6%, with a cost of equity of 8.5%.
In the period 2020–2022, a solvency ratio of 180% to 220% (between the lower end of the target range and the upper end of the adequate capital range) is expected at the Sava Insurance Group level.
The combined ratio of non-life business in Slovenia will not exceed 94%, while the combined ratio abroad will not exceed 95%, with the exception of the Croatian market, where the combined ratio will not exceed 100%. The five-year average combined ratio of reinsurance business (total Group and non-Group business) will not exceed 93%.
With regard to life insurance in Slovenia, profitability (the ratio of the value of new policies to the present value of the expected premiums of such new policies) of the portfolio of new life policies will be at least 9%, and in Croatia and on other markets at least 5% and 7.5%, respectively.
The return on the Group’s investment portfolio will average at least 1.0% over three years.
Plans of the Sava Insurance Group concerning the financial year 2020
Key targets for 2020
Index/difference
in p.p.
P2020/19
Profit or loss, net of tax
Return on the investment portfolio*
Net incurred loss ratio (reins. + non-life)*
Net combined ratio* (reins. + non-life)*
* Excluding the effect of exchange differences. The return on the investment portfolio does not include subordinated debt expenses.
** About 2 p.p. relate to the cost of digitalisation and the IT transformation.
