Pursuant to the rules of the Ljubljana Stock Exchange d.d., Ljubljana, and the Market in Financial Instruments Act, Sava Re d.d., Dunajska 56, Ljubljana, makes the following announcement:

The Sava Insurance Group has achieved all its key 2017–2019 strategy goals. It realised all its planned synergies flowing from the merger of four insurers now under the single Zavarovalnica Sava brand, and the umbrella insurance brand Zavarovalnica Sava has also achieved very good brand awareness in the region. During the period, the Group has grown both organically and through acquisitions. Using acquisitions, the Group expanded its insurance, pensions, assistance, health insurance and asset management presence. A new strategy has been prepared for 2020–2022, which continues in our primary direction.

The Sava Insurance Group has three key development focuses for 2020–2022:

• Digital transformation and placing the customer at the centre, which will allow us to improve customer experience and tailor our services to the wishes and needs of our customers;
• IT transformation, which will allow us to develop a modern and flexible IT system and thus gain a competitive advantage;
• Acquisitions-based growth, which will be a strategic and well-considered complement to our efficient organic growth.

In the area of digital transformation and customer-centricity, the Group will be carrying out activities that will make it easier for its customers to buy and manage insurance policies and file claims, and it will also focus on its online presence and mobile applications, as well as on the adjustment of its communications and products to customer preferences.

As part of its IT transformation, the Group will support the digital transformation process and overhaul and re-engineer its core IT systems, including replacements, upgrades and implementations of various IT solutions.

In addition to organic growth, the Group is planning to grow through acquisitions. The Group will seek opportunities for expanding its regional presence in the insurance, pension and health industries, as well as in those service industry segments that are complementary to insurance. In line with its sustainable orientation, the Group will also invest in projects aimed at improving energy efficiency, and promoting renewable resources and social coexistence.

For 2020–2022, the Sava Insurance Group has the following key growth and profitability targets:

We expect the Group’s operating revenues to grow on average by 4% annually throughout the 2020–2022 strategy period. In 2022, operating revenues will exceed EUR 650 million, an increase of more than EUR 60 million through the Group’s organic growth. The rate of return on equity is expected to exceed 11% in the strategy period.

Growth of Slovenian insurance business is expected to slow down, which reflects the expected slowdown in new vehicle sales, whereas higher premium growth rates are planned for the reinsurance business, for insurance business outside Slovenia, and for pension and asset management business.

Growth of non-life business in Slovenia and the Adriatic region is expected to exceed 2% and 5% annually, respectively. As regards life business in Slovenia, gross premiums written are expected to decrease by 5%, whereas new business is expected to grow by more than 2%. As regards life business in the Adriatic region, gross premiums written are expected to grow by 10%, and new business is expected to expand by more than 7%. Reinsurance business is planned to grow by more than 3%.

In this strategy period, organic growth will continue to be secondary to our primary goal of maintaining appropriate profitability as measured by combined ratios, which are envisaged to be under 95% for the insurance and reinsurance business.

The Group’s investment policy includes maintaining a high level of security of invested insurance contract assets, as well as ensuring high liquidity and risk diversification. It also includes pursuing asset-liability matching, particularly pertaining to life insurance business. In the medium term, investment management will be affected by continued low interest rates, and the expected return will be above 1.2%. At the end of the strategy period, investments in bonds, deposits and cash equivalents will represent at least 80% of the investment portfolio, and the Group will seek to have at least 75% of its investment portfolio in the investment grade category. Part of the investment portfolio will be prudently directed towards real estate, infrastructure and sustainable investments. The last are expected to exceed 8% of the investment portfolio structure at the end of the strategy period. At least 85% of the Group funds supporting technical provisions will be aligned with the UN PRI guidelines.

The Group’s solvency will be maintained in the 180% to 220% range in the strategy period, which represents the optimal level of capitalisation based on the Group’s risk appetite. As part of its capital management policy, the Group will use part of its surplus funds for growth through acquisitions and partially for organic growth of the Group. Furthermore, Sava Re will ensure its shareholders stable growth in dividends, on average by 10% annually, thus distributing between 35% and 45% of the Sava Insurance Group’s profits.

We are building a customer-centric, modern, digital, community-minded and sustainable insurance group. Through commitment and constant progress, we ensure security and quality of life. We are aware that we have set ambitious goals for the 2020–2022 strategy period. We also believe we have the knowledge, experience and dedication required for successful realisation of the activities planned.

The document “Strategic plan of the Sava Insurance Group for 2020–2022” is attached.

On 27 December 2019, Sava Re signed a deal to acquire NLB Vita d.d., and the Company expects the transaction to close in the first half of 2020. Because the released strategic plan does not include the financial effects of this transaction, Sava Re intends to evaluate these effects and issue a revised document after the transaction is completed.

This announcement will also be available on the Company’s website, at www.sava-re.si, for at least five years from the date of this announcement.