SAVA Re Group, 3Q2018: 39.2% growth in net profit and 8.1% growth in revenue
Gross premiums written increased by 5.2% to EUR 430.3 million. Premium growth was driven by non-life insurance in Slovenia (9.9% growth), non-life insurance abroad (13.6% growth) and life insurance abroad (14.4% growth). Reinsurance operations posted a 6.6% y-o-y decline in written premiums, partly owing to the stronger US dollar against the euro and partly due to the decline of a number of treaties that failed to reach profitability targets. In line with expectations, there was a 4.2% drop in Slovenian gross life insurance premiums written, reflecting a large number of policy maturities. Thus, in the first nine months of the year, the Group wrote 82.7% of its full-year 2018 premium target.
The return on financial investments for the first nine months of 2018 was in line with the plan.
Compared to y-o-y figures, the underwriting result improved in the reinsurance and non-life segments. The favorable third quarter led to an improved technical performance for the period despite a weaker second quarter, which was affected by Slovenian hail losses. The improvement is the result of lower major claims and a positive development of provisions, especially those relating to underwriting year 2017. Consequently, the net incurred loss ratio is also more favorable.
The expense ratio deteriorated partly because of a smaller volume of gross reinsurance premiums, partly due to reduced Slovenian life insurance premiums as a result of more maturities, and partly because increased sales of new life products pushed up acquisition costs while other operating expenses remained relatively flat.
In the first nine months, the SAVA Re Group generated a net profit of EUR 29.1 million, up 39.2% year on year. The annualized return on equity stood at 11.8%. We believe that the 2018 profit target is achievable.
In July 2018, after its regular annual rating review, the rating agency Standard & Poor's raised its long-term issuer credit and issuer financial strength ratings on SAVA Re and Zavarovalnica SAVA to 'A' with a 'stable' outlook. The Company believes that its improved ratings will assist it in delivering on its strategy of selective and profitable growth in international reinsurance markets.
Furthermore, the Group continues to make good progress on its strategy and is developing into a modern, digital, people-oriented and sustainable insurance group. In 2018, it placed particular emphasis on investing in environmental and sustainable development projects, specifically infrastructure funds and projects of local companies exploring energy efficiency and renewable energy sources. In the third quarter, investments in infrastructure funds and projects increased, accounting for 0.6% of the investment portfolio as at 30 September 2018.
The "'Unaudited financial report of the SAVA Re Group and financial statements of SAVA Re, d.d. for the nine months to 30 September 2018' is available here.