Strategy and Plans of the Triglav Group
- In 2015, the Triglav Group and Zavarovalnica Triglav surpassed their planned profit level.
- The Triglav Group continued to implement its strategy, placing focus on the core insurance business, profitability and safety of operations.
- The Group’s profit before tax for 2016 is planned between EUR 80 and 90 million.
Zavarovalnica Triglav and the Triglav Group consistently implement the Triglav Group Strategy for the 2013–2017 period, which the Company’s Management Board adopted in November 2013.
The values, which are realised through personal relations and relations with the environment on a daily basis, both connect and distinguish the Triglav Group from others. They guide the Group in the performance of its activities and the realisation of its vision and strategic guidelines. Moreover, they help identify opportunities, reward client relationships and business partnerships, and implement prudent risk management.
We are building a safer future.
- Professionalism. Business objectives are pursued through state-of-the-art insurance/financial services provided by highly professional employees. The Triglav Group is the key promoter of professional development of insurance/financial services in the environment.
- Security. Safe operations are guaranteed by efficient risk management. The Group’s high-quality products and services improve the financial security of clients.
- Simplicity. Everything we do must bring benefit and generate value. Jointly and rapidly, unnecessary complexity and red-tapism are eliminated. Products and processes are being simplified without reducing the high level of professional competence.
- Corporate social responsibility. The sustainable development of the Triglav Group (balancing of people, environmental awareness and profitability) is based on corporate social responsibility, implemented as economic, legal, ethical and philanthropic responsibility.
Vision of the Triglav Group
The Triglav Group’s business operations are profitable and secure. Measured by written premium, the Group is the largest insurance company in South-East Europe. The combined ratio is around 95%. Return on equity (ROE) is planned to be above 10% during the period until 2017.
The long-term profitable growth of the Triglav Group originates from very competitive, high-quality services, effective risk management and financial stability of the Group, which will help maintain the standalone »A« rating assigned by an established credit rating agency. Members of the Group achieve higher levels of reputation than their competitors. They are distinguished by comprehensive insurance/financial services offered through modern sales channels. Clients perceive the Group’s products as simple and desirable. The Group reaches at least a 10% market share on all of its foreign markets and ranks among the top three insurance companies in all key markets in terms of premium. The Group has a well-regulated and efficient governance system and follows the principles of modern organisation in all areas of business. Its processes are lean and streamlined. Dedicated and highly-qualified employees are the basis of the Group’s sustainable development.
The Group is focused on its core insurance business, placing emphasis on profitability and safety of operations.
Strategic guidelines by 2017
- Profitable operations and greater value of the Triglav Group;
- client-focused approach;
- simplification and cost-efficiency of business processes and adequate staffing structures;
- achieving adequate growth and profitability rates on key markets and efficient corporate governance of the Triglav Group’s companies.
Business and financial risks are thoroughly defined so as to avoid careless risk exposure.
Key strategic objectives by 2017: Throughout the entire period, return on equity will exceed 10%, while a stable combined ratio will be around 95%.
Prudent expansion of the Triglav Group: The Triglav Group plans future growth and development in target markets of South-East Europe. On the Slovene market, it will focus on profitability and maintaining the largest market share. So as to further expand and develop on the domestic market, special attention will be paid to health and pension insurance products.
Dividend policy: The dividend policy of Zavarovalnica Triglav is based on the Triglav Group’s target capital adequacy, which is the foundation of safety of its operations. The policy takes into account not only the planned volume of business and the related foreseen capital needs in the Slovene and strategic markets but also the guidelines and good practices of the insurance sector. See Section Dividend policy for more details.
For measuring the implementation of strategic objectives, a balanced scorecard with projections until 2017 has been developed and linked to concrete strategic activities.
|1. Employees, competences and learning level ||2. Process and organisation level|
|3. Client level||4. Finance level |
Planned objectives achieved in 2015
in EUR million
|Gross written premium from insurance and co-insurance contracts|
|Gross claims paid|
|Profit/loss before tax|
|Equity as at 31 December|
|Combined ratio in non-life insurance|
The Triglav Group implemented its strategy, placing focus on the core insurance business, profitability and safety of operations. Despite demanding conditions on the insurance markets, the Group and the Company once again performed well as confirmed by the results achieved. The Triglav Group generated a net profit of EUR 88.9 million and surpassed the budgeted net profit by as much as 24%, whilst the Group’s profit before tax was 20% higher than planned, reaching EUR 102.5 million.
The Triglav Group maintained its financial strength and stability as reflected by the reaffirmed high credit rating and key financial categories for 2015. The credit rating agencies S&P and A.M. Best reassigned the »A–« credit rating with a positive medium-term outlook as Standard & Poor's upgraded it from stable to positive. The credit ratings continue to reflect solid capital adequacy, high profitability and strong competitive position of the Triglav Group on both the Slovene market and the Adria region (see Section Credit rating of the Triglav Group and Zavarovalnica Triglav for more details).
The total equity capital of the Triglav Group as at 31 December 2015 was 1% lower than planned or EUR 704.0 million nominally, predominantly as a result of higher dividend payments and reduced fair value reserve (see Section Financial standing for more details).
The combined ratio in non-life insurance of the Triglav Group reached 92.8%, exceeding the budgeted level by 3.5 percentage points (the combined ratio is a measure of profitability in core insurance operations excluding investment return). The combined ratio of the Group and most of its insurance companies improved primarily due to non-occurrence of major mass loss events such as those in 2014 (see Section Financial result for more details).
Despite the challenging market conditions, the Triglav Group performed well in core insurance operations. Compared to 2014, total written premium of the Group was 4% higher than planned as a result of the acquisition of Skupna pokojninska družba and an increase in premium of insurance subsidiaries on all markets outside Slovenia. In the Slovene insurance market, 1% less in written premium was charged by the parent company, whereas Triglav, Zdravstvena zavarovalnica recorded 1% higher written premium than in 2014. Insurance premium is discussed in greater detail in Section Gross written premium from insurance and co-insurance contracts.
Gross claims paid were 7% below the budgeted level. The main reason was lower gross claims from non-life insurance as 2014 was marked by mass loss events. Gross claims paid from life insurance increased predominantly as a result of the acquisition of Skupna pokojninska družba (see Section Gross claims paid for more details).
In 2016, the Triglav Group will consistently pursue its strategic objectives, again placing emphasis on financial stability reflected in the high credit rating, safety and profitability of operations. The Group will continue with the activities to strengthen and consolidate its position in the region, taking into consideration the specificities of and opportunities in the respective markets.
The following assumptions and circumstances were taken into account in drawing up the Group’s plan:
- Macroeconomic environment in the Adria region: In the coming year, the macroeconomic environment will be somewhat more favourable for the business of the Triglav Group. According to projections, Slovenia will record the economic growth of 2.3% in 2016, which is slightly higher than the overall euro area; however, its growth will largely depend on the stability of the recovery of its export partners and the effectiveness of fiscal consolidation. In the regions in which the Triglav Group subsidiaries operate, the economies will slightly recover, particularly as a result of higher external demand and growth in investment consumption in some countries. Apart from the already present macroeconomic imbalances, the economic environment could be significantly affected by political changes.
- Insurance markets of the Triglav Group: The forecast improved macroeconomic situation in the region will be reflected in the insurance markets with a certain delay and gradually. In 2016, the Group’s insurance companies will operate in highly competitive environment and will be exposed to the risks of lower demand for insurance products, policyholders defaulting on the payment of premiums and the risks related to the selection of underwritten risks.
- The life insurance segment will be affected by a high number of maturities due to the aging of the life insurance portfolio and surrenders. The non-life insurance segment will be impacted by measures to retain high-value and loyal clients with client loyalty programmes, repricing to match competition and measures to improve insurance technical results in individual non-life insurance classes.
- Loss events (floods, hail, storms, etc.): Approximately the same development, number and extent of individual loss events (floods, hail, storms) as in past years is foreseen. The year 2015 was extremely favourable in terms of frequency and magnitude of loss events.
- Situation on capital markets: Given the current unchanged global economic growth outlook, credit spreads on corporate bonds are not expected to change significantly in 2016. The growth outlook for stock indexes of developed economies is moderately optimistic, especially the European, as the strengthening of the economy will be backed up by ample support from the ECB's liquidity. The main source of uncertainty could be an uncontrolled slowdown in growth in emerging markets and their global impact on stock markets.
Business guidelines and plan for 2016:
Financial stability. Maintaining a high financial stability and safety of operations of the Triglav Group. Maintaining the credit rating remains one of the most important strategic goals of the Triglav Group, because a high credit rating promotes even more competitive sale of insurance and reinsurance products in all target markets, gives access to a wider circle of investors in financial markets, enables relatively low costs of funding, increases goodwill and brings higher credibility. Therefore, in 2016 the objective is to keep stable credit ratings by the credit rating agencies S& P and A.M. Best.
Strengthening and consolidation of the position on the existing markets. Strengthening and consolidating the position in the existing markets will remain a priority for the Triglav Group, taking into account their specificities and opportunities. The Triglav Group insurance companies will aim to expand the scope of their operations and increase the profit from the core insurance business. To this end, the business model of Triglav INT was introduced in 2015, based on which this holding company took over the entire corporate governance and supervision of the Group’s insurance subsidiaries outside Slovenia.
Insurance business. Sales activities will be even more focused on clients and on developing and increasing the efficiency and development of internal and external sales networks. In the marketing approach, emphasis will be placed on the quality, simplicity, transparency and a high standard of services, supplemented with a penetrating market strategy. The Triglav Group will particularly focus on pension and health insurance segments.
Loss events: In 2016, the Triglav Group insurance companies will aim to improve the claim settlement process so as to satisfy client needs.
Financial investments: The Triglav Group’s investment policy will be based on adequate levels of investment security and liquidity, followed by the criterion of profitability. The financial risk calculations, arising from the investment structure on the one hand and from asset backing liabilities and guarantee funds on the other, will be the basis for formulating optimal investment guidelines, taking into account both the current and expected guidelines and models, such as S&P and Solvency II. A relatively conservative investment structure will be maintained or even strengthened, placing emphasis on fixed-return investments and on continuing to invest in the financial markets that provide better liquidity, appropriate diversification and the expected return.
Solvency II. In 2015, Zavarovalnica Triglav completed the development activities for implementing the Solvency II requirements. The Company’s risk profile is adequately balanced and represents a guarantee for long-term, financially stable and profitable operations. With regard to assets and liabilities, adjustments were made to account for the amended calculation of capital requirements in the Company. It is estimated that the capital adequacy of the Triglav Group, also measured in accordance with the Solvency II methodology, will remain sufficiently high. In 2016, regular activities will begin involving the preparation of reports, change and trend analyses, and the transfer of knowledge to the Group’s insurance subsidiaries.
The Group’s business plan for 2016 takes into account still challenging and highly competitive conditions on the insurance markets of the Group, the expected loss result and lower returns on financial investments compared to 2015.
Financial highlights of the Triglav Group business plan for 2016
in EUR million
|Profit/loss before tax|
|Gross written premium from insurance and co-insurance contracts|
|Combined ratio in non-life insurance|