Dear Shareholders and Readers,
The ramifications of this year's natural disasters, notably the severe hail and wind storms and the August floods, have led to an increased need to support our policyholders and historically high claims. Their impact was mitigated thanks to our adequate reinsurance protection. Our operations were significantly affected by the government regulation of the price of supplemental health insurance in Slovenia, resulting in losses in this business segment and reducing the Group's total earnings. We will no longer offer supplemental health insurance in 2024. However, we will continue to develop and sell commercial health insurance products in the markets of the Adria region, as we believe they have significant long-term potential. Lastly, inflationary pressures on claims and expenses continued to impact our operations for the second year running.
In this challenging environment, we demonstrated our flexibility and resilience, which is bolstered by our robust business model and effective risk management system. We maintained our leading market position in the region and continued to ensure profitable and safe operations. This report provides detailed insights into our operations, including year-on-year comparisons in accordance with the new IFRS. Net earnings of EUR 21 million before tax were generated, falling short of the planned figure due to the impact of one-off events. However, we are pleased with the performance of the income side of our business, as double-digit growth contributed to an increase in both business volume and contractual service margin. Nevertheless, challenges persisted, with losses in the Health segment, mass CAT claims and claims inflation resulting in an increase in the claims ratio and subsequently the combined ratio, which reached 101.6%. Fortunately, the financial markets' favourable conditions allowed us to achieve a strong investment result, positive other comprehensive income and a strong performance in asset management.
We successfully ensured the financial stability and adequate capitalisation of the Group, as confirmed by the high "A" credit ratings we received again, with a stable medium-term outlook. These ratings, assigned by S&P Global Ratings and AM Best, have been consistently maintained for the past eight years.
Insurance and asset management
Our total business volume increased by 12% to EUR 1,780 million, with the same growth rate recorded in gross written premium, amounting to EUR 1,654 million. In Slovenia, where 63% of the Group's premium is collected, growth stood at 9%, aligning with market trends. In the other markets of the Adria region, the increase stood at 7%, while in the international market, where we primarily operate under the principle of free movement of services and conduct active reinsurance business, growth reached 28%.
The expansion of our business volume was driven by a strategic and comprehensive focus on our clients, accompanied by appropriate adjustments to pricing policies to account for inflation. The effects of these adjustments partly resulted in an increase in insurance revenue, with the full impact expecting to manifest in future financial periods. We also responded to inflationary pressures by implementing various measures related to claims settlement and the management of operating expenses.
Benefitting from a favourable financial market environment, we delivered strong performance in the investment segment and managed clients' assets in mutual funds and via discretionary mandate services, where the volume of assets under management soared by 29%, driven by net inflows and favourable market conditions. With a 31% market share, the Group stands as one of the leading managers of mutual fund assets in Slovenia. In the insurance segment of our business, we achieved a strong result in the Life and Pension segment. While a positive result was recorded in the Non-Life segment, the Health segment experienced a loss. The results of both of these segments were significantly influenced by the aforementioned one-off events. Moreover, the conservative structure and quality of our investment portfolio, which grew by 4% to EUR 3,399 million, remained largely unchanged, in line with our investment policies.
Implementation of the dividend policy
Our aim is to ensure that the ZVTG share remains an attractive, secure and stable investment option for investors. As planned, we implemented our attractive and sustainable dividend policy, distributing dividends equivalent to 51% of consolidated net earnings for 2022, amounting to EUR 2.50 gross per share, to our shareholders in 2023. This resulted in a total share return of 8%, with a dividend yield of 7%.
Strategic focus on development and sustainability
We remain committed to our mission of creating a safer future for our clients, employees and shareholders. This commitment drives our strategic activities, turning words into action.
Our range of products and services continues to be expanded and upgraded to better serve our clients and adapt to the unique characteristics of each of the Group's market. We are also enhancing processes and communication channels with our clients. In 2023, our sales network was reorganised, accompanied by various activities in support of our digitalisation efforts across the Group so as to achieve a leaner organisational structure. Clients recognise our efforts and, as indicated by the NPS, their satisfaction with us is at a high level. We are particularly proud of this in what was a challenging year due to a considerable increase in the volume of claims as a result of extreme weather events and adjustments of premium to claims inflation. We recognise that our success hinges on the dedication of our employees. Therefore, we are pleased to see that their satisfaction scores affirm their commitment, unity and loyalty. On behalf of the Management Board, I would like to extend our gratitude to them for their unwavering dedication.
In both of our strategic activities, we continue to deliver on our strategic sustainability ambitions and support the transition to a climate-neutral and climate-resilient economy. The Group's Scope 1 and 2 carbon footprint and electricity consumption was reduced by 6%. By upholding high standards of corporate governance, we strive to foster a culture of diversity, equality and inclusion. Women make up 55% of our workforce and 47% of our senior managers. Working together with the community and various partners, we continue to contribute to a number of socially and environmentally responsible projects.
Throughout the Group's more than 120-year history, we have stood by our clients through many difficult times, successfully overcoming a variety of challenges, including those encountered in 2023. Looking to the future, I am confident that we are well prepared for whatever lies ahead. On behalf of the Management Board and all of the Triglav Group employees, I sincerely thank you for your trust in us.
Andrej Slapar
President of the Management Board of Zavarovalnica Triglav