AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Pozavarovalnica Sava d.d. (Sava Re) (Slovenia), the operating holding company of the Sava Insurance Group. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Sava Re’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Sava Re’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), liquid investment portfolio, prudent reserving and good internal capital generation collectively contribute to an overall balance sheet strength assessment of very strong. Additionally, the company exhibits low reliance on reinsurance and sound financial flexibility, with access to both equity and debt markets.

Sava Re’s operating results in 2023 were strong, driven by sound life and non-life underwriting performance, supplemented by healthy investment income, resulting in a return on equity (ROE) of 11.6% based on IFRS 17 (as calculated by AM Best). This is in line with the company’s track record of strong and stable operating results, as indicated by a five-year (2018-2022) weighted average ROE of 14.3% based on IFRS 4 (as calculated by AM Best). At year-end 2023, the combined ratio was 92.7% based on IFRS 17 (as calculated by AM Best), in line with the five-year (2018-2022) average combined ratio of 91.6% based on IFRS 4 (as calculated by AM Best). For the first half of 2024, Sava Re reported a strong net profit of EUR 44.5 million and a combined ratio of 89.7%. AM Best expects the full-year result to be in line with historical performance.

The Sava Insurance Group benefits from a strong position in its core domestic market of Slovenia, where it is the second-largest player and holds a market share of approximately 29% (excluding supplementary health insurance business) in terms of gross written premium. The group’s insurance business is dominated by premiums written in Slovenia; however, the company continues to expand in the West Balkan markets. AM Best expects to see further geographic diversification from Sava Re in the medium term in both the direct and reinsurance segments, as the group continues to develop its position prudently in the international reinsurance market.

AM Best considers Sava Re’s ERM to be developed and appropriate for the company’s risk profile and operational scope.

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