A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of Pozavarovalnica Sava d.d. (Sava Re) (Slovenia), the operating holding company of the Sava Re Group. The outlook of these Credit Ratings (ratings) remains stable.
The ratings of Sava Re reflect its very strong balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Save Re's very strong balance sheet strength is supported by its strong risk-adjusted capitalisation, which benefits from excellent internal capital generation, consistently positive reserve development and good financial flexibility, with access to both capital and debt markets. A.M. Best expects Sava Re's consolidated risk-adjusted capitalisation to remain strong in 2017, supported by solid earnings. Sava Re's adequate operating performance is driven by its good underwriting income. For the first six months of 2017, the company reported a pre-tax profit to EUR 22 million, compared with EUR 20 million for the same prior-year period. This mainly reflected improved performance in its Slovenian non-life portfolio, which offset a slightly deteriorating profitability in its international business due to a higher frequency of losses. The group's focus on underwriting discipline, supported by positive foreign exchange rate movements, resulted in a combined ratio of 94%, excluding foreign exchange differences, for the first half of 2017 (first half of 2016: 96%). Absent a major loss event occurring in the remainder of 2017, A.M. Best expects Sava Re's net earnings in 2017 to be similar to the post-tax profits of EUR 33 million reported for 2016.
Sava Re's business profile benefits from the company's strong position in its core market of Slovenia, where it had a 17% market share in 2016. The group also benefits from its leading profile within the smaller insurance markets of the West Balkans and continues to develop its competitive position in the international reinsurance markets. Growth in premium volume is expected to be modest in 2017. This reflects the impact of the challenging albeit improving economic and insurance operating conditions in Slovenia and the highly competitive international reinsurance markets.
Sava Re's ERM is appropriate given the size and complexity of its operations. A.M. Best considers the company's risk management capability to be well-aligned with its risk profile, which is supported by its focus on short-tailed business lines and conservative reserving that limits underwriting risk.
This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases
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