Slovenia's leading insurance groups, Triglav and Sava, saw a decline in profit last year despite higher revenue and gross written premiums, a development they attribute to higher claims and inflation.

The market leader, Zavarovalnica Triglav posted a group net profit of €110 million, down by 2% on 2021 as revenue rose by 10% to €1.6 billion, according preliminary earnings report released on 3 March.

Meanwhile, Sava Insurance Group reported its net profit falling by 10% last year to €68.2 million as operating revenue rose by 3% to €753.6 million.

Catastrophic event payouts up at Triglav

Triglav's gross written premiums were up by 9% to €1.48 billion and net premium income rose by 6% to €1.19 billion. The group recorded premium growth across all insurance segments and markets. The fastest growing segment was non-life premiums, which rose by 12%.

However, gross claims paid surged by 13% to €832 million, in part because payouts associated with major catastrophic events were a fifth above their five-year average.

Gross operating expenses were up 12% to EUR 375 million, which the company attributes to the increased business volume and investment in digitalisation and other development activities.

"The increased business volume and the partial release of claims provisions created in past years effectively compensated for higher claims and operating expenses due to the higher activity of households and businesses, rising inflation and other impacts from the environment," board member Uroš Ivanc was quoted as saying.

The group's investment portfolio was negatively affected by share price declines and higher interest rate, resulting in an 11% decrease in the value of the portfolio, which stood at €3.27 billion. Its returns were negative.

Higher non-life claims depress Sava profit

Despite falling on the year before, Sava Re, the core company of the Sava Group, said the net profit figure was 13.7% above the target and translated into a return on equity of 14.9%, almost a quarter above the target set in the 2020-2022 strategy.

It cited higher non-life claims in Slovenia as the main reason for the lower earnings. "This decline of 10.4% compared with the record result the year before had been expected, given the rising claims frequency as the impact of the pandemic subsided and drivers took back to the road," the company said.

It also pointed to additional negative impacts from claims inflation and major weather-related claims, and to challenges associated with increasing geopolitical tensions and tightening global economic conditions.

Gross premiums written rose by 6.1% to €774.1 million. Premium growth in the non-life and reinsurance segments was even higher, partly as a result of inflation-adjusted price increases. In the international non-life segment, premiums were up by 19.2%.

The value of the investment portfolio decreased from €1.58 million to €1.42 million, which is attributed to the adverse financial market conditions and the resulting decline in the fair value reserve within equity.

"This is an accounting loss, and we do not expect losses to occur on bonds at maturity," the company said in a regulatory filing.

The return on the investment portfolio was 1.3%, lower than the year before and below the target.