TRIGLAV GROUP WE ARE BUILDING A SAFER FUTURE TRIGLAV GROUP Key Features
Core business – 3 pillars Insurance Third-party asset management Banking
Triglav Group Parent company Zavarovalnica Triglav, d.d. 31 subsidiaries and 12 associated companies Market presence in 8 countries
S&P rating A/stable
Key figures H1 2011 GPW: 549.9 mio EUR (-1%) Net profit: 34.1 mio EUR Combined ratio: 89.0% (-9 p.p.) Equity: 514 mio EUR (+3 %) TRIGLAV GROUP The core business is insurance
Insurance Profit by business in 2010
Non-life 40 Life 27,8 Supplementary pensions 30 Health 20
Asset management 5,8 Mutual funds In EUR million 10 0,4 Investment companies -7,4 Investment holdings 0 Real Estate -10
Banking NON-LIFE LIFE HEALTH OTHER Significant interest in Abanka Vipa, d.d.
3 TRIGLAV GROUP Market presence with non-insurance businesses according to local opportunities/needs
Banking Other Insurance Asset management (presence only trough (Supporting bussines) significant interest)
Slovenia Zavarovalnica Triglav, d.d. Triglav DZU, d.o.o. Abanka Vipa, d.d. Triglav INT, d.d. Pozavarovalnica Triglav Re, d.d. Triglav Naložbe, d.d. TRI-PRO, d.o.o. Triglav, Zdravstvena zavarovalnica, d.d. Triglav nepremi čnine, d.d. AS Triglav, d.o.o. Triglavko, d.o.o. Skupna pokojninska družba, d.d. Croatia Triglav Osiguranje, d.d. Bosnia in Triglav BH Osiguranje, d.d. Polara Invest, d.d. Autocentar BH, d.o.o. Herzegovina Triglav Krajina Kopaonik, a.d. PROF-IN, d.o.o. TRI-PRO BH, d.o.o. Unis automobili i dijelovi, d.o.o. Serbia Triglav Kopaonik, a.d.o. Triglav penzijski fondovi, a.d. Montenegro Lov ćen Osiguranje, a.d. Lov ćen Avto, d.o.o. Lov ćen životna osiguranja, a.d. Macedonia Vardar osiguruvanje, a.d. Czech Republic Triglav Pojišt'ovna, a.s.
4 TRIGLAV GROUP MARKETS Slovenia: Zavarovalnica Triglav and Triglav, zdravstvena zavarovalnica
Gross premium written H1: -2% Market development in 2010: 435.7 m EUR Insurance penetration: 5.9% Market share (2010): 40.8% -1.2 p.p. GPW: 1,942 m EUR (+1%) Market position: 1 Insurance density: 1,020 EUR per capita Gross operating costs H1: -3% 84.6 m EUR Major events: Gross claims paid H1: +7% 240.1 m EUR New strategy of the group strictly implemented Combined ratio H1: 86.1% Immense improvement in profitability Impairments of financial instruments
5 TRIGLAV GROUP MARKETS Croatia: Triglav osiguranje
Gross premium written H1: +2% Market development in 2010: 31.0 m EUR Insurance penetration: 2.8% Market share: 4.4% +0.1 p.p. GPW: 1,268 mio EUR (-2%) Market position: 7 Insurance density: 286 EUR per capita Gross operating costs H1: -1% 8.1 m EUR Gross claims paid H1: -6% Major events: 13.1 m EUR Favourable trend in key Combined ratio H1: 107.2% performance ratios Asset management software fully implemented
6 TRIGLAV GROUP MARKETS Serbia: Triglav Kopaonik
Gross premium written H1: +5% Market development in 2010: 10.5 m EUR Insurance penetration: 1.8 % Market share: 3.5% +0,2 p.p. GPW: 550 m EUR (-2 %) Market position: 7 Insurance density: 75 EUR per capita Gross operating costs H1: +21% 6.2 m EUR Major events: Gross claims paid H1: +67% 4.6 m EUR Continuous, but relatively costly growth of market share Combined ratio H1: 109.9% Strengthening of technical reserves
7 TRIGLAV GROUP MARKETS Bosnia and Herzegovina: Triglav BH osig., Triglav Krajina Kopaonik osig.
Gross premium written H1: +3% Market development in 2010: 11.3 m EUR Insurance penetration: 1.5% Market share: 8.7% -0,0 p.p. GPW: 244 m EUR (+4%) Market position: 3 Insurance density: 65 EUR per capita Gross operating costs H1: 11% 5.0 m EUR Gross claims paid H1: -20% Major events: 4.0 m EUR Stable market share Combined ratio H1: 100.7% Growth of acquisition costs due to challenging distribution environment
8 TRIGLAV GROUP MARKETS Montenegro: Lov ćen osiguranje
Gross premium written H1: -2% Market development in 2010: 16.5 m EUR Insurance penetration: 1.6 % Market share: 53.1% -1.5 p.p. GPW: 63 m EUR (-4%) Market position: 1 Insurance density: 99 EUR per capita Gross operating costs H1: -26% 4.8 m EUR Major events: Gross claims paid H1: -6% 8.8 m EUR Turnaround strategy and management yielding results Combined ratio H1: 99.1%
9 TRIGLAV GROUP MARKETS Macedonia: Vardar osiguruvanje
Gross premium written H1: +5% Market development in 2010: 11.2 m EUR Insurance penetration: 1.2 % Market share: 20.6% -0.7 p.p. GPW: 105.5 m EUR (+5%) Market position: 1 Insurance density: 51 EUR per Gross operating costs H1: +18% capita 2.6 m EUR Gross claims paid H1: +1% Major events: 6.4 m EUR Reasonable premium growth Combined ratio H1: 96.2% Restructuring of insurance portfolio Higher costs due to non-personnel overhead
10 TRIGLAV GROUP MARKETS Czech republic: Triglav Pojišt’ovna
Gross premium written H1: +5% Market development in 2010: 14.4 m EUR Insurance penetration: 4.0% Market share NL: 0.8% -0.04 p.p. GPW NL: 3,188 m EUR (0%) Market position: 11 Insurance density: 568 EUR per capita Gross operating costs H1: +8% 4.2 m EUR Gross claims incurred H1: +6% Major events: 8.7 m EUR Measures for the improvement in Combined ratio H1: 99.9% profitability being introduced and already yielding results
11 PERFORMANCE OF TRIGLAV GROUP IN H1 2011
In EUR million 1-6 2011 1-6 2010 INDEX Gross premium written 549,9 557,1 99 Net premium earned 456,9 467,4 98 Gross claims paid 296,7 278,0 107 Net claims incurred 282,5 287,3 98 Gross operational costs 114,4 115,7 99 Profit before Tax 49,0 24,3 201 Profit after Tax 34,1 17,9 190 30. 6. 2011 31. 12. 2010 INDEX Total assets 3.122 3.024 103 Insurance contract provisions 2.342 2.271 103 Equity 514 499 103 Number of emploeyees 5.155 5.247 98 1-6 2011 1-6 2010 Loss ratio 61,3% 69,3% Expense ratio 27,8% 28,6% Combined ratio 89,0% 97,8%
12 INVESTMENT PORTFOLIO Consistent investment strategy
Structure of portfolio investments
Main drivers in H1 2011: Restructuring of portfolios towards liquid short term instruments Drop of share prices on LJSE Raising credit spreads Raising interest rates Impairments of non-listed assets Very limited exposure to PIIGS (marked to market, Greeks impaired through P&L to expected recovery)
13 FIXED INCOME INVESTMENT PORTFOLIOS Portfolios still dominated by sovereign bonds, but restructured towards
Structure of bond portfolio by issuer Structure of bond portfolio by rating
14 NET PROFIT Profit growth and combined ratio improvement as a result of lower net claims and costs Net profit H1 2011 Combined ratio H1 2011 60 140% -8,8 p.p. 50 +90,0% 120% 97,8% inmillion EUR 100% 89,0% 40 34,1 80% 30 60% 20 17,9 40%
10 20%
0 0% 1-6 2010 1-6 2011 1-6 2010 1-6 2011 Net profit 2007-2010 Combined ratio 2007-2010 60 54,5 110% 103,6% 104,0% 50 105% 101,4% 40 100%
30 26,6 95% 20 In EURIn million 90% 92,0% 10 1,0 85% 0 2007 2008 2009 2010 80% -10 2007 2008 2009 2010 -6,3
15 STRONG CAPITAL BASE Solvency ratios and technical provisions follow the strategy and demanding business conditions
Solvency ratios Gross insurance technical provisions
200% 2.400 2.342 186% 2.271 2.300 166% 174% 175% 164% 2.162 151% 2.200
146% 150% 2.100 Solvency In EUR million EUR In
2.000 1.918 125%
1.900 1.815
100% 1.800 39082 31.12.2007 31.12.2008 31.12.2009 31.12.2010 30.06.2011 31.12.2007 31.12.2008 31.12.2009 31.12.2010 30.06.2011
16 RECENT EVENTS Current activities inline with strategic objectives and guidelines
The sell of the interest in Abanka Vipa – the process expected to start in Q3 2011
The entry in Albania being further negotiated
Triglav INT Zavarovalnica Triglav is going to transfer the ownership of all insurance subsidiaries abroad to Triglav INT NDA and Equity Appraisal Letters signed with IFC in June 2011 Term sheets to be negotiated in Q3 and Q4 2011 – IFC intends to pay in additional equity to Triglav INT and to obtain up to 20 % ownership rights of Triglav INT The strategy of Triglav Group is to retain at least majority (>50 %) ownership of Triglav INT
17 TRIGLAV GROUP PLANS FOR 2011 Stable premium growth with high growth of profits
In EUR million Index 2009 2010 Plan 2011 2010/2009 2011/ 2010 Gross premium written 1.022,3 1.013,6 1.024,6 99 101 Net premium earned 946,3 946,2 943,8 100 100 Gross claims paid 597,2 588,3 643,7 99 109 Net claims incurred 610,9 557,7 625,7 91 112 Gross operating costs 239,1 239,9 236,2 100 98 Profit /loss before Tax 2,1 43,3 65,4 2.078 151 Profit/loss net -6,3 26,6 54,2 203 Plan Index 31.12.2009 31.12.2010 31.12.2011 2010/2009 2011/ 2010 Total balance sheet 2.866,0 3.024,4 3.265,6 106 108 Gross insurance contract provisions 2.161,8 2.270,9 2.414,8 105 106 Equity 477,8 499,0 606,7 104 122 Number of employees as at 31. Dec. 5.237 5.247 5.069 100 97 Change in proc. points 2009 2010 Plan 2011 2010/2009 2011/ 2010 Claims ratio 30,1% 30,1% 28,4% 0,0 -1,7 Expense ratio 73,9% 61,9% 69,3% -12,0 7,4 Combined ratio 104,0% 92,0% 97,7% -12,0 5,7 TRIGLAV GROUP STRATEGY Stable GPW growth in the strategic period
1.200 1.022,3 1.085,0 1.102,8 1.013,6 1.024,6 1.046,2 1.067,2
1.000
784,0 740,8 754,7 769,0 800 729,4 719,7 724,4
600 in EUR million EUR in 400 222,2 216,1 225,7 221,4 213,2 208,5 202,3 200 116,5 67,1 72,4 78,0 89,2 99,3 107,5
0 2009 2010 Budget 2011 Budget 2012 Budget 2013 Budget 2014 Budget 2015
Non-life Life Health Total
Assumed factors, that are going to influence the operations in strategic period: Economic stagnation on all key markets with frequent turbulences Changing customer behaviour patterns (stagnation of buying power, need to lower debt burden of private individuals, companies and countries) Strong competitors in SEE markets focusing on higher market share
19 THE STRATEGY OF TRIGLAV GROUP Moderate expansion with focus on profitability
Triglav Group Goals for 2015 Return on equity (end of strategic period target): 12% Net combined ratio: 94.7% stable Gross premium written: 1.1 billion EUR Profitable operation of all subsidiaries
20 INVESTOR RELATIONS CONTACTS
Igor Stebernak + 386 1 47 47 556 Member of the Board igor. [email protected]
Uroš Ivanc + 386 1 47 47 468 Executive director - finance [email protected]
21 DISCLAIMER
The information, statements or data contained herein has been prepared by Triglav Corporate officers. Zavarovalnica Triglav, d.d., or any member of Triglav Group, or any Zavarovalnica Triglav employee or representative accepts no responsibility for the information, statements or data contained herein or omitted here from, and will not be liable to any third party for any reason whatsoever relating to the information, statements or data contained herein or omitted here from. Such information, statements or data may not be prepared according to the same standards and requirements than the information, statements or data included in Triglav’s own reports and press releases are prepared to, and accordingly the level of information and materiality and nature of the disclosures may be different. Undue reliance should not be placed on the information, statements or data contained herein because they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results to differ materially from those expressed or implied in such information, statements or data. Moreover, the information, statements and data contained herein have not been, and will not be, updated or supplemented with new or additional information, statements or data.
22 TRIGLAV GROUP The profile of our professionals reflects our geographical presence and ambitiousness
.
. 5,247 employees, as at 31.12. 2010: . 2,441 in Zavarovalnica Triglav . 2,964 in Slovenia . 2,283 abroad .
Slovenia Abroad ZT Structure according to location Structure according to education
M Sc. & Ph. D. 2,1% I.-IV. Degree 22,3%
Abroad VII. Degree 43,5% 27,5%
In Slovenia 56,5% VI. Degree V. Degree 10,6% 37,5%
23 CONTENTS
1. TRIGLAV GROUP
2. STRATEGY AND INVESTMENT
STORY 3. TRIGLAV GROUP’S H1 2010 RESULTS AND KEY MARKETS
4. A LOOK AHEAD
24 INVESTMENT STORY From high growth and fast expansion to profitable operations
Leading insurance company in Slovenia – expansion started in 2000 Fast growth in Slovenia, especially life insurance Entry into private pension business In part a regional strategy – besides Slovenia also present in Croatia, Czech Republic and Montenegro
Fast growth in the markets of former Yugoslavia Limited growth potential of Slovenian insurance market High growth potential and knowledge level of relatively undeveloped insurance markets of former Yugoslavia – entry on all markets in former Yugoslavia region Biggest insurance group in Western Balkans
Focus on profitability and selective expansion Profitability of the core business result of consolidation of business functions, prudent selection of insurance risks, transfer of know-how – exploiting potential of existing markets Growth of operations and expansion of insurance lines in existing markets, prudent entry in new insurance markets Efficient system of risk management compliant with Solvency II
25 THE STRATEGY OF TRIGLAV GROUP The strategy for 2010 -2015
WE ARE BUILDING A SAFER MISSION FUTURE.
STROKOVNOST VARNOST VREDNOTNI SISTEM TRIGLAV VALUES
DRUŽBENA ODGOVORNOST THE STRATEGY OF TRIGLAV GROUP Vision 2015
Profitable and safe operation Competitiveness and quality of services Efficient risk management Financial stability of Triglav Group – retaining A rating
Superior image of Triglav Group Recognised by complete financial & insurance services Modern distribution channels Organised and efficient corporate governance Principles of modern organisation introduced in all segments of operation
Enthusiastic and highly professional employees are the basis of our ongoing development
27 THE STRATEGY OF TRIGLAV GROUP Strategic guidelines and projects Guidelines Establishing effective corporate governance system Optimisation of business processes and structure of human resources Profitability of operations and increasing the value of the Group Expansion on existing and new markets Development of alternative distribution channels Entry into new key projects, where the expected rate of return exceeds the required rate of return
Projects IT (Build, Life, Foreign operations) Business processes reengineering Solvency II Banking distribution channels Study of establishment of private medical services and long-term care services Entry of strategic partner in Triglav INT as source of additional capital, risk sharing of further business expansion and efficient relationship management with local regulators
28 THE STRATEGY OF TRIGLAV GROUP Selective investment in growth and development of insurance in target markets
Slovenia High density in non-life insurance segment Focus on profitability with goal to retain position of market leader Increase the depth of Slovenian market and development of the Group in the field of health and pension insurance The domicile market of the Group, but does not ensure sufficient growth rates to reach the strategic goal – top 3 insurance group in target region, which leads to searching for new opportunities in other target markets
Target markets in South-eastern Europe Development in long term, but highly promising markets Goal on existing markets is to acquire or retain target market shares under the rationality principle assumption Entry to new insurance segments on existing markets (life, health and pensions) New market entry in target region
Potential of Triglav Re
29 THE EXPECTED DEVELOPMENT OF INSURANCE MARKETS GDP growth and low insurance density key growth drivers on target markets
4.000
3.000
2.000 EU15
1.000 SLO MCD ROM
GPW percapitaUSD) GPW ( CZR - CRO 1.000 SER BUL 10.000 100.000 GDP per capita (USD)
4.000
3.000 EU16
2.000 SLO 1.000 MCD BUL CZR ROM CRO GPW per capitaperUSD) GPW ( - SER 1.000 10.000 100.000 GDP per capita (USD)
30 LONG TERM PROSPECTIVENESS OF TARGET MARKETS High catch-up potential
Insurance density 2010 2.064
2x 2x 2x 4x 7x 7x 18x 21x 22x 23x 27x 32x 41x 18x 20x 26x 27x 27x 41x 26x 27x 41x 1.020
568
286 93 115 99 92 75 65 51
EU - 27 SLO CZR CRO BUL MN ROM TUR SER BIH MCD Non-Life Life • Low insurance density on target markets • Development and growth in sales of new insurance products • Life insurance growth • Regulation: pension, health, tax 31 THE STRATEGY OF TRIGLAV GROUP Sources and capital requirements in the strategic period
Strategic projects Solvency II (QUIS studies point to higher capital needs at given level of operation) Target rating (rating agencies expected to follow Solvency II requirements, Triglav Group has insufficient capital to ensure A rating on a stand-alone basis ) Internal and external growth (the growth of operations of existing companies, takeovers and/or Greenfields require additional capital) Development of banking distribution channels
Ensuring capital Retained earnings not sufficient to achieve strategic goals Capital support of Triglav INT strategic partner will be limited New share issue as major source of capital to manage solvency position
32 GROSS PREMIUM WRITTEN IN H1 2011 Lower demand, measures taken to increase profitability Non – Life GPW Total GPW 700
557,1 600 -1,3% 549,9 in in EUR million
-1,0% million EUR in , , 500
400
300 200 100 0 - - Life GPW 1-6 2010 1-6 2011 700 Main drivers H1 2010: 600 Lower demand for life insurance products in EUR million EUR in 500 and mature life insurance portfolio 400 MTPL – adjustments made in cover and 300 pricing to tailor-made client needs (differentiation of premium) 200 -2,4% 110,8 108,2 100 Introduction of obligatory deductibles and the decrease of sum insured for crop 0 insurance 1-6 2010 1-6 2011
33 GROSS PREMIUM WRITTEN IN H1 2011 Gross premium written structure by insurance classes
Motor liability insurance 21,6%
Life insurance 20,4%
Property insurance 19,9%
Motor hull insurance 15,7%
Health insurance 7,5%
Accident insurance 5,3%
General liability insurance 4,3%
Other insurance 3,3%
Credit insurance 1,9%
0% 5% 10% 15% 20% 25%
34 GROSS CLAIMS PAID IN H1 2011 Effective measures, lower frequency and intensity of CAT losses
Non – Life Claims Total Claims 400
+6,7% 296,7 in in EUR million -1,4% EUR million in 300 278,0 , ,
200
100
- - 0 Life Claims 1-6 2010 1-6 2011 400 Major drivers in H1 2011: Lower frequency and intensity of CAT losses in EUR million EUR in 300 More emphasis put on risk selection and underwriting Effective reinsurance protection adapted to new business 200 conditions (higher frequency and intensity of CAT +44,0% events in recent years, financial crises) 100 71,7 49,8 Increase in Life claims has no effect on results due to higher maturity and surrender rates 0 1-6 2010 1-6 2011
35 OPERATING COSTS IN H1 2011 Through effective measures to lower costs Non-life operating costs Total operating costs of ins. activities
140 140 115,7 -1,1% 114,4 120 -1,5% 120 97,4 95,9 inmillion EUR 100 100 inmillion EUR 80 80
60 60
40 40
20 20
0 0 1-6 2010 1-6 2011 1-6 2010 1-6 2011 Life operating costs 140
120 inmillion EUR 100
80
60 Major drivers in H1 2011: 40 +1,2% 18,3 18,5 Rationalisation 20
0 1-6 2010 1-6 2011
36 OPERATING RATIOS IN H1 2011 Combined ratio below 100 % Net Loss Ratio Combined ratio
140% 140%
120% 120% -8,0 p.p. 97,8% -8,8 p.p. 100% 100% 89,0%
80% 69,3% 80% 61,3% 60% 60%
40% 40%
20% 20%
0% 0% 1-6 2010 1-6 2011 1-6 2010 1-6 2011 Net Expense Ratio 140% Major drivers in H1 2011: 120% Favourable claims ratio 100%
80% Lower costs 60% -0,8 p.p. 40% 28,6% 27,8% 20%
0% 1-6 2010 1-6 2011
37 TRIGLAV GROUP Slovene government a controlling shareholder
Shareholders of Zavarovalnica Triglav as at 30.6.2011
Total Domestic Foreign Legal Natural
Number of shares 22.735.148 21.040.853 1.694.295 20.932.705 1.802.443 Number of shareholders 29.854 29.376 478 721 29.133
The top ten shareholders of Zavarovalnica Triglav as at 30.6.2011 Number of shares Share in %
Zavod za pokojninsko in invalidsko zavarovanje Slovenije, Ljubljana 7.836.628 34,47 Slovenska odškodninska družba, Ljubljana 6.380.728 28,07 NLB, d.d., Ljubljana 696.213 3,06 Claycroft Limited, Nicozija, Ciper 385.000 1,69 NFD 1, delniški investicijski sklad, d.d., Ljubljana 371.187 1,63 Poteza naložbe, d.o.o., Ljubljana - v ste čaju 346.570 1,52 Hypo Alpe-Adria Bank AG, Celovec, Avstrija 281.712 1,24 HIT, d.d., Nova Gorica 255.408 1,12 Raiffeisen Bank International AG (RBI), Dunaj, Avstrija 229.351 1,01 UniCredit Bank Austria AG, Dunaj, Avstrija 184.648 0,81
37.5% free float some changes in holdings of top ten shareholders
38 THE SHARE OF ZAVAROVALNICA TRIGLAV Valuation ratios close to the lowest values since share listing ,
,
,
,
,
,
,
. . . . . . . . . . . . . .. . .. . .... . .. . .. . .... . .. . .... . .. . . . . . .. . . .. . .... . ..
Slovene blue chip index ZVTG
30.6.2011 31.12.2010 31.12.2009
Number of shares 22.735.148 22.735.148 22.735.148 Bokk value of a share (in EUR) 21,06 21,19 21,00 Share market value - closing price (in EUR) 14,50 17,61 25,00 Market capitalisation (in EUR) 329.659.646 400.365.956 568.378.700 Net earnings/loss per share (in EUR) 1,34 1,41 -0,08 Dividend per share (in EUR) 0,40 0,00 Trading symbol ZVTG
39 TRIGLAV GROUP MARKETS The share of GPW outside Slovenia reached 18.2 % in 2010
The structure of GPW by insurance companies in Triglav Group
Triglav Kopaonik Lov ćen Osiguranje Triglav Krajina 2,0% 3,1% Kopaonik 0,5% Triglav Pojišt ΄ovna 2,7% Vardar Osiguruvanje 2,1% Triglav BH Osiguranje 1,6%
Triglav Osiguranje 5,8%
Triglav, Zdravstvena zavarovalnica 7,5%
Zavarovalnica Triglav 74,7%
40 TRIGLAV GROUP MARKETS Performance of Zavarovalnica Triglav in H1 2011
In EUR million 1-6 2011 1-6 2010 INDEX Gross premium written 396,1 410,1 97 Net premium earned 316,4 327,8 97 Gross claims paid 208,7 196,2 106 Net claims incurred 188,3 183,3 103 Gross operational costs 80,6 81,3 99 Profit before Tax 44,2 31,4 141 Profit after Tax 30,4 25,3 120 30. 6. 2011 31. 12. 2010 INDEX Total assets 2.665 2.593 103 Insurance contract provisions 2.042 1.985 103 Equity 479 482 99 Number of emploeyees 2.432 2.441 100 1-6 2011 1-6 2010 Loss ratio 57,4% 65,3% Expense ratio 26,3% 26,2% Combined ratio 83,7% 91,5%
41