Together. At every moment. The Triglav Group and Zavarovalnica Triglav d.d. Annual Report 2020 This report is dedicated to the exceptional solidarity and Confirmation of engagement shown our resilience, by Triglav Group employees. stability and loyalty to clients. At the heart of the Triglav Group's business model is the creation of value for clients through an agile culture, digital transformation and new ways of doing business. The Triglav Group’s development strategy proved to be appropriate and operational even in a strongly changed environment, thus the planned strategic guidelines continued to be pursued. Strategy and plans Development and sales activities Together. At every moment. We are pleased that even in the uncertain situation brought about by the COVID-19 pandemic our operations were stable and that we stood by our clients. Address by the President of the Management Board Risk management Nataša Kaurin, Human Resource and Compliance Coordinator, Triglav Osiguranje, Banja Luka Building a safer future. “Living and working in an extraordinary situation For 120 years. is a special challenge due to restrictions and the precautionary principle in limiting the spread of the disease. The openness of co-workers to the different and new in this situation really means a lot. The COVID-19 pandemic is unprecedented and therefore there are no established good practices to follow, including in the field of human resource management. Despite the adapted models of operation, we have and must constantly learn and test, determine what works best and what will work in the future, and above all, co-operate and protect one another. It is necessary to look for a new work-life balance. Exercising outdoors has always helped me to achieve this.” Aleš Furlanič, an independent expert in the Digital Strategy Department, Zavarovalnica Triglav Jelena Agafonova, Head of the Digital Strategy and Innovation Department, Zavarovalnica Triglav “The environment is changing. Technological development always means boldness “A lively year is behind us. It has brought many changes that helped us achieve and constant improvement, which also progress on many levels, both strategic and operational, and accelerated the applies to our activities. Therefore, we are digitalisation of our business. I would like to highlight the development of a defining the methodology and expanding number of remote business solutions for working smoothly during the epidemic. innovation processes, and including the We have developed an innovation methodology and linked innovation to direct main stakeholders. In doing so, we account business objectives. We are designing and implementing new digital solutions and for the fact that new generations are not promoting digitalisation as our strategic guidelines.” only digitally literate but that their financial literacy is also higher.” Financial highlights of the Triglav Group and Zavarovalnica Triglav in 2020 43 companies The parent company was founded in 1900 Jasmina Dunovska, Client Support Centre, Leading market share Zavarovalnica Triglav in the Adria region 5,316 employees Credit rating Balance sheet: »A« EUR 4.1 billion of the Triglav Group with a stable NPS 67.1 medium-term outlook Customer satisfaction of Zavarovalnica Triglav (NPS index) improved and reached high values throughout the year. Consolidated gross written premium of the Triglav Group by segment Non-life Life and pension Health 2018 65.7% 20.8% 13.5% EUR mio 1,068.4 2019 65.5% 19.6% 14.9% EUR mio 1,184.2 2020 65.4% 18.7% 15.9% EUR mio 1,233.8 Gross written premium for insurance, coinsurance and reinsurance contracts in EUR million Triglav Group Zavarovalnica Triglav 2018 1,068.4 660.2 2019 1,184.2 702.1 2020 around 1,200 plan 2020 1,233.8 719.3 Net profit before tax in EUR million Triglav Group Zavarovalnica Triglav 2018 97.5 78.5 2019 100.9 84.6 2020 plan 71–95* 2020 90.9 71.1 * Interim estimate: a 10–25% decline in the planned range of profit before tax of EUR 95–105 million Combined ratio of the Triglav Group Claims ratio Expense ratio 2018 62.5% 29.3% 91.8% 2019 63.2% 28.3% 91.5% 2020 plan below 95% 2020 63.1% 28.1% 91.2% Table of Contents About the report The PDF version of the report is designed in The Triglav Group and Zavarovalnica Triglav d.d. accordance with the MAR Regulation and is unofficial. Audited Annual Report of the Triglav Group and Zavarovalnica Pursuant to Commission Delegated Regulation (EU) Triglav d.d. for the Year Ended 31 December 2020 2019/815 and paragraph one of Article 134 of the Business Report Market in Financial Instruments Act (ZTFI-1), the official version of the report is the one designed 1. Address by the President of the Management Board 7 in the ESEF format and published on the SEOnet 2. Triglav Group and Zavarovalnica Triglav in 2020 10 of Ljubljanska borza d.d., the Company’s official 3. Report of the Supervisory Board 22 announcement site. 4. Strategy and plans of the Triglav Group 27 5. Corporate Governance Statement 34 The Annual Report of the Triglav Group and 6. The share and shareholders of Zavarovalnica Triglav 45 Zavarovalnica Triglav d.d. for 2020 is integrated 7. Operations of the Triglav Group and Zavarovalnica Triglav 52 and describes the balance and plans as at 8. Financial result of the Triglav Group and Zavarovalnica Triglav 77 31 December 2020. When compiling the report, the 9. Financial position of the Triglav Group and Zavarovalnica Triglav 83 aim was to present a comprehensive overview of 10. Cash flow statement 88 the main financial and non-financial (ESG) aspects, 11. Development and marketing activities 90 results and plans. You can read more about the Statement on non-financial reporting 102 report in the section Statement on non-financial 12. Sustainable development and the ESG aspects reporting. at the Triglav Group 104 13. Information on the Triglav Group as at 31 December 2020 134 14. Business network of the Triglav Group 139 Navigation 15. Performance indicators of Zavarovalnica Triglav 141 You can access the contents of the report through Risk management 155 interactive indexes and quick links to related or 1. Risk management system 157 additional content, for example: Challenges and opportunities of today 163 Section 4. Strategy and plans of the Triglav Group. 2. Risk exposure and management 167 Accounting Report Keep updated about our activities and offers Statement of management's responsibilities 190 Independent auditor's report 191 Detailed information for investors and 1. Financial statements 195 existing shareholders is available below: 2. General information 201 Information for shareholders: 3. Notes to the statement of financial position 229 Zavarovalnica Triglav d.d., Ljubljana 4. Notes to the income statement 263 Miklošičeva cesta 19, 1000 Ljubljana 5. Other information 281 Helena Ulaga Kitek, Head of Investor Relations Appendix: Glossary of insurance terms 315 Telephone: +386 1 47 47 331 GRI Content Index 318 E-mail: [email protected] The Triglav Group and Zavarovalnica Triglav d.d. Annual Report 2020 | Address by the President of the Management Board 7 During the COVID-19 »pandemic and the low interest rate environment in 2020, the Triglav Group demonstrated its resilience and financial strength.« The Triglav Group's operations in 2020 were In view of the already implemented strategic projects marked by the COVID-19 pandemic and the and based on the planned projects, business continuity, persisting low interest rate environment. In reliability and client focus were ensured in all markets. this situation, we demonstrated our resilience, We further increased our market share in the largest, 1. maintaining our financial strength and proving Slovenian market by 0.4 percentage point to 36.5%. We our ability to adapt effectively to changes. The are especially pleased that clients rated our work with Address by the President situation in the business environment and the the highest satisfaction scores to date. We are aware 1 capital markets had a negative impact on our that employees are the main foundation of our success, of the Management Board profit, but we are nevertheless satisfied with the thus for several years we have been strategically business results, as they are close to the originally transforming our organisation and culture to be even planned. The difficult year behind us confirms more cooperative and agile. The results of our efforts are Dear Shareholders, that our strategy is well set out and that we already visible. The team of over 5,300 employees in all are developing into a modern, innovative and seven markets is distinguished by diversity, appropriate Business Partners and dynamic insurance and financial group, which stability and cooperation. We are proud that the firmly remains the leader both in Slovenia and measurements confirmed this increased satisfaction not Colleagues, the wider region. only with clients but also with employees. 1 GRI GS 102-14 The Triglav Group and Zavarovalnica Triglav d.d. Annual Report 2020 | Address by the President of the Management Board 8 The situation in the business »environment and the capital markets had In the difficult year of 2020, we Non-life insurance premium increased by 4% claims experience was affected by the pandemic. The total volume of gross pursued our strategic commitment to and health insurance premium by 11%, while claims paid was 3% lower than in 2019. In addition, we expect that a certain a negative impact on the long-term and stable profitability life and pension insurance premium remained at part of claims not incurred in 2020 due to decreased economic activity or our profit, but we are of the Group's operations. The Group the same level as in the preceding year. Premium other restrictions of the policyholders’ movement will be paid in 2021.