Best’s News & Research Service - October 16, 2015 09:13 AM (EDT)
A.M. Best Affirms Ratings of Zavarovalnica Triglav d.d. and Pozavarovalnica Triglav Re d.d. Ljubljana
- October 16, 2015 09:13 AM (EDT)
London //BestWire// - A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of “a-” of Zavarovalnica Triglav d.d. (Triglav), the operating holding company of the Triglav group. The outlook for both ratings remains positive. Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Pozavarovalnica Triglav Re d.d. Ljubljana (Triglav Re), the wholly owned subsidiary of Triglav. The outlook for these ratings is stable. Both companies are domiciled in Slovenia.
The positive outlook for Triglav’s ratings continues to reflect the group’s consistently excellent technical performance, as demonstrated by the five-year average combined ratio of 88.7%. Triglav’s strong underwriting results follow a change in strategy in 2010 to scale back on its aggressive growth and focus on profitability, through quality risk selection and underwriting discipline. Prior to 2010, the group maintained combined ratios of approximately 100%. For the first half of 2015, Triglav group produced a combined ratio of 93.6% compared with the 95.7% reported for the same period in 2014, remaining within A.M. Best’s expectations. Results for the first six months of 2014 were affected by a high incidence of weather-related losses.
A.M. Best expects that Triglav’s technical earnings are likely to remain strong, supported by its excellent business profile, despite the challenging economic and insurance market conditions in Slovenia. Triglav benefits from a dominant competitive position, with a 36.7% share of the domestic market at half-year 2015 and strong brand recognition across Southeast Europe.
The rating actions also reflect Triglav’s strong consolidated risk-adjusted capitalisation, which has been sustained by retained earnings and contracting net written premium volumes in response to softening market conditions in Slovenia. The strengthening of Triglav’s risk-adjusted capitalisation has been supported by its adequate risk management framework. The group continues to take steps to enhance its existing risk policy, to further embed an extensive framework throughout the organisation.
A partly offsetting rating factor is the weak technical performance of Triglav’s operations in the West Balkan region, underpinned by the intense competitive conditions and high costs of operating in these markets. Nonetheless, Triglav continues to demonstrate modest improvement in earnings derived from these operations as the group achieves additional scale and actively seeks alternative lower cost distribution channels.
The ratings of Triglav Re reflect its importance to the group’s strategy as the licensed reinsurer of the group. In addition to business derived from the global reinsurance market, which accounted for approximately 4% of Triglav’s consolidated gross written premium of EUR 888 million in 2014, Triglav Re provides reinsurance capacity to all group companies.
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This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.
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