Triglav eyes further growth with health, life insurance in focus, to advance telematics solutions

By Nevena Krasteva

Slovenian insurance company Zavarovalnica Trigla, set up in 1990, is the controlling company of Triglav Group. Triglav Group posted a consolidated net profit of 88.9 million euro in 2015, up 4% from a year earlier. Gross written premiums from insurance and co-insurance grew 3% to 919.1 million euro in 2015. The group, listed on the Ljubljana Stock Exchange, is active in Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, and Macedonia.

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Benjamin Josar, member of the management board

In 2015 Triglav Group posted an increase in premiums. What were the main drivers behind this positive performance? How do you plan to sustain growth in the long term?

In its strategy, the Triglav Group defined that the main emphasis will be on the core insurance business, paying special attention to pension and health insurance. Bearing this in mind, the sales activities of all insurance companies of the group are even more focused on clients as well as on developing and increasing the efficiency and development of sales channels. This is our competitive advantage in Slovenia, and we are transferring this practice also to our markets outside Slovenia. We effectively achieve the set strategic objectives, which reflects in the business results and – as you mentioned – in premium growth. Moreover, we have made progress in the pension insurance segment, which is important in terms of future growth, by taking over Skupna pokojninska druzba, the second largest provider of voluntary pension insurance in Slovenia. Apart from that, we effectively implement the health insurance strategy in both the domestic and foreign markets.

Satisfied clients will continue to be our main concern and focus of activities. We will put emphasis on the development of our services, the availability and diversity of sales channels, which are increasingly supported through online operations, and the strengthening of the sales network on all markets of the group. I expect that digitalisation will be one of the most important future elements of success. Such an environment allows us not only to continuously improve our product range tailored to client needs but also to introduce modern technology so as to optimise business processes and promote their transparency and simplicity, all of which keeps changing our relationship with the clients and our business operations. We will continue to develop innovative solutions, which have been recently introduced. Particularly in cooperation with start-up and other innovative companies, we have been developing advanced solutions in telematics and transferring them into practice, in addition to promoting traffic safety, designing applications that send weather alerts and other.

Economic and financial conditions in Slovenia have improved and risks for Slovenian insurers have diminished but low interest rates pile pressure on bottom lines. How do you expect Slovenia’s insurance sector to perform in this environment?

Like most insurance companies worldwide, we have been facing very challenging conditions on debt markets for quite some time now. Extremely low interest rates and increased volatility in financial markets are the reality. Returns on financial instruments, debt instruments in particular, in our portfolios have dropped on average, which is expected to last for some time. We anticipated such a situation and adapted our business plans accordingly. We are aware of the responsibility and the fact that we manage the assets used to cover the liabilities of insurance operations, which is why investment security will remain our primary goal. We will maintain the existing relatively conservative investment structure of the Triglav Group with the emphasis on fixed-rate investments, and we will continue to invest on the financial markets which ensure adequate liquidity, diversification and the expected return.

Elsewhere in Southeast Europe, what were the underlying trends that shaped the development of the insurance market and how will they affect Triglav’s performance in 2016-2017?

The macroeconomic conditions on the insurance markets in Croatia, Bosnia and Herzegovina, Montenegro, Serbia and Macedonia, where the group operates, are improving, however their recovery is gradual and affects the insurance business with a certain delay. Last year, positive trends and premium growth were seen on all the insurance markets in which the group operates. The results show that in total written premium non-life insurance is by far the largest segment, the bulk of which is accounted for by motor vehicle insurance – life and non-life insurance are sold in most countries, while only non-life insurance is sold in Macedonia and, as of recently, health insurance. The life insurance market has continued to increase gradually and consistently.

The countries in which the group operates have major development potential as they are in part relatively undeveloped. We are aware that we are operating in a highly competitive and demanding environment, in which specificities of individual insurance markets play an important role. We continuously strive to transfer the good practice from Slovenia to our subsidiaries abroad, which are managed by the holding company TINT (Triglav INT). In the markets where the group holds a high market share and a leading position, the consolidation strategy has been and will continue to be pursued, whilst on the remaining markets, where the group’s presence is still being built, focus has been and will be on strengthening the group’s market position. In all markets, we will strive to take full advantage of both the strength of the Triglav brand and the comparative advantages of the Triglav Group, to ensure long-term return on invested assets and to increase productivity through synergistic effects, while complying with the local legislation and taking into account the risks.

In which segments and product categories do you see growth opportunities – both in Slovenia and in Southeast Europe?

Each of the six countries in the Adria region where the Triglav Group operates has some specificities, which individual insurance subsidiaries of the group take into account to define their strategic guidelines and business plans. In the long run, I see growth potential on the health, life and pension insurance markets both in Slovenia and in the region. We are very pleased that by acquiring the second largest Slovenian provider of voluntary pension insurance the group consolidated its presence on the Slovenian market, where around 83% of the group’s total written premium is booked. This enables us to be even more active on the pension insurance market. Due to the relatively underdeveloped pension system in Slovenia and the increasingly unfavourable age structure of the population, I believe that we can expect further pressures on the Slovenian public pension system and consequently the need to strengthen the second pension pillar. The growth rate of the said market will depend on the dynamics of changes to the existing pension system, while the increased presence on the Slovenian pension market will affect future consolidation of the group’s position in the life insurance segment (pension annuities). The markets of Southeast Europe represent foremost potential growth in the non-life insurance segment, excluding motor vehicle insurance, and various life and health insurance classes.

Last year and the beginning of 2016 saw some major acquisitions on the insurance markets in Southeast Europe, including Triglav’s deal for Skupna pokojninska druzba. Do you see further room for consolidation?

The insurance markets in this region, from Croatia to Macedonia, have potential for growth. In line with our strategic guideline, the Triglav Group will continue to consolidate its position in the region and to develop as the insurance hub of Southeast Europe. Our goal is to further grow on these markets, primarily through organic growth, however we do not rule out potential takeovers should an appropriate opportunity arise. Therefore, we will continue to strengthen and consolidate the group’s position outside Slovenia, while the activities aimed at achieving growth and development will be prudent and focused on increasing the group’s value in the long term.