STA, 22 April 2020 - Slovenia's leading insurance group, Triglav, expects the coronavirus pandemic to slash its profit by at least 10% and premiums by 5% this year. It says though its business is sound enough to cope with the situation successfully.
Triglav Group had initially projected a pre-tax profit of between EUR 95 million and EUR 105 million for this year, however, new calculations show the figure could be 10-25% lower.
The insurance premiums collected, initially projected at around EUR 1.2 billion, were to be 3-5% lower as a result of the pandemic and its impact on the economy and international financial markets.
The company made the impact assessment based on the projected contraction in GDP and various scenarios of how long the stall in economic activity may last and how quick recovery once pandemic measures are relaxed. It expects gradual easing of the situation by the end of 2020.
The projected deterioration of the economic situation and the suspended activity in the manufacturing and service sectors in Slovenia and the region will impact the group's underwriting activities.
In its release with the Ljubljana Stock Exchange on Wednesday, the company estimates that primarily the written premium and claims result of the non-life insurance segment will be affected.
Motor vehicle insurance premiums are also expected to be affected by lower sales of new vehicles, deregistration of existing vehicles and lower coverage.
Slowed economic activity is to suppress life insurance premium and premium written in real property insurance, credit insurance and general liability insurance; lower demand is expected for travel insurance.
Lower net claims incurred are anticipated for some insurance classes due to reduced economic activity and movement restrictions.
Financial market shocks, particularly changes in credit spreads on government and corporate bonds, will affect not only the return on investment but also the market value of Triglav assets and liabilities and thus the capital adequacy ratio.
The decrease in the market value and thus the amount of financial assets under management will also be reflected in lower income from the management of clients' assets.
However, the insurer assesses that its insurance and investment portfolios are sufficiently resilient and that its capital position appropriate to effectively cope with increased risks arising from the Covid-19 pandemic.
The company expects it will be able to assess the impact on this year's operations with a higher degree of certainty at the end of the second quarter, on which basis it will revise the annual business plan for 2020.
