Sava Re: en route to going global

On the back of expansion through acquisitions, an upgrade, investments in technology and solid organic growth, Sava Re is heading into this year’s renewal season in a buoyant mood, says CEO Marko Jazbec.

What are your expectations for this year’s renewals season?

It is too early to have any reasonable expectations. The Rendez-Vous is in the middle of the hurricane season and we need to see how it will play out this year. Some might say that last year was bad, but we need to be aware how lucky we all were, as no major cat 5 storms hit the US. Only after the Q3 results are in can we start having expectations, and the question will be answered in Baden-Baden.

Do you expect growth in your book? In which areas?

We expect our Group business to grow in all areas with Slovenia leading the way. The Slovenian insurance market grew by 5 percent in MTPL and 10 percent in motor casualty/collision in the first half of 2018, which influenced the growth of Group GWP. The growth is driven by more new vehicles and general positive macroeconomic developments in Slovenia.

Our non-Group business has also been growing profitably for over 10 years. We successfully made the transformation from a regional to a global reinsurer, having clients in over 100 countries. However, we had to apply the brakes at some point.

In 2018, we had to decline some underperforming business, which outpaced our growth in other areas. At the same time, the market is extremely competitive and our focus is the bottom line, so we remain conservative with our underwriting decisions, as we always did.

Do you expect rates to increase, decrease or remain stable?

On average, we expect rates to stay stable. Cat losses in 2017 made just enough impact on balance sheets that finally a bit of reason entered our industry. For a quarter, we experienced small price increases, which turned to flat throughout the rest of the year.

Loss-free treaties might again enjoy some reductions, but these will be single-digit. On the other side, loss-makers should have slightly tougher pricing. Nevertheless, everything depends on discipline of the underwriters and, ultimately, their superiors who should give clear guidelines on how to achieve targeted profitability. After all, hoping losses will not happen is not enough.

What is the significance of your upgrade?

Getting an S&P rating upgrade to ‘A’ is a historic achievement for Sava Re Group. It has been 10 years since our upgrade to ‘A-’ and we have been working very hard to prove that we can be even better. The rating confirms the real strength of our Group and we will continue to prove that this is where we belong.

Business-wise, we believe it will help us strengthen our portfolio. We will be able to participate on placements that require a higher rating. We expect to get preferential treatment against lower rated reinsurers on those accounts, where we are looking to improve our position.

In addition, there might be opportunities with clients who pay close attention to capital charges. However, the upgrade will not change our strategy and approach to underwriting.

What sets Sava Re apart as a reinsurer?

It is the quality of service—fast turnaround time and claims payments—long-term commitment and transparency. We believe our clients share our opinion and prove it by having Sava Re on their reinsurance panels. We are not as big as large reinsurer groups and do not want to be compared to them, but our industry needs variety and it needs choice. This is what Sava Re can offer.

What are your goals/objectives over the next 12 months?

We are intensively working on improving our core IT system, which will help us with better capital utilisation, risk control and portfolio management.

At Group level we will conclude with the integration of the newly acquired companies: the pension pillar of the Group became important in terms of size of assets under management after the acquisition of the Macedonian pension funds management company. Accelerated development of assistance products in the markets where we are present is also a result of our latest acquisitions.

An important scope on the Group level is also developing a robust IT platform that will enable us to move quickly according to our digitisation agenda. This goal is crucial for materialising the strategic statement of putting the customer in the centre.

In terms of our investment portfolio, environmental investments are becoming important and in line with the strategic focus.

Marko Jazbec is chief executive officer of Sava Re. He can be contacted at: marko.jazbec@sava-re.si