Impact of the environment on the performance of the Triglav Group

The performance of the Triglav Group in 2011 was affected by the global economic and financial crisis, as previously stated in sections Marketing and sales activities/Life insurance and Development activities/Life insurance. It introduced uncertainty into financial markets and encumbered insurance, Triglav's core business. As a financial organisation, Zavarovalnica Triglav is closely intertwined with financial markets and cannot avoid their influence entirely. Since equity investments represent a major part of its assets, the direct influence of the financial crisis on its operations was shown as increased volatility of its investment portfolio. In spite of a relatively conservative investment policy, the value of some investments decreased, which was reflected in the reduction of the share capital and net profit of Zavarovalnica Triglav. Due to significant or permanent value decreases, assets were impaired by EUR 63.2 million.

The economic and financial crisis had an impact on our primary business: insurance operations. The decrease in demand for some insurance products is a consequence of lower economic activity, reduction in export and import, new bankruptcies, reduced purchasing power of households, higher unemployment, reduction of bank loans, etc.

Our performance was also affected by other factors. Increased competitiveness in the motor vehicle insurance market and consequently amendments and adjustment of the actuarial basis of Zavarovalnica Triglav reduced the volume of written premiums for car insurance. Repetitive claims for high amounts in recent years have forced the Company to introduce stricter insurance terms in agricultural insurance, which is the main reason for a decrease in agricultural insurance premiums. An additional loss of planned premium income resulted from the insurance portfolio selection and the intense measures taken to mitigate poorer insurance technical results in non-life insurance.

Nevertheless, the achieved results show that the Group's strategic orientation, focused on the core insurance business and the stability and profitability of operations as key objectives, is effective and can safeguard the Group's business results from the increasingly uncertain impacts of the environment.


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