2023_WORD_ANGL_AZN

Key figures

EUR

2023

2022

Change

Index

Business volume

910,113,382

795,535,596

114,577,786

114.4

Insurance revenue

697,562,811

608,987,793

88,575,018

114.5

Insurance service result

83,477,762

76,073,417

7,404,345

109.7

Finance result

18,097,793

1,511,878

16,585,915

Net profit

64,657,172

46,923,441

17,733,731

137.8

31 December 2023

31 December 2022

Change

Index

Equity

585,663,613

531,463,677

54,199,936

110.2

Net contractual service margin (CSM)

149,351,142

129,365,490

19,985,652

115.4

Investment portfolio position

1,503,282,095

1,415,231,399

88,050,696

106.2

Total assets

2,568,546,136

2,312,140,248

256,405,888

111.1

Assets under management

2,411,800,065

2,006,528,479

405,271,586

120.2

2023

2022

Change

Index

Combined ratio

93.1%

92.6%

+0.5 p.p.

Return on equity (ROE)

10.8%

8.3%

+2.5 p.p.

Return on investment portfolio

2.1%

0.6%

+1.5 p.p.

Solvency ratio

188%–194%

183%

For definitions and calculations, please refer to the appended glossary.

The key figures for 2023 with comparative data for 2022 have been prepared in accordance with IFRS 17 and IFRS 9, which entered into force on 1 January 2023. The methodologies and estimated impact of the transition to the new standards are presented in the notes to the financial statement of the annual report.

Contents

Business report...................................................................................................................8

1Letter from the chairman of the management board..................................................10

2Profile of Sava Re and the Sava Insurance Group........................................................12

2.1Sava Re company profile........................................................................................................12

2.2Significant events in 2023......................................................................................................13

2.3Significant events after the reporting date............................................................................13

2.4Sava Re rating profile.............................................................................................................13

2.5Profile of the Sava Insurance Group......................................................................................13

2.6Composition of the Sava Insurance Group.............................................................................15

2.7General information on Group companies as at 31 December 2023....................................16

2.8Changes in Group composition..............................................................................................20

3Shareholders and share trading..................................................................................20

3.1Responsibility to investors.....................................................................................................24

4Report of the supervisory board.................................................................................26

5Corporate governance statement...............................................................................40

5.1Corporate governance policy.................................................................................................40

5.2Statement of compliance with the Slovenian Corporate Governance Code for Listed Companies.............................................................................................................................40

5.3Governing bodies of Sava Re..................................................................................................42

5.4Internal control and risk management systems relating to financial reporting.....................54

5.5External audit.........................................................................................................................55

5.6Disclosures in accordance with Article 70(6) of the Companies Act......................................55

5.7Governance of Sava Insurance Group members....................................................................57

6Mission, vision, strategic focus and goals...................................................................58

6.1Our purpose...........................................................................................................................58

6.2Strategic focus of the Sava Insurance Group.........................................................................59

6.3Business plan of the Sava Insurance Group for 2024.............................................................60

6.4Goals achieved in 2023..........................................................................................................61

7Business environment................................................................................................64

8Review of operations of the Sava Insurance Group and Sava Re.................................70

8.1Sava Insurance Group............................................................................................................70

8.2Sava Re...................................................................................................................................93

9Human resource management.................................................................................100

9.1Strategic guidelines for human resource management.......................................................100

9.2Key activities in human resource management...................................................................100

9.3Employer brand development and management................................................................100

9.4Recruitment and staffing levels...........................................................................................101

9.5Employee training and development...................................................................................107

9.6Employee management and motivation..............................................................................108

10Risk management.....................................................................................................112

10.1Risk management system....................................................................................................112

10.2Material risks of the Sava Insurance Group.........................................................................116

11Internal auditing in the Sava Insurance Group..........................................................121

12Information technology............................................................................................122

Sustainability report.......................................................................................................124

13Sustainability report.................................................................................................126

13.1Sustainable Development Strategy of the Sava Insurance Group for 2023–2027...............127

Relations with stakeholders............................................................................................................129

13.2Economic aspect..................................................................................................................132

13.3Social aspect.........................................................................................................................145

13.4Responsibility to the community.........................................................................................151

13.5Environmental aspect..........................................................................................................154

13.6Sava Insurance Group sustainability performance indicators..............................................158

Financial statements with notes......................................................................................159

14Auditor’s report........................................................................................................162

15Financial statements................................................................................................171

15.1Statement of financial position............................................................................................171

15.2Income statement................................................................................................................172

15.3Statement of other comprehensive income........................................................................173

15.4Cash flow statement............................................................................................................174

15.5Statement of changes in equity for 2023.............................................................................175

15.6Statement of changes in equity for 2022.............................................................................176

16Notes to the financial statements.............................................................................177

16.1Basic details..........................................................................................................................177

16.2Business combinations and overview of Group companies.................................................178

16.3Consolidation principles.......................................................................................................182

16.4Significant accounting policies.............................................................................................183

16.5Standards and interpretations issued but not yet effective, and new standards and interpretations.....................................................................................................................226

16.6Transition to the new standards IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments”........................................................................................................................228

16.7Risk management.................................................................................................................241

16.8Notes to the financial statements........................................................................................303

16.9Contingent assets and liabilities...........................................................................................390

17Significant events after the reporting date...............................................................396

Appendices (unaudited)..................................................................................................398

Appendix A – Glossary of selected terms and calculation methodologies for indicators..400

Appendix B – GRI index...................................................................................................401

Appendix C – Disclosures required by Disclosures Delegated Regulation 2021/2178.......404

Appendix D – Disclosures required by Disclosures Delegated Regulation 2021/2178 (non-life insurance and reinsurance).................................................................................408

Appendix E – Discount rates............................................................................................409

Appendix F – Fund assets not included in the consolidated financial statements of the Sava Insurance Group.......................................................................................................410

1Letter from the chairman of the management board2

Dear Shareholders, Business Partners and Employees,

The financial year 2023 was another trying year that brought completely new challenges for the Sava Insurance Group. The war in Ukraine led to a surge in inflation. In addition, Slovenia and other countries in which the Group operates were hit by severe storms and floods during the summer, resulting in significant damage to property. We focused our efforts on fast-track claims handling to fulfil our “Never Alone” promise, offering policyholders the necessary support and assistance. First and foremost, we stood by our customers on the ground by simplifying the reporting and claims handling processes. Then, we provided an extra day of volunteering leave and financial support to the worst-affected areas. The loss events resulted in claims totalling EUR 88 million, with a lower impact on the Group’s result due to adequate reinsurance protection.

Despite the significant impact of these claims, particularly on Zavarovalnica Sava, the Group exceeded its profit guidance. The Group’s other operating segments performed better than planned. Sava Re’s business in international reinsurance markets contributed significantly to the above-target performance. The market growth in reinsurance prices over the last few years, the restructuring of the reinsurance portfolio to improve profitability and the absence of major claims were the driving forces behind the strong outperformance of the profit target. In addition, the investment result played a significant role in exceeding the plan. Due to rising interest rates, the Group’s investment return was 2.1%, 0.6 percentage points higher than planned. The Group’s companies that manage financial assets also closed 2023 well ahead of target. This performance was driven by both capital market movements and increased inflows into the funds. All this helped to mitigate the negative impact of the storm and flood losses.

The Group achieved strong organic growth across all segments and markets, bringing our business volume to EUR 910 million, which is almost a 15% increase year on year. I am confident that we will exceed the EUR 1 billion threshold by the end of the strategy period. We are pleased that our Group companies are vastly improving their market position and expanding their product range and sales channels. Our strong organic growth is supporting us to operate more cost-effectively. The Group’s revenue growth also demonstrates its ability to respond to external circumstances by adjusting pricing, thus ensuring stable performance.

The customer solutions and processes put in place during the last strategy period helped speed up claims handling, which has already resulted in faster settlement of storm and flood claims. Continuing our customer-centric approach and optimising our business processes are both focus areas that will maintain momentum in the 2023–2027 strategy period. These focus areas will drive further improvements in our business – particularly in streamlining our business processes and enhancing our relationship with customers at all points of the customer journey.

In the non-life business, we further developed our product range in line with the needs and wishes of our customers. We offered products with strong sustainability credentials, products targeted at specific policyholder segments, and products promoting online sales and bancassurance. In the life and pension business, our focus over the past year was to expand the life risk insurance ecosystem by adding more customer services, developing additional health coverage options, and upgrading unit-linked life insurance and bancassurance products.

In 2023, an independent institution verified our carbon footprint calculation for the previous year. This calculation provides the basis for setting more precise milestones on our way towards our strategic target of reducing our carbon footprint by 55% in scope 1 and 2 emissions by 2030. An important measure taken was relocating the head offices of six Slovenian companies and one Macedonian insurance company to new, more energy-efficient premises, which has already helped to reduce our carbon footprint for 2023. Last year, we began systematically collecting and processing data across our

2 GRI 2-22.

value chains (insurance portfolio, investment portfolio and suppliers) to identify the necessary actions to achieve our sustainability goals. In terms of organisational structure, sustainability was being progressively integrated into the Group companies’ operations in 2023 and is now increasingly taken into account in day-to-day activities. Our employees are actively developing a culture of sustainability to set an example for the wider community. This involves organising a number of volunteer activities as part of the Heart for the World initiative. In 2023, our employees dedicated more than 5,000 hours to corporate volunteerism.

Another important milestone in 2023 was the successful transition to the new IFRS 17 and IFRS 9 accounting standards, which required a substantial effort from our employees and involved restructuring some IT systems, processes and organisation over the past few years. I believe the transition has been successful, and I am confident that the data collected at the end of the project will help us better monitor our business and respond more quickly to emerging risks.

To sum up, 2023 posed a particular challenge for the Group due to the unprecedented scale of the summer floods that affected a considerable part of Slovenia. I am proud that the Group demonstrated these three qualities in such circumstances:

Heart – our loss adjusters, agents and other colleagues gave their “all” to ensure that the policyholders affected were able to get their claims paid as quickly as possible.

Flexibility – although the structure of an insurance company is complex, some processes at Zavarovalnica Sava were streamlined in response to the massive flood damage.

Business line diversification – the Group ended the year with a solid performance despite the significant impact of flood claims on the business result. In particular, reinsurance in international reinsurance markets performed significantly better than planned in 2023. In addition to external influences, this is due to the hard work of our reinsurance team to improve the portfolio towards profitability over the last few years.

Many thanks to all our colleagues for their contributions and efforts in 2023. We have shown that by working together, we can overcome major challenges and accomplish ambitious goals.

Marko Jazbec

Chairman of the Management Board of Sava Re d.d.

2Profile of Sava Re and the Sava Insurance Group

2.1Sava Re company profile3

3 GRI 2-1, 2-3.

Company name

Sava Re d.d.

Business address

Dunajska 56

1000 Ljubljana

Slovenia

Telephone (switchboard)

+386 1 47 50 200

Facsimile

+386 1 47 50 264

info@sava-re.si

Website

www.sava-re.si

ID number

5063825

Tax identification number

SI17986141

LEI code

549300P6F1BDSFSW5T72

Share capital

EUR 71,856,376

17,219,662 no-par-value shares

Management and supervisory bodies

MANAGEMENT BOARD

Marko Jazbec (chairman)

Polona Pirš Zupančič

Peter Skvarča

David Benedek

SUPERVISORY BOARD

Davor Ivan Gjivoje Jr (chairman)

Keith William Morris (deputy chairman)

Klemen Babnik

Matej Gomboši

Edita Rituper (employee representative)

Blaž Garbajs (employee representative)

Date of entry into court register

10 December 1990, Ljubljana District Court

Certified auditor

Deloitte Revizija d.o.o.

Dunajska Cesta 165

1000 Ljubljana

Slovenia

Largest shareholder and holding

Slovenski Državni Holding d.d. (Slovenian Sovereign Holding) and the Republic of Slovenia – together 31.6% (no-par-value shares: 5,436,319)

Credit ratings:

S&P Global Ratings

AM Best

A /stable/, September 2023

Investor relations contact

ir@sava-re.si

The Company has no branches.

2.2Significant events in 2023

Major loss events

In the summer of 2023, Slovenia and certain other countries in which the Group is present were hit by a wave of storms and floods that caused significant property damage. The gross claims resulting from these events amounted to EUR 88.3 million. Taking into account reinsurance protection, the net impact of these events on the Group’s result was EUR 27.4 million.

Changes to the management and supervisory boards

Changes in the composition of the management and supervisory boards are described in section 5.3 “Governing bodies of Sava Re”.

Other significant events

•In June 2023, the 39th general meeting of shareholders was held4.

•In September 2023, the rating agencies S&P Global Ratings and AM Best reaffirmed the “A” ratings of Sava Re and Zavarovalnica Sava. The outlook was stable.

2.3Significant events after the reporting date

•On 22 February 2024, Sava Re signed a contract to acquire a 2.5% stake in TBS Team 24. Upon completion of the transaction, Sava Re held a 90% stake in the company as at 27 February 2024.

2.4Sava Re rating profile

“A” ratings affirmed with stable outlook

Sava Re is rated by two rating agencies, S&P Global Ratings and AM Best.

Financial strength ratings of Sava Re

Agency

Rating5

Outlook

Latest review

S&P Global Ratings

stable

September 2023: existing rating affirmed

AM Best

stable

September 2023: existing rating affirmed

2.5Profile of the Sava Insurance Group6

The Group is one of the leading insurance groups based in the Adriatic region, with a presence in six countries of the region. Pozavarovalnica Sava d.d. (Sava Re) is the parent company of the Sava Insurance Group and a reinsurance company headquartered in Ljubljana, Slovenia. The Group operates in the insurance and asset management sectors, and also engages in secondary activities. It continuously improves the quality and integrity of the services it provides:

•Reinsurance: Sava Re is one of the largest reinsurance companies based in southeastern Europe, serving more than 450 partners in over 110 reinsurance markets worldwide and building a globally diversified reinsurance portfolio.

4 For more information, see sections 3 “Shareholders and share trading” and 5.3.1 “General meeting of shareholders”.

5 The credit rating agency S&P Global Ratings uses the following scale for assessing financial strength: AAA (extremely strong), AA (very strong), A (strong), BBB (adequate), BB (less vulnerable), B (more vulnerable), CCC (currently vulnerable), CC (highly vulnerable), R (under regulatory supervision), SD (selectively defaulted), D (defaulted), NR (not rated). Plus (+) or minus (-) following the credit rating from AA to CCC indicates the relative ranking within the major credit categories.

AM Best uses the following categories to assess financial strength: A++, A+ (superior), A, A- (excellent), B++, B+ (good), B, B- (fair), C++, C+ (marginal), C, C- (weak), D (poor), E (under regulatory supervision), F (in liquidation), S (suspended).

6 GRI 2-6, 2-2.

•Insurance, Slovenia: in Slovenia, the insurance business is conducted through Zavarovalnica Sava and Vita. Zavarovalnica Sava offers a wide range of non-life and life insurance policies. It markets its products through its own distribution network and external channels, always focusing on the needs of its customers. Vita is a life insurance company in Slovenia operating on a bancassurance model. It operates exclusively through the branches of NLB d.d. Its product mix is dominated by unit-linked life insurance.

•Insurance, international: the Sava Insurance Group operates through subsidiaries and branches in the markets of Croatia, Serbia, Montenegro, North Macedonia and Kosovo. Motor insurance business accounts for a significant portion of the non-life insurance business written in these markets, but there is an increasing trend towards all other non-life business, including health insurance. The Group offers life insurance in the markets of Croatia, Serbia and Kosovo.

•Pensions: the Sava Insurance Group offers pension insurance in Slovenia and North Macedonia. In the Slovenian market, Sava Pokojninska provides a comprehensive range of supplementary pension insurance, as it manages pension fund assets and distributes pension annuity payments. The Group’s pension company in North Macedonia manages both mandatory and voluntary pension funds.

•Asset management: Sava Infond manages client assets in 19 sub-funds of the Infond umbrella fund and provides portfolio management services to Group companies.

•Assistance services: the TBS Team 24’s assistance services supplement the Group’s core business in all the markets where the Group has a presence through companies. The company is the leading assistance provider in southeastern Europe, offering its policyholders roadside, home and travel medical assistance, as well as other assistance services.

The Group is also successfully expanding its activities in other areas, in particular the hospital and healthcare activities in Slovenia, which are carried out through the associated company DCB (SVN). In 2023, having established Vita S Holding, the Group was preparing to enter the North Macedonian healthcare market. In 2023, the Group expanded its activities to include the development of comprehensive IT solutions in Serbia.

2.6Composition of the Sava Insurance Group7

Composition of the Sava Insurance Group as at 31 December 20238

7 GRI 2-1, 2-2.

8 The percentages in the diagram refer to shareholdings of Sava Re or other controlling companies. The shareholdings provided for Sava Infond and DCB differ from the voting rights held by these companies. Section 2.7 “General information on Group companies as at 31 December 2023“ provides disclosures about all Group companies, including equity stakes and voting rights.

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2.7General information on Group companies as at 31 December 20239

As at 31 December 2023, the Sava Insurance Group had the following members:

Sava Re

Zavarovalnica Sava (SVN)

Sava Neživotno Osiguranje (SRB)

Illyria (RKS)

Registered office

Dunajska Cesta 56, 1001 Ljubljana, Slovenia

Ulica Eve Lovše 7, 2000 Maribor, Slovenia

Bulevar Vojvode Mišića 51, 11040 Belgrade, Serbia

Sheshi Nëna Terezë 33, 10000 Pristina, Kosovo

ID number

5063825000

5063400000

17407813

810483769

Main activity

reinsurance

insurance

non-life insurance

Share capital (EUR)

71,856,376

68,417,377

6,314,464

7,228,040

Book value of combined equity interest of all Group members (EUR)

68,417,377

6,314,464

7,228,040

% equity share / voting rights held by Group members

Sava Re: 100.0%

Governing bodies

management board

managing director

Marko Jazbec (chair), Polona Pirš Zupančič, Peter Skvarča, David Benedek

Jošt Dolničar (chair), Uroš Lorenčič, Primož Močivnik, Robert Ciglarič

Bojan Mijailović (chair), Aleksandar Ašanin

Shpend Balija

supervisory board

board of directors

Davor Ivan Gjivoje Jr (chair), Keith William Morris, Klemen Babnik, Matej Gomboši, Edita Rituper, Blaž Garbajs

Marko Jazbec (chair), Pavel Gojkovič, Polona Pirš Zupančič, Peter Skvarča, Aleš Perko, Branko Beranič

Peter Skvarča (chair), Nebojša Šćekić, Josif Jusković

Marko Jazbec (chair), Rok Moljk, Andreja Rahne, Milan Viršek, Ilirijana Dželadini

9 GRI 2-1, 2-6, 2-9, 2-2.

Sava Osiguruvanje (MKD)

Sava Osiguranje (MNE)

Illyria Life (RKS)

Sava Životno Osiguranje (SRB)

Registered office

Železnička 41, Opština Centar, PF 133, 1000 Skopje, North Macedonia

Ulica Svetlane Kane Radević br. 1, 81000 Podgorica, Montenegro

Sheshi Nëna Terezë 33, 10000 Pristina, Kosovo

Bulevar Vojvode Mišića 51, 11040 Belgrade, Serbia

ID number

4778529

02303388

810793837

20482443

Main activity

non-life insurance

life insurance

Share capital (EUR)

3,820,077

4,033,303

3,285,893

4,326,664

Book value of combined equity interest of all Group members (EUR)

3,585,524

4,033,303

3,285,893

4,326,664

% equity share / voting rights held by Group members

Sava Re: 93.86%

Sava Re: 100.0%

Governing bodies

board of directors

managing director

management board

managing director: Melita Gugulovska, executive director: Kristian Leskov

non-executive directors of the company: Rok Moljk (chair), Peter Skvarča, Milan Viršek, Sašo Tonevski, Nenad Jovanović

executive director: Nebojša Šćekićnon-executive directors of the company: Marko Jazbec (chair), Milan Viršek, Zvonko Peković

Albin Podvoricadeputy managing director: Mehmeti Fisnik

Miloš Brusin (chair), Ana Bojanić

board of directors

supervisory board

Marko Jazbec (chair), Andreja Rahne, Rok Moljk, Milan Viršek, Ilirijana Dželadini

Polona Pirš Zupančič (chair), Pavel Gojkovič, Uroš Ćamilović

Sava Car (MNE)

ZS Svetovanje (SVN)

Sava Agent (MNE)

Sava Station (MKD)

Registered office

Ulica Svetlane Kane Radević br. 1, 81000 Podgorica, Montenegro

Ulica Eve Lovše 7, 2000 Maribor, Slovenia

Ulica Svetlane Kane Radević br. 1, 81000 Podgorica, Montenegro

Železnička 41, Opština Centar, 1000 Skopje, North Macedonia

ID number

02806380

2154170000

02699893

7005350

Main activity

technical testing and analysis

insurance agency

technical testing and analysis

Share capital (EUR)

485,000

327,263

10,000

199,821

Book value of combined equity interest of all Group members (EUR)

485,000

327,263

10,000

199,821

% equity share / voting rights held by Group members

Sava Osiguranje (MNE): 100.0%

Zavarovalnica Sava: 100.0%

Sava Osiguranje (MNE): 100.0%

Sava Osiguruvanje (MKD): 100.0%

Governing bodies

executive director

managing director

executive director

managing director

Siniša Mićunović

Aljaž Kos

Snežana Milović

Aleksandar Mihajloski

Sava Pokojninska (SVN)

TBS Team 24 (SVN)

Sava Penzisko Društvo (MKD)

Vita (SVN)

Registered office

Ulica Eve Lovše 7, 2000 Maribor, Slovenia

Majka Tereza 1, 1000 Skopje, North Macedonia

Trg Republike 3, 1000 Ljubljana, Slovenia

ID number

1550411000

5946948000

5989434

1834665000

Main activity

pension fund

provision of assistance services

fund management activities

life insurance

Share capital (EUR)

6,301,109

8,902

2,110,791

7,043,900

Book value of combined equity interest of all Group members (EUR)

6,301,109

7,789

2,110,791

7,043,900

% equity share / voting rights held by Group members

Sava Re: 100.0%

Sava Re: 87.5%

Sava Re: 100.0%

Governing bodies

management board

managing director

management board

Andrej Plos (chair), Igor Pšunder

Edvard Hojnik

Snežana Stankovič (chair), Petar Taleski, Tatjana Bojkovska

Barbara Smolnikar (chair), Irena Prelog, Tine Pust

supervisory board

holder of procuration

supervisory board

David Benedek (chair), Rok Moljk, Hermina Kastelec, Pavel Gojkovič, Irena Šela, Tomaž Šalamon, Uroš Krajnc

Aleksandra Tkalčič

Pavel Gojkovič (chair), Rok Moljk, Peter Skvarča, Erol Hasan

David Benedek (chair), Pavel Gojkovič, Andreja Rahne, Jure Košir

DCB (SVN)

Vita S Holding (MKD)

Sava Infond (SVN)

ASP (SRB)

Registered office

Pod Skalo 4, 4260 Bled, Slovenia

Ul. Dimche Mirchev 20, Opština Centar, 1000 Skopje, North Macedonia

Ulica Eve Lovše 7, 2000 Maribor, Slovenia

Bulevar Kralja Aleksandra 17, 11000 Belgrade, Serbia

ID number

5690366000

7690088

5822416000

17077295

Main activity

hospital activities

non-specialised wholesale trade

fund management activities

computer programming

Share capital (EUR)

379,123

1,320,026

1,460,524

1,129

Book value of combined equity interest of all Group members (EUR)

189,562

1,056,021

1,460,524

1,129

% equity share / voting rights held by Group members

Sava Re: 40.1%/50.0%

Sava Re: 80%

Sava Re: 84.00%/84.85%

Sava Re: 100%

Zavarovalnica Sava: 15.00%/15.15%

Governing bodies

managing director

management board

managing director

Zvonko Novina, Robert Cugelj

Iskra Kostova, Suzana Jovanova

Jožica Palčič (chair), Samo Stonič, Jure Dubravica

Ivana Ivetić

supervisory board

Blaž Jakič (chair), David Benedek (deputy chair), Jaka Kirn, Milan Marinič, Polonca Jug Mauko, Matej Narat

David Benedek (chair), Zvonko Novina, Snežana Stanković, Simon Trpeski, Nebojša Mojsoski

David Benedek (chair), Polona Pirš Zupančič, Jure Košir, Uroš Lorenčič

Sava Car (SRB)

Registered office

Braće Jerkovića 108A, Belgrade, Serbia

ID number

21822302

Main activity

technical testing and analysis

Share capital (EUR)

100,000

Book value of combined equity interest of all Group members (EUR)

100,000

% equity share / voting rights held by Group members

Sava Car (MNE): 100%

Governing bodies

managing director

Nemanja Parapid

The management of all Sava Insurance Group members is local.10

10 GRI 202-02.

2.8Changes in Group composition11

In 2023, Sava Re established Vita S Holding (MKD), a healthcare company based in North Macedonia, and acquired ASP (SRB), a Serbian company providing development and maintenance services for core IT systems. In 2023, Sava Re sold G2I (GBR) and the Croatian company SO Poslovno Savjetovanje ceased operations.

3Shareholders and share trading

Sava Re’s share price rose by 25.0% from EUR 22.4 to EUR 28.0 in 2023. During this period, it reached a high of EUR 28.0 and a low of EUR 22.1. In 2023, the average price was EUR 24.6. Considering the dividend payout of EUR 1.60 per share (representing a dividend yield of 6.5%), the return on the share in 2023 was 32.1%.

The SXIP (STOXX Europe 600 Insurance) also rose in 2023, by 8.8%. The Ljubljana Stock Exchange index (SBITOP) also increased over the period. It gained 19.8%.

POSR share price performance from 1 January 2023 to 31 December 2023 compared to the SBITOP Index and the STOXX Europe 600 Insurance Index in % (31 December 2022 = 100)

In 2023, turnover in Sava Re shares was EUR 15.8 million (2022: EUR 17.9 million). The average daily turnover in 2023 was EUR 66,114, compared to EUR 71,859 in 2022.

11 GRI 2-6.

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Basic details about the POSR share

31 December 2023

31 December 2022

Share capital (EUR)

71,856,376

Number of shares

17,219,662

Ticker symbol

POSR

Number of shareholders

4,376

4,316

Type of share

ordinary

Listing

Ljubljana Stock Exchange, prime market

Number of treasury shares

1,721,966

Consolidated book value per share (EUR)

37.79

34.29

Market capitalisation, closing rate at (EUR)

433,935,488

347,148,390

2023

2022

Consolidated earnings per share (EUR)

4.16

3.01

Share price at end of period (EUR)

28.00

22.40

Average share price during reporting period (EUR)

24.56

25.26

Period low (EUR)

22.10

20.10

Period high (EUR)

28.00

30.40

Turnover during the period (EUR)

15,801,226

17,892,849

Average daily trade volume (EUR)

66,114

71,859

Shareholders

Sava Re shareholder structure as at 31 December 2023

Type of investor

Domestic investors

International investors

Insurance and pension companies

17.9%

0.0%

Other financial institutions*

18.0%

19.6%

Republic of Slovenia

13.9%

0.0%

Natural persons

11.5%

0.2%

Investment funds and mutual funds

2.4%

0.0%

Other commercial companies

2.6%

1.0%

Banks

0.0%

13.0%

Total

66.3%

33.7%

* The other financial institutions item includes Slovenian Sovereign Holding with a stake of 17.7%.

The composition of shareholders remained largely unchanged in 2023. International ownership increased by 0.3 percentage points to 33.7%.

Fiduciary accounts with banks, attorneys and other financial institutions altogether account for 25.7% of all POSR shares.

Composition of Sava Re share capital

Ten largest shareholders and qualifying shareholders under the Slovenian Takeover Act as at 31 December 202312

Shareholder

Number of shares

% of share capital

% voting rights

InterCapital Securities Ltd. – fiduciary account

3,295,534

19.1%

21.3%

Slovenian Sovereign Holding

3,043,883

17.7%

19.6%

Republic of Slovenia

2,392,436

13.9%

15.4%

European Bank for Reconstruction and Development (EBRD)

1,071,429

6.2%

6.9%

Modra Zavarovalnica d.d.

714,285

4.1%

4.6%

OTP Banka d.d. – fiduciary account

434,529

2.5%

2.8%

Hrvatska Poštanska Banka – fiduciary account

380,190

2.2%

2.5%

Guaranteed civil servants’ sub-fund

320,346

1.9%

2.1%

Kapitalska Družba d.d. – SODPZ

238,109

1.4%

1.5%

Modri Zajamčeni Podsklad (guaranteed sub-fund)

168,150

1.0%

1.1%

Total

12,058,891

70.0%

77.8%

Sava Re d.d., treasury shares*

1,721,966

10.0%

* Treasury shares carry no voting rights.

** Pursuant to Article 235a of the Slovenian Companies Act (ZGD-1), Sava Re started the process of identifying shareholders who are registered with intermediaries as holders of shares and who are not themselves intermediaries (ultimate shareholders). The process was last carried out on 2 October 2023. According to the information received, on that date, Croatia Osiguranje d.d. held 2,439,852 POSR shares, and Adris Grupa d.d. held 838,197 POSR shares.

In 2023, the combined equity share of the ten largest shareholders increased from 67.9% to 70.0% and their share of voting rights from 75.5% to 77.8%.

As at 31 December 2023, the top four largest shareholders of Sava Re exceeded the 5% threshold (qualifying holding under Article 77 of the Slovenian Takeover Act, ZPre-1).

In 2023, the chairman of the management board of Sava Re, Marko Jazbec, increased his holding of Sava Re shares by 500 to 12,000 shares. In 2023, purchases were also made by management board member Polona Pirš Zupančič, who acquired 570 shares and now holds 4,318 shares, and management board member David Benedek, who acquired 400 shares and now holds 1,200 shares. At the end of 2023, members of the management and supervisory boards together held 18,718 shares, representing 0.11% of the share capital.

POSR shares held by members of supervisory and management boards as at 31 December 2023

Number of shares

% of share capital

Marko Jazbec

12,000

0.070%

Polona Pirš Zupančič

4,318

0.025%

Peter Skvarča

1,200

0.007%

David Benedek

1,200

0.007%

Total management board

18,718

0.109%

Total management and supervisory boards

18,718

0.109%

All Sava Re shares are ordinary registered shares with no par value; all were issued in book-entry form and are of the same class.

12 Source: Central securities register KDD d.d.

The shares confer the following rights on their holders:

•the right to participate in the Company’s management, with one share carrying one vote in the general meeting;

•the right to a proportionate part of the Company’s profit (dividend);

•the right to a corresponding part of the remaining assets upon the liquidation or bankruptcy of the Company.

Pursuant to the Sava Re articles of association and the applicable legislation, current Sava Re shareholders also hold pre-emptive rights entitling them to take up shares in proportion to their existing shareholding in any future stock offering; their pre-emptive rights can only be excluded under a resolution to increase share capital adopted by the general meeting by a majority of at least three quarters of the share capital represented.

Share transfer restrictions

All Sava Re shares are freely transferable.

Holders of securities carrying special control rights

Sava Re has issued no securities carrying special control rights.

Treasury shares

In line with the authorisation granted at the 28th general meeting of shareholders (held on 23 April 2014), the Company started repurchasing its shares in July 2014. The authorisation to acquire treasury shares was valid for three years from the date of the general meeting resolution. The authorisation was valid for the acquisition of up to 1,721,966 treasury shares of the Company, representing 10% of the Company’s share capital. The Company initially acquired its treasury shares only on the regulated market for financial instruments. However, after the announcement of the share-repurchase programme in November 2014, the Company repurchased its treasury shares both on and off the regulated market for financial instruments, in line with the authorisation given to the management board by the general meeting. The management board’s most recent repurchase of treasury shares to fill the quota was performed on 11 April 2016.

From 1 January 2023 to 31 December 2023, Sava Re did not buy back or sell any treasury shares. The total number of treasury shares as at 31 December 2023 was 1,721,966, representing 10% less one share of all issued shares.

The Company’s management board does not have a new general meeting authorisation to purchase treasury shares.

Dividend

At the 39th general meeting of shareholders held on 5 June 2023, the shareholders adopted the proposal of the management and supervisory boards to use EUR 24,796,313.60 of the distributable profits to pay a dividend of EUR 1.60 per share. The dividend was paid on 21 June 2023 to shareholders registered in the share register on 20 June 2023.

Details of dividends paid each year in respect of the previous financial year13

EUR, except percentages

2018

2019

2020

2021

2022

2023

Amount of dividend payment

12,398,157

14,722,811

13,173,042

23,246,544

24,796,314

Dividend/share

0.80

0.95

0.00

0.85

1.50

1.60

Dividend yield

4.8%

5.6%

3.4%

5.9%

6.5%

Contingent capital

The Company had no contingent capital as at 31 December 2023.

3.1Responsibility to investors14

Sava Re’s investors (shareholders) and analysts are important stakeholders, with whom Sava Re maintains transparent, professional and comprehensive relationships.

As a Ljubljana Stock Exchange first listing company, Sava Re respects the principle of equal treatment and informing of all members of the public. Sava Re communications follow recommendations for uniform information to all shareholders, and through public announcements Sava Re enables simultaneous and transparent information to be provided in line with the financial calendar. In this way, the Company builds confidence among shareholders and potential investors in the POSR share. Key information is published in accordance with the financial calendar on the Company’s website and via the Ljubljana Stock Exchange SEOnet system. In 2023, Sava Re issued 50 public announcements in both the Slovenian and English language.

Sava Re communicates in compliance with the Slovenian Financial Instruments Market Act (ZTFI-1), the Companies Act (ZGD-1), the aforementioned recommendations of the Ljubljana Stock Exchange for listed companies, the Corporate Governance Code for Listed Companies, the rules of procedure of the supervisory board and the Company’s internal communication rules.

The Company aims to set up an open communication channel with investors. It seeks to raise awareness of the real value of the Sava Re and Sava Insurance Group brand and, consequently, of everything that investing in POSR shares entails. In 2023, Sava Re continued its efforts to improve the liquidity of the POSR share. Responsibility towards investors is reflected in cooperation and building a two-way relationship through various communication tools.

In 2023, Sava Re reached out to investors through investor and analyst conferences, webcasts organised by the Ljubljana Stock Exchange, a press conference on the occasion of the announcement of unaudited results, a letter to shareholders, an invitation to the general meeting of shareholders, an email newsletter and through similar means. It also sponsored the Ljubljana Stock Exchange’s capital market development and financial literacy project.

Sava Re also uses its official website www.sava-re.si/en-si/, in particular the Investors subpage, to provide timely and uniform information to investors, shareholders and other members of the financial community. The subpage contains all the essential information on the POSR share price development, key indicators, dividends, financial reports, analyses and a financial calendar. A calendar of past investment conferences is also available on the website, together with the material presented at each event. Also presented are the events Sava Re will attend in the coming year.

13 Current year dividend distributions from distributable profits of the previous year. The dividend yield was calculated as the ratio of the dividend per share to the rolling average share price in the 12-month period.

14 GRI 2-29, 2-15.

Investors, shareholders and analysts can contact Sava Re’s office of the management board and of compliance by phone at +386 1 47 50 200 and by email at investor relations ir@sava-re.si.

4Report of the supervisory board15

The supervisory board of Sava Re d.d. (the Company or Sava Re) has prepared the following report in accordance with Article 282 of the Slovenian Companies Act (ZGD-1).

In 2023, the supervisory board monitored the Company’s operations and oversaw its management in a responsible manner. It periodically examined reports on various and select aspects of the business, passed appropriate resolutions, and monitored their implementation. Individual issues were addressed in more detail by the relevant supervisory board committees, and, on the basis of the supervisory board committee findings, the supervisory board also adopted appropriate resolutions and recommendations.

The supervisory board acted within the framework of the powers and responsibilities conferred upon it by legal and regulatory provisions, the Slovenian Corporate Governance Code for Listed Companies, the Company’s articles of association, and its rules of procedure.

COMPOSITION OF THE SUPERVISORY BOARD

The composition of the supervisory board changed in 2023. The term of office of Andrej Gorazd Kunstek and Edita Rituper, members of the supervisory board, employee representatives, expired on 12 June 2023. The works council reappointed Edita Rituper for a four-year term of office, and Blaž Garbajs was appointed as the second employee representative, his first term of office on the supervisory board. Both the appointed members began their new terms of office on 13 June 2023.

In 2023, the supervisory board comprised the following members: Davor Ivan Gjivoje Jr (Chairman), Keith William Morris (Deputy Chairman), Klemen Babnik, Matej Gomboši, Andrej Gorazd Kunstek (until 12 June 2023), Edita Rituper and Blaž Garbajs (from 13 June 2023).

The size and composition of the supervisory board allowed for effective discussion and the adoption of sound resolutions based on the broad range of expertise and experience provided by its members.

OPERATION OF THE SUPERVISORY BOARD

In its work and decision-making, the supervisory board is guided by the goals of the Company and the Sava Insurance Group as a whole. During sessions, the members expressed their opinions and positions and sought to reconcile any differences.

The supervisory board notes that the reports prepared by the management board for the supervisory board’s own use, and that of its committees, were appropriate for a careful examination of issues, and that they complied with both the relevant laws and internal regulations. Session materials were provided in a timely manner, allowing the members sufficient time to prepare themselves for the consideration of agenda items. The Company’s professional staff assisted in the conduct of the sessions and organised other supporting activities.

The supervisory board held ten sessions during 2023, one of which was held by correspondence. All members attended all sessions convened during their term of office. Most of the sessions were held at the Company’s head office. The number/intensity of sessions in 2023 were driven by the transition to IFRS 17, as well as by the strategically important development of the Company’s next five-year plan.

The members of the management board and the secretary of the supervisory board also participated in the discussions, whereas other professional staff assisted in certain agenda items.

During the year, the supervisory board discussed select and relevant aspects of the operations and activities of the Company and the Sava Insurance Group within its powers under Slovenian law and the Company’s articles of association.

15 GRI 2-10.

The major issues to which the supervisory board members paid particular attention in 2023 are, in particular, outlined below.

Business plans of the Company and the Sava Insurance Group

In late 2023, the supervisory board considered and approved the Business Plan of the Sava Insurance Group and Sava Re d.d. for 2024.

Financial reports – annual report

The supervisory board reviewed the unaudited financial statements of the Group and the Company for 2022, and it adopted the audited annual report of the Group and the Company for 2022, including the auditor’s report and opinion on the 2022 annual report, and the supervisory board’s own report on its activities in 2022.

Financial reports – interim reports

The supervisory board also periodically reviewed other select financial reports in 2023, in particular the statements of results of the Sava Insurance Group with the financial statements of Sava Re d.d. for January–March 2023 and January–September 2023, and the unaudited financial report for January–June 2023.

Investment

The supervisory board monitored asset management periodically and as part of its review of the annual report and interim financial reports of the Company and the Group.

Reinsurance operations and claims experience

The supervisory board was informed of the Company’s reinsurance programme for the current year. Throughout 2023, the supervisory board was regularly updated by the management board on major loss events in the domestic and global markets, and on potential claims that could have a material impact on the Company. Following the floods in Slovenia (and the wider region) in August, the supervisory board took note of the report on the reinsurance protection covering the Group and non-Group portfolio.

Supervision of subsidiaries

In addition to overseeing the operations of Sava Re as the parent company of the Sava Insurance Group, the supervisory board actively monitored the performance of the Group’s subsidiaries to the extent permitted by law.

Risk management system

Risk management function

The supervisory board monitored risk management periodically and as part of its review of the annual report and interim financial reports of the Company and the Group.

It took note of the risk report for the last quarter of 2022 and the risk reports for the first, second and third quarters of 2023. In March, it took note of the Own Risk and Solvency Assessment (ORSA) Report of Sava Re d.d. and the Sava Insurance Group for 2023. The report covered select and relevant information on the own risk and solvency assessment of Sava Re d.d. (the parent company) and the Sava Insurance Group.

At the end of 2023, the supervisory board approved the Risk Strategy of the Sava Insurance Group for 2023–2027.

Actuarial matters

In 2023, the supervisory board considered the actuarial function report of Sava Re d.d. for 2022, and it took note of the Sava Insurance Group non-life actuarial function report for 2022 and the Sava Insurance Group life actuarial function report for 2022.

Granting authorisation to new key function holders

Following the surrender of authorisation of the holder of both the actuarial function at the level of Sava Re and the non-life actuarial function at the level of the Sava Insurance Group, the supervisory board gave its consent to the management board in May 2023 to grant mandates to two new actuarial function holders, namely the holder of the non-life actuarial function at the level of the Sava Insurance Group and the holder of the actuarial function at the level of Sava Re.

Compliance monitoring

In 2023, the supervisory board of Sava Re took note of the annual report of the compliance function holder for 2022 and his annual work plan for 2023. It also took note of the compliance function holder’s half-yearly report for the period from 1 January to 30 June 2023.

Internal audit

In 2023, the supervisory board oversaw the activities of the Company’s internal audit department in accordance with its statutory powers. It also reviewed the internal audit report for the period from 31 October to 31 December 2022 and the annual report on internal auditing for 2022, including a quality assurance and improvement programme of the Company’s internal audit department, and drew up an opinion on the annual report, which was presented to the Company’s general meeting of shareholders. It also considered quarterly internal audit reports for the periods ending on 31 March 2023, 30 June 2023 and 30 September 2023. In addition, it monitored the quarterly reports of the internal audit department on internal auditing of the Sava Insurance Group (Group Internal Audit). All reports prepared by the Company’s internal audit department were presented by the head of the department.

The supervisory board is of the opinion that the internal audit reports are independent and objective and that the internal auditor’s recommendations and findings have been taken into account by the management board. It notes that the internal audit’s reviews, based on their available resources, have not revealed any significant irregularities in the Company’s operations. The supervisory board also notes that the internal audit department continuously monitors the development of the internal audit departments of Group subsidiaries, providing them with appropriate support. In addition, it also monitors the operations of these companies and has not detected any major irregularities.

At the end of 2023, the supervisory board considered and approved the annual work plan of the internal audit department for 2024.

In accordance with the International Standards on Internal Auditing, the supervisory board approved the proposed bonus for the head of the internal audit department relating to her individual performance in 2022.

Joint statement of key function holders

The supervisory board took note of the joint statement of all key function holders of the Group and the Company for 2022, including the opinion that all key risk areas were effectively managed and their functions were aligned to ensure ample coverage of the risks to which the Company and the Group were exposed.

Solvency II policies

In 2023, the supervisory board also took note of the update on the periodic review of Solvency II policies, discussing individual policies and giving its consent to the proposed amendments.

Personnel matters

Succession planning

In 2023, the supervisory board considered the management board’s regular report on succession planning and approved the Policy on Human Resource Development and Succession Planning of the Sava Insurance Group.

Appointment of supervisory board committees

With the expiry of his term of office on the supervisory board, Andrej Gorazd Kunstek also concluded his term of office on two supervisory board committees. To replace Mr. Kunstek’s positions, the supervisory board appointed Edita Rituper as a new member of the nominations and remuneration committee and Blaž Garbajs as a new member of the audit committee. Both took up their positions on the supervisory board committees on 13 June 2023. At the end of December, the supervisory board also appointed Blaž Garbajs as an additional member of the nominations and remuneration committee.

Remuneration of members of management and supervisory bodies

Variable remuneration of the management board in 2022

In 2023, the supervisory board adopted a resolution on the payment of variable remuneration to the members of the management board for business and individual performance in 2022, in accordance with the internal methodology for determining the variable remuneration of the management board members.

Methodology for determining the variable pay of a management board member

In March, the supervisory board adopted amendments to the methodology for determining the variable pay of a management board member, effective for 2023. In December, it reviewed the methodology again and adopted amendments with effect from 2024.

Remuneration policy and remuneration report

In accordance with the Slovenian Companies Act, in 2023 the management and supervisory boards submitted to the Sava Re general meeting of shareholders the Remuneration Policy for Members of Management and Supervisory Bodies of Sava Re d.d. and the Directors’ Remuneration Report of Sava Re d.d. for 2022. The general meeting approved the 2022 directors’ remuneration report. The advisory vote to approve the remuneration policy was not carried. The Company will again submit a revised policy to the shareholders for consideration at the next ordinary general meeting of Sava Re in 2024.

Goals of the management board for determining the variable remuneration for 2024

In late 2023, the supervisory board approved the management board’s goals for 2024 for determining the variable remuneration of a management board member.

Start of the nomination process for the appointment of a supervisory board member

In December, the supervisory board adopted a resolution to start the nomination process for the appointment of a supervisory board member with a four-year term commencing on 9 March 2025.

Adoption of internal regulations

In March and August 2023, the supervisory board approved amendments to the act on the management board relating to the Company’s internal organisation. In March, it also took note of the information on the revision of the Sustainable Investment Policy of the Sava Insurance Group.

Calling and holding the general meeting of shareholders

The supervisory board, together with the management board, called the Company’s general meeting of shareholders once in 2023, for 5 June 2023.

Consideration of additional reports

Benchmark analyses

The supervisory board discussed in depth the analysis of solvency and financial position reports of various other companies in the insurance industry for 2022.

Impact of inflation on claims

Because of the expected rebound of motor claim frequency back up to pre-pandemic levels, combined with rising inflation, pushing up claim amounts and claims provisions, the supervisory board was presented with periodic reports in 2023 on the impact of claims inflation on the non-life portfolio and on the measures taken to limit this impact on the performance of the Group’s motor insurance subsidiary.

Report on the activities of the works council

In March 2023, the supervisory board considered the works council’s report on the state of employee participation in management for 2022.

Monitoring corporate finance projects

The management board kept the supervisory board informed of developments in corporate finance projects.

Monitoring other projects

The supervisory board took note of the management board’s report on the implementation of IFRS 17 and IFRS 9, the preliminary calculations under the new accounting standards, and the state of the transition to these new standards.

Overseeing the work of supervisory board committees

In March 2023, the supervisory board considered the 2022 risk committee report and the 2022 audit committee report. It also assessed the quality of the work of the two committees. At each session, it monitored the committees’ activities through reports and session minutes.

Correspondence with market regulators

As part of the periodic risk reports, the supervisory board reviewed reports on correspondence between the Company and the Insurance Supervision Agency, other market regulators and inspection services. The supervisory board was regularly updated on the status of the periodic review launched by the Insurance Supervision Agency in October 2022. The supervisory board was informed of the results and conclusions of this review at the end of March 2023.

Strengthening supervisory board best practices

In line with best practice, the members of the supervisory board complete questionnaires upon taking office and annually thereafter, including a declaration that they have no conflicts of interest. In 2023, all the members of the supervisory board and its committees declared themselves to be independent. The declarations were noted by the supervisory board. The Company publishes the declarations of the supervisory board on its website.

In accordance with good practice, in 2023 the supervisory board evaluated its composition, its functioning, and the work of its individual members, and the supervisory board as a whole, including its cooperation with the management board. It carried out a self-assessment with positive results, and it included an action plan to continuously improve the board’s operation.

OPERATION OF SUPERVISORY BOARD COMMITTEES

AUDIT COMMITTEE

In accordance with statutory requirements,the Company’s supervisory board has established an audit committee to deal with accounting, financial and auditing matters.

Terms of reference

The duties and powers of the audit committee of the supervisory board are laid down by the Slovenian Companies Act, its rules of procedure and those of the supervisory board, and other autonomous legal acts (e.g., recommendations for audit committees).

Composition in 2023

The term of office of each audit committee member is limited by the term of office of the supervisory board.

In 2023, the audit committee comprised the following members: Matej Gomboši (chairman), Andrej Gorazd Kunstek (until 12 June 2023), Blaž Garbajs (from 13 June 2023), Katarina Sitar Šuštar (external member) and Dragan Martinović (external member).

Operation in 2023

The audit committee met nine times in 2023. All sessions were held at the Company’s head office, and all members attended all sessions convened during their term of office.

The main activities of the audit committee in 2023 are outlined below.

Overseeing the integrity of financial information

The audit committee monitored the integrity of financial information. The main focus was on monitoring the financial reporting processes, in particular the transition to the new reporting standard IFRS 17. In this respect, it made recommendations and suggestions on materials for supervisory board sessions to ensure compliance with relevant professional standards and adherence to appropriate reporting principles, such as completeness, transparency, and consistency of reporting.

Monitoring the efficiency and effectiveness of internal controls and internal audit

The audit committee monitored the efficiency and effectiveness of internal controls and internal audit activities based on the annual and quarterly internal audit reports, and it assessed the adequacy of the annual internal audit work plan. In addition, it monitored the quarterly reports of the internal audit department on internal auditing of Group companies (Group Internal Audit). The committee used these reports to keep up to date with and monitor information systems security activities to ensure business continuity and defence against cyberattacks. It also reviewed the quality assurance and improvement programme of the Company’s internal audit department and the department’s self-assessment for 2022. It discussed the proposed bonus for the director of internal audit for her individual-performance-based pay for 2022. The audit committee carried out an interview with the head of the internal audit department without the presence of the members of management and the

minute taker, in accordance with the internal audit standards and the recommendations for the work of audit committees issued by the Slovenian Directors Association. The audit committee also took note of information on the selection process for the provider of the internal audit quality assessment to be carried out in all Group companies in 2024.

Overseeing the operation of the risk management system

In line with the Company’s corporate governance system (the supervisory board having established a separate risk committee), the audit committee took note of the effectiveness and efficiency of the risk management framework by reviewing the minutes of the work and findings of the risk committee of the Sava Re supervisory board.

The audit committee also took note of the report on the regular annual review of the Solvency II policies for 2023. It took note of the amendments to the Internal Audit Policy of the Sava Insurance Group and Sava Re d.d. and gave a favourable opinion on the proposed amendments.

The audit committee also took note of the reports of other key function holders of Sava Re and the Sava Insurance Group for 2022.

Monitoring the statutory audit of separate and consolidated financial statements

In 2022, a contract was signed with Deloitte Revizija d.o.o., Dunajska Cesta 165, 1000 Ljubljana (Deloitte) to audit the financial statements for the period from 2022 to 2024. Deloitte has also audited the financial statements of Sava Re and the Sava Insurance Group for 2022 and 2023. In 2022 and 2023, the Group’s subsidiary companies were audited by the local audit staff of the same auditing firm.

Statutory audit of financial statements

During 2023, the audit committee met several times with the selected external auditor, monitored the audit of the separate and consolidated financial statements and took note of the post-audit management letter and the additional auditor’s report in relation to the audit of the financial statements for the year ended 31 December 2022. It also took note of the results of the auditor’s review of compliance with the ESEF Directive and the findings of the review of the absolute level of net assets as required by the local regulators in the relevant markets. The committee also took note of a number of other reports by the Company and the external auditor relating to the audit of the financial statements.

Setting audit focus areas

The audit committee took note of the 2023 audit plan and, among other things, participated in setting the audit focus areas. In December 2023, it also took note of the external auditor’s report and the management letter following the pre-audit of the 2023 financial statements. Together with the external auditor, the audit committee reviewed and followed up on information security findings and measures and the effectiveness of information system controls.

Selection procedure for the auditor of the Company’s annual report

At the general meeting of shareholders of Sava Re in 2022, Deloitte was elected to audit the financial statements for the period 2022–2024. In 2023, there was no need for the audit committee to conduct a selection process for a candidate firm to be the auditor of the Company’s annual report.

Preparation of the contract between the auditor and the Company

In 2022, a contract was signed with Deloitte to audit the financial statements for the period from 2022 to 2024. However, in 2023 there was no need for the audit committee to consider the proposal for the contract with the external auditor or any annex thereto.

Assessing the quality of the external auditor

In accordance with the internal methodology for assessing the quality of the external auditor, the audit committee carried out a quality assessment of the external auditor of the 2022 annual report and assessed the quality of the service provided in auditing the annual report of the Sava Insurance Group and Sava Re d.d.

Independence of the auditor of the Company’s annual report

Based on quarterly management board reports on non-audit services provided by the audit firms, the audit committee assessed the independence of the auditor of the annual report of the Company and the Group. It also took note of the report on the recruitment of the Group auditor’s team members or the granting of mandates to the Group auditor’s team members in corporate bodies or other key functions in individual companies of the Sava Insurance Group. The audit committee also carried out a separate interview with the external auditor without the presence of management.

External oversight of the auditor’s work

The audit committee took note of the letter of notification of the audit firm Deloitte on the requests received from the market regulators in relation to the submission of reports, namely from (1) the Insurance Supervision Agency (ISA) for the submission of the additional report to the audit committee for 2022 and (2) the Agency for Public Oversight of Auditing (APOA) for the submission of the reports issued based on the requirements of the resolution on the additional audit review of insurance companies and the additional auditor’s report for 2022.

Cooperation with the market regulators

In 2023, the audit committee took note of information on the completion of the Insurance Supervision Agency’s review of operations that started in 2022. It also took detailed note of the quarterly management board reports on the Company’s correspondence with the Insurance Supervision Agency, other market regulators and inspection services.

Performing other tasks

In 2023, the audit committee also performed other tasks. It prepared a report on its work in 2022 for the supervisory board. In the context of corporate oversight, the committee took note of the report on implementing the whistleblower protection system in a work-related context at Sava Re, presented by the compliance function holder. It also confirmed its work plan for 2024, including the attached timetable.

Further strengthening audit committee best practices

The audit committee carried out a self-assessment of the quality of its work, which was then presented to the supervisory board. The committee in turn took note of the assessment of the quality of its work carried out by the supervisory board in 2023. It also took note of information on the fit and proper assessment of its members and the assessment of its own competence as a collective body, both of

which were conducted in 2023. All the audit committee members signed an annual declaration of their independence, which was also presented to the supervisory board.

Conclusions

The chairman of the audit committee reported regularly to the supervisory board on the work and positions of the audit committee. The supervisory board regularly reviewed the minutes of the committee’s sessions.

The supervisory board is of the opinion that the audit committee thoroughly considered relevant issues within its terms of reference, taking into account the fact that the board established a separate risk committee. It provided the supervisory board with high quality professional assistance in the form of opinions and proposals.

The supervisory board also believes that the composition of the audit committee is appropriate and that the members have the professional and personal qualities to maintain a high level of quality and independence in their work.

Furthermore, the supervisory board is of the opinion that the audit committee received appropriate support in carrying out its work.

RISK COMMITTEE

The supervisory board believes that identifying and managing risk is a central part of good governance and has therefore set up a risk committee to monitor risk developments and provide advice and support to the supervisory board on risk-related matters.

Terms of reference

The risk committee performs its duties in accordance with the resolutions of the supervisory board, the Solvency II Directive, its rules of procedure, the rules of procedure of the supervisory board, the Insurance Act, the Slovenian Corporate Governance Code for Listed Companies, and other applicable risk management regulations.

Composition in 2023

The term of office of each member of the risk committee is limited by the term of office of the supervisory board.

In 2023, the risk committee comprised the following members: Keith William Morris (chairman), Davor Ivan Gjivoje Jr, Slaven Mićković (external member, deputy chairman) and Janez Komelj (external member).

Operation in 2023

The risk committee met six times in 2023. All members attended almost all the sessions convened (one member was excused from one session).

The main activities of the risk committee in 2023 are outlined below.

Overseeing the operation of the risk management system

The risk committee focused on overseeing the risk management system, primarily in terms of its reliability, effectiveness, and efficiency. It assessed the adequacy of the risk management system in place.

The risk committee reviewed in depth all risk management documents submitted to it, brought to its attention, or approved by the supervisory board, including:

•the quarterly risk reports of the Sava Insurance Group and Sava Re for the periods ending on 31 December 2022, 31 March 2023, 30 June 2023, and 30 September 2023;

•the own risk and solvency assessment (ORSA) report of Sava Re and the Sava Insurance Group for 2023;

•annual reports on the capital adequacy calculations under Solvency II and solvency and financial condition reports of the Company and the Group for 2022 (Company SFCR and Group SFCR);

•proposed amendments to the risk strategy of the Sava Insurance Group for 2023–2027.

The risk committee also took note of the report on the regular annual review of the Solvency II policies for 2023. It took note of the amendments to the Capital Management Policy of the Sava Insurance Group and Sava Re d.d. and the Own Risk and Solvency Assessment Policy of the Sava Insurance Group and Sava Re d.d., and it gave a favourable opinion on the proposed amendments.

It discussed the analysis of solvency and financial position reports in the insurance industry for 2022.

Performing other tasks

The risk committee also performed other tasks in 2023: It prepared a report on its work in 2022 for the supervisory board. As reinsurance is one of the areas of the risk management system by which a reinsurance company covers part of the assumed risks in excess of its retentions according to its tables of retention limits, the risk committee also reviewed the Company’s reinsurance programme for 2023. During the supervisory board sessions, the committee took note of the report on reinsurance protection covering the Group and non-Group portfolio and the follow-up report on claims inflation for the non-life business of Zavarovalnica Sava. The committee also took note of the 2023 credit rating reports issued by S&P Global Ratings and AM Best. It also took note of the audit committee’s work (audit committee minutes) to ensure mutual information and insight into the work of the other, and that key areas are adequately monitored through the complementary work of the two committees.

Further strengthening risk committee best practices

The risk committee carried out a self-assessment of the quality of its work, which was then presented to the supervisory board. The committee in turn took note of the assessment of the quality of its work carried out by the supervisory board in 2023. It also took note of the information on the fit and proper assessment of its members and the assessment of its own competence as a collective body, both of which were conducted in 2023. All the risk committee members signed an annual declaration of their independence, which was also noted by the supervisory board.

Conclusions

The chairman of the risk committee reported regularly to the supervisory board on the committee’s work. The supervisory board regularly reviewed the minutes of the committee’s sessions.

The supervisory board believes that the composition of the risk committee is appropriate and that the members have the professional and personal qualities to perform its duties with quality and independence.

The supervisory board also considers that the risk committee received appropriate support to carry out its work.

NOMINATIONS AND REMUNERATION COMMITTEE

In accordance with the Slovenian Corporate Governance Code for Listed Companies, the supervisory board has established a nominations and remuneration committee as a permanent special committee to make proposals on the selection criteria and the selection of candidates for the management and supervisory boards, prepare proposals on the remuneration of the management and supervisory

boards, and assist the supervisory board in other areas where, amongst other possible tasks, conflicts of interest may arise among the members of the supervisory board.

Terms of reference

The nominations and remuneration committee operates in accordance with the resolutions of the supervisory board, the Solvency II Directive, the rules of procedure of the supervisory board, the Insurance Act, and the Slovenian Corporate Governance Code for Listed Companies.

Composition in 2023

The term of office of each committee member is limited by the term of office of the supervisory board.

In 2023, the nominations and remuneration committee comprised the following members: Klemen Babnik (chairman), Davor Ivan Gjivoje Jr, Keith William Morris, Matej Gomboši, Andrej Gorazd Kunstek (until 12 June 2023), Edita Rituper (from 13 June 2023) and Blaž Garbajs (from 14 December 2023).

Operation in 2023

The nominations and remuneration committee met four times in 2023. All the members attended all committee sessions.

The main activities of the nominations and remuneration committee in 2023 are outlined below.

Succession planning

In 2023, the nominations and remuneration committee considered the management board’s regular report on succession planning and approved the Policy on Human Resource Development and Succession Planning of the Sava Insurance Group.

Act on the management board

The nominations and remuneration committee considered the proposed amendments to the act on the management board and recommended that the supervisory board approve them.

Remuneration of members of management and supervisory bodies

Variable remuneration of the management board in 2022

In accordance with the internal methodology for determining the variable pay of a management board member, the nominations and remuneration committee assessed the management board’s performance in 2022. This assessment served as the basis for the supervisory board’s resolution on the payment of variable remuneration to management board members for their business and individual performance in 2022.

Methodology for determining the variable pay of a management board member

The nominations and remuneration committee considered the proposed amendments to the methodology for determining the variable pay of a management board member for 2023 and 2024 and recommended that the supervisory board approve them.

Remuneration policy and remuneration report

The nominations and remuneration committee considered the proposed Directors’ Remuneration Report of Sava Re d.d. for 2022 (Article 294b of ZGD-1) and the proposed Remuneration Policy for Members of Management and Supervisory Bodies of the Sava Insurance Group (Article 294a of ZGD-1), which the management and supervisory boards then submitted to the 39th general meeting for approval. The remuneration policy was not approved by the general meeting. At the end of 2023, the committee again reviewed the proposed amendments to the Remuneration Policy for Members of Management and Supervisory Bodies of the Sava Insurance Group (Article 294a of ZGD-1) and

recommended that the supervisory board resubmit the policy for approval to the general meeting to be convened in 2024.

Goals of the management board for determining the variable remuneration for 2024

At the end of 2023, after extensive discussion, the nominations and remuneration committee proposed that the supervisory board approve the proposed goals of the management board for 2024.

Performing other tasks

The chairman of the nominations and remuneration committee reported regularly to the supervisory board on the work of the committee. The supervisory board regularly reviewed the minutes of the committee’s sessions.

FIT AND PROPER COMMITTEE

In accordance with the law and the Company’s fit and proper policy, the management and supervisory boards have appointed a dedicated fit and proper committee for the fit and proper assessment of the management board and the supervisory board, including all its committees, and the members of these bodies.

Terms of reference

The fit and proper committee operates in accordance with the resolutions of the supervisory board, the Solvency II Directive, the rules of procedure of the supervisory board, the Insurance Act, the Slovenian Corporate Governance Code for Listed Companies, and the recommendations of the Insurance Supervision Agency.

Composition in 2023

The term of office of each committee member is limited by the term of office of the supervisory board.

In 2023, the fit and proper committee comprised the following members: Keith William Morris (chairman), Klemen Babnik, Rok Saje (compliance officer) and Klara Hauko (director of human resource management).

Operation in 2023

The fit and proper committee met two times in 2023. All the members attended both sessions.

The main activities of the fit and proper committee in 2023 are outlined below.

In March 2023, the committee carried out a fit and proper assessment of the candidates for the position of a member of the supervisory board of Sava Re representing the interests of employees. At the same time, it carried out a regular annual fit and proper assessment of all incumbent members of the management board and the supervisory board, including its committees. It also conducted its periodic fit and proper assessment of the aforementioned management and supervisory boards as collective bodies.

When changes were made to the membership of the supervisory board’s committees, the fit and proper committee reassessed the fitness and suitability of the new members to also serve as members of the individual committees. It also reassessed the competence of each committee as a collective body in its new composition.

Performing other tasks

The chairman of the fit and proper committee reported regularly to the supervisory board on the committee’s work. The supervisory board regularly reviewed the minutes of the committee’s sessions.

CONCLUDING FINDINGS

The year 2023 was marked by a challenging global geopolitical and economic situation, and in August Slovenia (and the wider nearby region) were hit by flooding on an unprecedented scale. This presented the Sava Insurance Group with new challenges. The supervisory board notes that the advanced risk management system, timely actions, capital strength and customer focus of the Company enabled the Sava Insurance Group to achieve virtually all the goals set in its plan for the 2023 financial year, despite the aforementioned loss events and despite the difficult business environment. This assessment of the supervisory board is also based on the report of the independent auditor on the financial statements of Sava Re d.d. and the Sava Insurance Group for 2023, and those of the key function holders of the Company’s risk control system.

As of 2023, the Sava Insurance Group made the transition to the new accounting standards IFRS 17 and IFRS 9. The standards have been successfully introduced into regular reporting processes at all levels.

In 2023, the Sava Insurance Group entered the 2023–2027 strategy period with a new strategy that strategically builds upon and further strengthens the previous strategy period.

In 2024, the supervisory board will also pay particular attention to overseeing the management of risks arising from business operations, taking into account the challenging geopolitical situation. In 2024, in addition to its day-to-day responsibilities, it will also focus in particular on monitoring the implementation of the 2024 business plan and the five-year strategy.

Equally so, the supervisory board will continue to give its steadfast support to the management board, within the scope of its responsibilities, possibilities, and defined powers.

ANNUAL REPORT 2023

The Company’s management board submitted the audited Annual Report of the Sava Insurance Group and Sava Re d.d. for 2023 for approval to the supervisory board. The audit committee of the supervisory board has reviewed the unaudited and the audited annual reports of the Sava Insurance Group and Sava Re d.d. for the year ended 31 December 2023, including the auditor’s pre-audit report to the management, the auditor’s letter to the management on the audit, and the additional auditor’s report to the audit committee on the audit of the financial statements as at 31 December 2023, prepared in accordance with Article 11 of Regulation (EU) No 537/2014, together with the committee’s opinion thereon. In accordance with its powers, the supervisory board examined the audited annual report at its session on 4 April 2024.

The supervisory board notes that the annual report for 2023 is clear and extensive, and complies with the content and disclosure requirements of the Companies Act, International Financial Reporting Standards and Insurance Act with its implementing regulations.

The supervisory board has also noted the opinion of the auditor Deloitte Revizija d.o.o., Dunajska Cesta 165, 1000 Ljubljana, which audited the 2023 annual report of the Sava Insurance Group and Sava Re d.d. and carried out audit reviews in all of the Group’s subsidiary companies. The supervisory board agrees with the positive opinion of the authorised auditor Deloitte, who finds that the consolidated and separate financial statements provide, in all material respects, a fair view of the financial position of the Sava Insurance Group and Sava Re d.d. as at 31 December 2023, and their profit or loss, other comprehensive income and cash flows for the year then ended, in accordance with International Financial Reporting Standards, as adopted by the European Union.

Based on its review of the 2023 annual report, and based on the opinion of the external auditor and the opinion of the audit committee, the supervisory board is of the opinion that the annual report gives a true and fair opinion of the assets and liabilities, financial position, profit or loss, and cash flows of the Sava Insurance Group and Sava Re d.d.

The supervisory board hereby approves the audited Annual Report of the Sava Insurance Group and Sava Re d.d. for 2023 as submitted by the management board.

DETERMINATION OF AND PROPOSAL FOR APPROPRIATION OF DISTRIBUTABLE PROFIT OF SAVA RE

The supervisory board has also reviewed the management board’s proposal for the appropriation of the distributable profit as at 31 December 2023, subject to final approval by the general meeting of shareholders of Sava Re. The supervisory board of Sava Re d.d. gives its consent to the management board’s proposal to the general meeting regarding the appropriation of the distributable profit as at 31 December 2023 of EUR 57,546,609.84; EUR 27,120,968.00 to be appropriated for dividends, and the remaining part of the distributable profit of EUR 30,425,641.84 to be left unallocated as retained earnings. Thus, the proposed gross dividend per share is EUR 1.75.

The supervisory board proposes that the general meeting of shareholders grant discharge to the management board for the financial year 2023.

Davor Ivan Gjivoje, Jr.

Chairman of the Supervisory Board of Sava Re d.d.

Ljubljana, 4 April 2024

5Corporate governance statement 16

Sava Re issues this corporate governance statement to publicly disclose information on the nature, structure and effectiveness of the Company’s internal governance and control system. It aims to increase transparency, accountability and trust among all the Company’s stakeholders, including shareholders, employees and the general public. The Company prepares this statement in accordance with Article 70(5) of the Slovenian Companies Act (ZGD-1) and the recommendations of the Slovenian Corporate Governance Code for Listed Companies. The statement is a special section of the business report as part of the annual report for 2023. It covers the period from 1 January 2023 to 31 December 2023, with additional disclosure of significant events occurring after this period up to the date of its publication. The statement is available in electronic form for at least five years from the date of its publication on the website of the Ljubljana Stock Exchange d.d. in its SEOnet information system (http://seonet.ljse.si) and on the Company’s official website (http://www.sava-re.si).

5.1Corporate governance policy

In December 2023, with the consent of the Company’s supervisory board, the Sava Re management board adopted the revised Corporate Governance Policy of the Sava Insurance Group and the revised Corporate Governance Policy of Sava Re d.d. The documents set out the main subsidiary governance principles for the Sava Insurance Group and the governance rules for Sava Re, taking into account the goals, mission, vision and values of the Group. The policies represent a commitment to future action.

The Corporate Governance Policy of Sava Re d.d. is available through the Ljubljana Stock Exchange SEOnet information system and from the Company’s website.

5.2Statement of compliance with the Slovenian Corporate Governance Code for Listed Companies

As a public limited company, Sava Re’s reference code in 2023 was the Slovenian Corporate Governance Code for Listed Companies adopted by the Ljubljana Stock Exchange and the Slovenian Directors’ Association on 9 December 2021. It is available in Slovenian and English from the Ljubljana Stock Exchange website.

The management and supervisory boards of Sava Re hereby state that Sava Re operates in compliance with the Code, with individual deviations that are disclosed and explained below.

5.2.1Corporate governance statement

Recommendation 5.6: External assessment of adequacy of corporate governance statement

The Company has yet to ensure an external assessment of the adequacy of the corporate governance statement. It intends to carry out an external assessment of the corporate governance statement in the current strategy period.

16 GRI 2-23.

5.2.2Remuneration policy and remuneration report for members of management and supervisory bodies17

Recommendation 6.1: Designing a remuneration policy

A remuneration policy and a remuneration report for members of management and supervisory bodies were presented to the 39th general meeting of shareholders of Sava Re (held on 5 June 2023). As the remuneration policy was not approved at the general meeting, an amended policy will be considered at the next general meeting in 2024 (scheduled for 27 May 2024).

5.2.3Relationship between the Company and shareholders – Relations with shareholders

Recommendation 10.1: Holding general meetings by electronic means

The Company has not yet provided for the possibility of attending and voting at the general meeting by electronic means without physical presence. It intends to amend its internal rules (articles of association and rules of procedure for the general meeting) during the current strategy period.

5.2.4Supervisory board

Recommendation 14.6: Duties of the supervisory board – Supervisory board members’ access to the archives after the end of their term of office

In 2024, the Company will amend the rules of procedure of the supervisory board to include a provision on the access of members to the supervisory board’s archives after the end of their term of office.

Recommendation 16.4: Evaluation of the supervisory board

The supervisory board does not perform periodic external assessments of its evaluation. The Company intends to perform periodic external assessments of the supervisory board’s evaluation during the current strategy period.

Recommendation 18.4: Supervisory board committees – Term of office of an external member of a committee not tied to the term of office of the supervisory board

In the Company, the terms of office of all committee members are tied to the term of office of the supervisory board. For practical reasons, given the complexity of fit and proper assessment procedures upon the appointment of new committee members and upon their reappointment, the terms of office of external committee members are tied to the terms of office of the supervisory board.

5.2.5Transparency in operations – Public disclosure of significant information

Recommendation 32.7: Public disclosure of the rules of procedure of management bodies

The Company has published the rules of procedure of both the general meeting and the supervisory board on its website but not those of the management board, as they are an internal procedural document.

17 GRI 2-19, 2-20.

5.3Governing bodies of Sava Re18

Management system

Sava Re has a two-tier management system with a management board that conducts the business and a supervisory board that oversees operations. The governing bodies – the general meeting, and the supervisory and management boards – act in compliance with laws, regulations, the articles of association and internal rules. The Company’s articles of association and the rules of procedure of both the general meeting and the supervisory board are posted on the Company’s website.

The risk management system is a cornerstone of strong governance. The management board ensures the effectiveness of this system. Rules of the risk management systems and own risk and solvency assessment rules are set out in detail in the Company’s internal regulations.

The Company has certain functions integrated into its organisational structure and decision-making processes. These are the risk management function, internal audit function, actuarial function and compliance function, defined by applicable law as the key functions of the governance system (key functions). They are integrated in order to strengthen the three lines-of-defence framework in the Company’s control system. Rules governing individual key functions are set out in detail in the Company’s internal regulations.

5.3.1General meeting of shareholders

The general meeting of shareholders is the supreme body of the Company through which shareholders exercise their rights in Company matters. The terms of reference of the general meeting are governed by its rules of procedure, which are posted on the Company’s website.

Convening the general meeting

The general meeting of shareholders, through which the shareholders of Sava Re exercise their rights in the affairs of the Company, is convened at least once a year, but not later than by the end of August. The general meeting may be convened in other cases as provided by law, the Company’s articles of association, and whenever this is in the interest of the Company. As a rule, the general meeting is convened by the management board. In the cases stipulated by law, it may be convened by the supervisory board or shareholders.

The Company publishes general meeting notices through the SEOnet system provided by the Ljubljana Stock Exchange and through its website (www.ljse.si), on the AJPES website (www.ajpes.si) and on the Company’s official website (www.sava-re.si), as well as in printed form in one daily newspaper as provided for in the articles of association (in Delo or Dnevnik) or in the Official Gazette of the Republic of Slovenia.

Participation in the general meeting

To attend the general meeting and exercise their voting rights, shareholders must send the Company a registration form no later than by the end of the fourth day prior to the general meeting and must be registered holders of shares listed in the central register of book-entry securities at the end of the seventh day prior to the general meeting.

The conditions of participation or exercise of voting rights at the general meeting must be set out in detail in the notice of the general meeting.

18 GRI 2-9.

Adoption of resolutions

General meeting resolutions are adopted by a majority of votes cast (simple majority), unless a larger majority or other requirements are stipulated by law or the articles of association.

Exercise of voting rights

Shareholders may exercise their voting rights in the general meeting according to their share of the Company’s share capital. Each no-par-value share with voting rights carries one vote. Voting rights can be exercised by proxy based on a written proxy form, or through financial organisations or shareholder associations.

Treasury shares carry no voting rights.

The general meeting in 2023

The general meeting of shareholders was convened once in 2023.

In accordance with the Company’s 2023 financial calendar, the 39th general meeting of shareholders was held on 5 June 2023. Among other things, the general meeting was presented with the annual report for 2022, including the auditor’s opinion and the written report of the supervisory board to the annual report, and the annual report on internal auditing for 2022 with the opinion of the supervisory board thereto. The general meeting received the management board’s report on treasury shares. At the 39th general meeting, the shareholders adopted the management and supervisory boards’ proposal to use EUR 24,796,313.60 of the distributable profits for dividends. The dividend was EUR 1.60 gross per share, payable on 21 June 2023 to shareholders of record on 20 June 2023. The shareholders granted discharge to the management and supervisory boards for 2022. At the 39th general meeting, the shareholders approved the Directors’ Remuneration Report of Sava Re d.d. for the Financial Year 2022, whereas the advisory vote on the resolution to approve the Remuneration Policy for Members of Management and Supervisory Bodies of Sava Re d.d. was not carried. Although the remuneration policy is valid and consistent with the law, it is not fully aligned with the recommendations of the shareholder Slovenian Sovereign Holding (SSH) published on 4 May 2023. The Company will put a revised remuneration policy to a vote at the next annual general meeting of Sava Re. The remuneration report and the remuneration policy were also published on the Company’s website immediately after the 39th general meeting and will remain publicly available for at least ten years. No legal actions to challenge any general meeting resolutions were announced at the general meeting.

5.3.2Supervisory board

The supervisory board oversees the Company’s conduct of business and appoints members of the management board.

In accordance with the Company’s articles of association and applicable law, the supervisory board is composed of six members, of which four (shareholder representatives) are elected by the Company’s general meeting, and two (employee representatives) are elected by the works council, which informs the general meeting of its decision. Supervisory board members are appointed for a term of up to four years and may be re-elected. The supervisory board members elect a chair and deputy chair from among their number.

The supervisory board is composed in such a manner as to ensure responsible oversight and decision-making in the best interest of the Company. Its composition takes account of diversity in terms of technical knowledge, experience and skills, and the way members complement each other so as to form a homogeneous team, which also ensures a sound and prudent oversight of the Company’s affairs. In 2023, the Company sought to align the composition of the supervisory board with the

Company’s policy on the diversity of the management and supervisory boards. The Company’s policy on diversity of the management and supervisory boards is posted on the Company’s website.

In 2023, the gender balance on the supervisory board was 16.67% women and 83.33% men. The implementation of the policy on diversity of the supervisory board in 2023 is detailed below.

Terms of reference and operation of the supervisory board

The supervisory board must comply with the applicable legislation, particularly the Slovenian Companies Act and the Insurance Act, the Company’s articles of association and the supervisory board’s rules of procedure. In accordance with the law, the supervisory board must be convened at least on a quarterly basis, generally after the end of each quarter of the financial year, and more frequently if necessary. The terms of reference of the supervisory board are governed by the Rules of Procedure of the Supervisory Board of Sava Re d.d., which are posted on the Company’s website.

Remunerations, compensation and other benefits

The supervisory board members are entitled to remuneration for performing their function, attendance fees and reimbursement of expenses. The remuneration must not be directly linked to the Company’s performance, as demonstrated by its financial statements. The amount of the above remuneration was set by resolution of the general meeting and is also regulated by the Remuneration Policy for Members of Management and Supervisory Bodies of Sava Re d.d., which was submitted for approval to the 39th general meeting (held on 5 June 2023). For more details on the remuneration policy, please refer to the section “The general meeting in 2023”.

The remuneration of supervisory board members in 2023 is disclosed in more detail in section 16.10 “Related party disclosures” in the notes to the financial statements and in more detail in the Directors’ Remuneration Report for 2023, which will be submitted as a separate document to the general meeting.

Commitment to identify the existence of any conflict of interest

Before taking office and afterwards periodically (annually) and upon each change, each supervisory board member signs and submits to the supervisory board a statement of their independence, thereby taking a position with respect to individual conflicts of interest, in accordance with the criteria set out in the Code. The statements of independence of the members of the Company’s supervisory board are posted on the Company’s website.

POSR holdings of supervisory board members

Supervisory board members report any acquisition or disposal of Company shares to the Company and relevant organisations, and Sava Re posts this information.

Details on POSR shares held by supervisory board members as at 31 December 2023 are provided in section 3 “Shareholders and share trading”.

The supervisory board in 2023

5.3.3Supervisory board committees

Pursuant to legislation, the Code and best practice, the supervisory board appoints one or more committees, tasking them with specific areas, the preparation of draft resolutions of the supervisory board, the implementation of resolutions of the supervisory board and other tasks requiring specialist expertise, thereby providing the board with professional support.

The Company has established the following supervisory board committees:

•the audit committee,

•the risk committee,

•the nominations and remuneration committee,

•the fit and proper committee.

Audit committee

The main tasks of the audit committee are to:

•oversee the integrity of financial information;

•monitor the efficiency and effectiveness of internal controls, the operation of the internal audit department and risk management systems;

•monitor the statutory audit of independent and consolidated financial statements;

•perform other tasks assigned by a valid resolution of the supervisory board, in line with statutory requirements and best practices of comparable companies or insurance groups.

Risk committee

The main tasks of the risk committee are to:

•assess the impact of various types of risk on economic and regulatory capital;

•assess the Group’s overall risk governance framework, including the risk management policy, and the risk strategy, and monitor operational risks;

•assess the appropriateness and adequacy of risk management documents to be approved by the supervisory board;

•perform other tasks assigned by a resolution of the supervisory board, in line with statutory requirements and best practices of comparable companies or insurance groups.

In 2023, the risk committee comprised the following members: Keith William Morris (chairman), Davor Ivan Gjivoje Jr, Slaven Mićković (external member) and Janez Komelj (external member).

Nominations and remuneration committee

The main tasks of the nominations and remuneration committee are to:

•draft proposals for the supervisory board regarding the criteria for membership of the management board, and consider and draft proposals concerning nominations to be decided by the supervisory board;

•preliminarily consider the proposal of the chair of the management board regarding the composition of the management board and the Company’s governance, and draw up proposals for the supervisory board;

•carry out the nomination process for candidates for membership of the supervisory board who are shareholder representatives;

•provide support in drawing up and implementing a system for remuneration, reimbursements and other benefits for management board members.

Fit and proper committee

The main tasks of the fit and proper committee are to:

•carry out procedures for assessing the competence of the supervisory board, supervisory board committees and the management board as collective bodies, and conduct fit and proper assessments of individual members of these bodies;

•at the request of the Company’s works council, carry out a fit and proper assessment of any employee representative on the supervisory board elected by the works council.

Composition of the supervisory board in 2023

Full name

Davor Ivan Gjivoje Jr

Keith William Morris

Klemen Babnik

Matej Gomboši

Edita Rituper

Blaž Garbajs

Andrej Gorazd Kunstek

Function

chair

deputy chair

member

member (from 13 June 2023)

member (until 12 June 2023)

Employment

Networld Inc. / DGG Holdings Ltd., 36 Cattano Ave. Fl. 5. Ste. 3, Morristown, NJ 07960, USA

retiree

Ministry of Finance of the Republic of Slovenia, Župančičeva Ulica 3, 1000, Ljubljana, Slovenia

Financial Administration of the Republic of Slovenia, Šmartinska Cesta 55, 1000 Ljubljana, Slovenia

Sava Re d.d., Dunajska Cesta 56, 1000 Ljubljana, Slovenia

First appointed

7 March 2017

15 July 2013

17 July 2021

1 January 2022

13 June 2023

23 January 2013

End of term of office

8 March 2025

17 July 2025

13 June 2027

12 June 2023

Representative of shareholders/employees

of shareholders

of employees

Attendance at sessions

10/10

5/5

Gender

Nationality

American

British

Slovenian

Year of birth

1968

1948

1983

1975

1966

1980

1974

Education

B.A. in political science, master of science in economics

B.Sc. in management sciences, specialised in finance and marketing

university graduated lawyer

doctoral degree in computing and informatics

university graduated economist

university graduated economist, master of science in economics

Professional profile

strategic management, business administration, management of equity investments, risk management, insurance business

strategic management, business administration, banking and insurance business, risk management

business administration, leadership, corporate governance, general legal affairs, compliance monitoring

business administration, governance, information technology, digitalisation, audit

insurance business, governance, corporate governance, sustainable development

finance, corporate finance, insurance business, governance

insurance and reinsurance business, actuarial affairs, governance

Independence under the Code

YES

Memberships in committees and functions

•risk committee, member

•nominations and remuneration committee, member

•risk committee, chair

•nominations and remuneration committee, member

•fit and proper committee, chair

•nominations and remuneration committee, chair

•fit and proper committee, member

•audit committee, chair

•nominations and remuneration committee, member

•nominations and remuneration committee, member (from 13 June 2023)

•audit committee, member

(from 13 June 2023)

•nominations and remuneration committee, member (from 14 December 2023)

•audit committee, member (until 12 June 2023)

•nominations and remuneration committee, member (until 12 June 2023)

Full name

Davor Ivan Gjivoje Jr

Keith William Morris

Klemen Babnik

Matej Gomboši

Edita Rituper

Blaž Garbajs

Andrej Gorazd Kunstek

Attendance of committee sessions

•risk committee: 6/6

•nominations and remuneration committee: 3/3

•risk committee: 6/6

•nominations and remuneration committee: 3/3

•fit and proper committee: 2/2

•nominations and remuneration committee: 3/3

•fit and proper committee: 2/2

•audit committee: 9/9

•nominations and remuneration committee: 3/3

•nominations and remuneration committee: 2/3

•audit committee: 4/9

•nominations and remuneration committee: 0/3

•audit committee: 5/9

•nominations and remuneration committee: 1/3

Notes on memberships of management or supervisory bodies of third parties

Networld Inc. / DGG Holdings Ltd., 36 Cattano Ave. Fl. 5. Ste. 3, Morristown, NJ 07960, USA – chief executive officer

Adria Lines Dover, Delaware, USA – chief executive officer

Sava d.d., Dunajska 152, 1000 Ljubljana, Slovenia – chair of the supervisory board

Sava Turizem d.d., Dunajska 152, 1000 Ljubljana, Slovenia – chair of the supervisory board

HMS Victory Preservation Endowment Fund Ltd, HM Naval Base (PP66) Portsmouth Hampshire PO1 3NH, UK – chair of the board of directors

Sava d.d., Dunajska 152, 1000 Ljubljana, Slovenia – member of the supervisory board

Sava Turizem d.d., Dunajska 152, 1000 Ljubljana, Slovenia –

member of the supervisory board

Imark, Matej Gomboši, Inštitut za Svetovanje in Informatiko, s.p., Panonska Ulica 101, Beltinci, 9231 Beltinci, Slovenia – founder

* Blaž Garbajs is also a member of the audit committee of the associate company Diagnostic Centre Bled, and this committee also serves as the audit committee for two of the associate’s subsidiaries.

External member of supervisory board committees in 2023

Full name

Katarina Sitar Šuštar

Dragan Martinović

Slaven Mićković

Janez Komelj

Rok Saje

Klara Hauko

Supervisory board committee

audit committee

risk committee

fit and proper committee

First appointed

17 July 2021

End of term of office

17 July 2025

Attendance at sessions

9/9

6/6

2/2

Gender

Nationality

Slovenian

Year of birth

1971

1959

1958

1954

1977

1972

Education

university graduated economist, MBA

university graduated economist

master of mathematical sciences, doctor of science in economics

master of economics, master of computer science, doctor of science in economics

university graduated lawyer

university graduated economist, MBA, master of occupational psychology and organisation

Professional profile

audit, accounting, finance, taxation, banking and insurance, corporate governance, certified auditor

audit, accounting, finance, taxation, commercial trade, certified auditor

banking, modelling, risk management

insurance operations, actuarial affairs, risk management

insurance operations, general legal affairs, insurance law, compliance

human resources management and development, work organisation

Employment

University of Ljubljana, Faculty of Economics, Kardeljeva Ploščad 17, 1000 Ljubljana, Slovenia

UHY Revizija in Svetovanje d.o.o., Vurnikova 2, 1000 Ljubljana, Slovenia

Ministry of Labour, Family, Social Affairs and Equal Opportunities, Štukljeva Cesta 44, 1000 Ljubljana, Slovenia

retiree

Sava Re d.d., Dunajska Cesta 56, 1000 Ljubljana, Slovenia

Notes on memberships of management or supervisory bodies of third parties

Flat, Katarina Sitar Šuštar, s.p., Zaprice 6b, 1241 Kamnik, Slovenia – founder

Shramba d.o.o.,

Vilharjeva Cesta 27, 1000 Ljubljana, Slovenia – founder and managing director

UHY Revizija in Svetovanje d.o.o., Vurnikova 2, 1000 Ljubljana, Slovenia – founder and holder of procuration

SM, Poslovno Svetovanje, Slaven Mićković, s.p., Avčinova 12, 1000 Ljubljana, Slovenia – founder

The operation of the supervisory board and its committees in 2023 is detailed in section 4 “Report of the supervisory board”.

5.3.4Management board

The management board runs the Company and represents it in public and legal matters. It is composed of at least two but no more than five members, of whom one is the chair. The chair and members of the management board are appointed by the supervisory board for a period of five years. Such appointments are renewable without limitations. The chair and all members of the management board are in regular employment on a full-time basis. The exact number of management board members and

the areas for which they are responsible is laid down by the supervisory board in the Act on the Management Board of Sava Re d.d.

The management board is composed in a manner to ensure responsible oversight and decision-making in the best interest of the Company. The management board’s composition takes account of the diversification of technical knowledge, experience and skills, and the way members complement each other so as to form a homogenous team and ensure sound and prudent conduct of the Company’s business. In 2023, the Company sought to align the composition of the management board with the Company’s policy on diversity of the management and supervisory boards.

The Company’s policy on diversity of the management and supervisory boards is posted on the Company’s website.

In 2023, the gender balance on the management board was 33.33% women and 66.67% men until 21 March 2023, and 25% women and 75% men from 22 March 2023. The implementation of the policy on diversity of the management board in 2023 is detailed below.

Terms of reference and operation of the management board

The management board operates in accordance with the applicable legislation, particularly the Slovenian Companies Act and the Insurance Act, as well as with the articles of association and the act on the management board and its rules of procedure. Terms of reference and operation of the management board are defined in more detail in the Rules of Procedure of the Management Board of Sava Re d.d.

Delimitation of competencies between the management and supervisory bodies is described in greater detail in the Corporate Governance Policy of Sava Re d.d., which is posted on the Company’s website.

Remunerations, compensation and other benefits

The remuneration of the management board members consists of a fixed and a variable component. The variable component of the salary of a management board member is composed of (1) business-performance-based pay, (2) individual-performance-based pay linked to the annual goals of each management board member and (3) team-performance-based pay relating to joint goals of the management board. The variable component must not be determined so as to allow the rewarding of behaviour that encourages the exposure of the Company to uncontrolled risk. Remuneration, reimbursements and other benefits of management board members are set out in the employment contract made between the Company and each management board member. The methodology used to establish both the variable pay and the amount of the bonus of each management board member is adopted by the supervisory board. Sava Re prepared an update of its remuneration policy in 2023. For more details on the remuneration policy, please refer to the section “The general meeting in 2023”.

The remuneration of the members of the management board in 2023 is disclosed in more detail in section 16.10 “Related party disclosures” in the notes to the financial statements and in more detail in the Directors’ Remuneration Report for 2023, which will be submitted as a separate document to the general meeting.

Share ownership

The management board members report any acquisition or disposal of the Sava Re shares to the Company and to the relevant institutions, which is then published by Sava Re.

Details on POSR shares held by management board members as at 31 December 2023 are provided in section 3 “Shareholders and share trading”.

The management board in 2023

In 2023, the management board comprised the following members: Marko Jazbec (chairman), Polona Pirš Zupančič, Peter Skvarča and David Benedek (the latter from 22 March 2023).

The average age of the members of the management board is 50.38 years. All the members of the management board are citizens of the Republic of Slovenia.19

19 GRI 202-02.

Composition of the management board in 2023

Full name

Marko Jazbec

Polona Pirš Zupančič

Peter Skvarča

David Benedek

Function

chairman

member

member (from 22 March 2023)

Work area at management board level

•coordination of work of the management board

•general, HR, organisational and legal affairs

•public relations

•compliance

•internal audit

•management of strategic investments in Slovenia-based insurance companies (from 22 March 2023)

•information technology

•sustainable development

•corporate finance

•strategic planning and controlling

•accounting

•investor relations

•capital and risk management

•actuarial affairs

•development of reinsurance and reinsurance underwriting, Group and non-Group

•reinsurance protection (retrocession), Group and non-Group

•development of reinsurance processes and technology

•reinsurance technical accounting

•management of strategic investments in non-Slovenian subsidiaries

•financial operations and asset management

•management of strategic investments in pension companies and asset management companies (AMCs)

•management of strategic investments in healthcare companies

•managing overarching cooperation with commercial banks or banking groups at Group level

First appointed

12 May 2017

14 January 2018

19 June 2020

22 March 2023

End of term of office

13 May 2027

15 January 2028

19 June 2025

22 March 2028

Gender

Nationality

Slovenian

Year of birth

1970

1975

1973

Education

university graduated economist

university graduated economist, master of science in economics

university graduate in political sciences / international relations, master’s degree in European integration

university graduated economist, master of science in economics

Professional profile

banking, insurance business, finance, strategic management, corporate governance, business administration

insurance and reinsurance business, corporate governance, controlling, accounting, risk management, actuarial affairs, corporate governance, business administration

insurance and reinsurance business, corporate governance, business administration

banking, insurance business, finance, corporate governance, business administration

Notes on memberships of management or supervisory bodies of third parties

Slovenian Insurance Association, GIZ, Železna Cesta 14, 1000 Ljubljana, Slovenia – member of the association’s council

Tennis Association of Slovenia, Šmartinska 152, 1000 Ljubljana, Slovenia – member of the board of directors

Notes on memberships of management or supervisory bodies of related parties

Illyria sh.a., Sheshi Nëna Terezë 33, 10000 Pristina, Kosovo – chair of the board of directors

Illyria Life sh.a., Sheshi Nëna Terezë 33, 10000 Pristina, Kosovo – chair of the board of directors

Sava Osiguranje a.d., Ulica Svetlane Kane Radević br. 1, 81000 Podgorica, Montenegro – chair of the board of directors

Sava Životno Osiguranje a.d.o., Bulevar Vojvode Mišića 51, 11000 Belgrade, Serbia – chair of the supervisory board

Sava Infond, Družba za Upravljanje, d.o.o., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – chair of the supervisory board (until 15 August 2023), deputy chair of the supervisory board (from 16 August 2023)

Sava Osiguruvanje, a.d., Železnička 41, Opština Centar, PF 133, 1000 Skopje, North Macedonia – non-executive member of the board of directors

Sava Penzisko Društvo a.d., Ulica Majka Tereza 1, 1000 Skopje, North Macedonia – supervisory board member

Zavarovalnica Sava d.d., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – member of the supervisory board

Sava Pokojninska Družba d.d., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – chair of the supervisory board (from 28 June 2023)

DCB d.o.o., Pod Skalo 4, 4260 Bled, Slovenia – deputy chair of the supervisory board (from 30 June 2023)

Sava Infond, Družba za Upravljanje, d.o.o., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – member of the supervisory board (from 3 June 2023), chair of the

Full name

Marko Jazbec

Polona Pirš Zupančič

Peter Skvarča

David Benedek

Zavarovalnica Sava d.d., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – chair of the supervisory board

Vita, Življenjska Zavarovalnica, d.d., Trg Republike 3, 1001 Ljubljana, Slovenia – chair of the supervisory board (until 7 June 2023)

Zavarovalnica Sava d.d., Ulica Eve Lovše 7, 2000 Maribor, Slovenia – deputy chair of the supervisory board

Sava Neživotno Osiguranje a.d., Bulevar Vojvode Mišića 51, 11000 Belgrade, Serbia – chair of the board of directors

supervisory board (from 16 August 2023)

Vita, Življenjska Zavarovalnica, d.d., Trg Republike 3, 1001 Ljubljana, Slovenia – chair of the supervisory board (from 7 June 2023)

Vita S Holding d.o.o., Skopje, Ul. Dimche Mirchev 20, Center Municipality, 1000 Skopje, North Macedonia – chair of the supervisory board (from 14 September 2023)

5.4Internal control and risk management systems relating to financial reporting20

Internal controls comprise a system of guidelines and processes designed and implemented by Sava Re at all levels to manage risks associated with, among other things, financial reporting, for both Sava Re and the Sava Insurance Group. These controls work to guarantee the efficiency and effectiveness of operations, the reliability of financial reporting and compliance with applicable external and internal regulations.

Apart from the Slovenian Companies Act (ZGD-1), Sava Re is governed by the Slovenian Insurance Act (ZZavar-1), which provides that insurance companies must put in place and maintain an appropriate internal control and risk management system. Relevant implementing regulations based on the Insurance Act are issued by the Insurance Supervision Agency and strictly complied with by the Company.

Financial controls are closely linked to information technology controls, which aim, among other things, to limit and control access to the network, information and applications, and to control the completeness and accuracy of data input and processing. The latter is established at the Group and parent company level through compliance with the information security policy and the enforcement of security policies.

Internal controls applicable to financial reporting on a consolidated basis are set out in the internal accounting rules and the Sava Insurance Group Financial Control Rules.

Internal controls, which are mainly preventive and detective in nature, include regular checks on account balances, reconciliation of subsidiary records with general ledger balances, built-in system controls (access restrictions, segregation of duties, limit systems and authorisations), automation of reporting and transfers between systems, additional manual controls on reporting and checks on consolidation packages. Reporting consistency is achieved through the use of a uniform data reporting system.

Internal controls include the four-eye principle, information transfer (including with subsidiaries), regular review and monitoring of transactions, department meetings, ongoing monitoring of announced regulatory changes, regular training and mentoring.

The valuation of assets and liabilities arising from insurance and reinsurance contracts follows the four-eyes principle, while the calculations are based on the valuation methodology for insurance and reinsurance contracts in accordance with IFRS 17. In addition, for consolidation purposes, additional internal controls are in place to review the consolidation processes for manual data entry and internal controls over items where adjustments are made to the Group, as well as controls over all the procedures carried out for the Group (e.g. consolidation adjustments). Members of the Group submit the financial information required for the preparation of the consolidated financial statements in reporting packages, prepared in accordance with International Financial Reporting Standards (IFRS) and the parent company’s guidelines, within the time limits set out in the Company’s financial calendar. In addition, Group members submit their separate financial statements, which constitutes an additional control measure. By unifying information systems and applications that support consolidation, planning and reporting, the exchange and control of financial data between subsidiaries and the parent company is becoming ever more efficient. Whether necessary information system controls have been put in place and function adequately is verified, on an annual basis, by relevant experts as part of the regular annual auditing of financial statements.

20 GRI 3-3.

A system of internal controls is also in place for other important business processes. Effective risk management requires that companies ensure a functioning and established internal control system. The systematic internal controls of companies ensure the achievement of its objectives in terms of the efficiency and effectiveness of its operations, the reliability, timeliness and transparency of internal and external reporting, and compliance with applicable laws, legal provisions and internal regulations. All major business processes have been specified, including details on control points and the persons responsible for each control. Basic controls are carried out by reviewing documents received or by an automatic or manual control procedure of processed data.

Sava Re complies with all rules and regulations on handling confidential data and inside information, allocating investments and prohibiting trading based on inside information.

Other entities authorised by Sava Re to provide individual services must do so in compliance with the law, implementing regulations, service contracts, internal rules and work instructions in force at Sava Re.

The risk management department monitors improvements in the internal control environment and keeps track of internal controls in the internal control register, which is linked to the risk register. In accordance with the Insurance Act, Sava Re has its own internal audit department, which provides assurance and advice to the management board on how to increase added value and improve the efficiency and effectiveness of operations. The internal audit department assists the Company in achieving its goals by systematically and methodically assessing the effectiveness and efficiency of the governance, risk management and internal control systems and making recommendations for their improvement. The internal audit also reports on its findings to the management board, the audit committee and the supervisory board.

5.5External audit

In 2022, a contract was signed with Deloitte Revizija d.o.o., Dunajska 165, 1000 Ljubljana, for the audit of the financial statements for the period 2022–2024.

Deloitte has also audited the financial statements of Sava Re and the Sava Insurance Group for 2022 and 2023. In 2022 and 2023, the Group’s subsidiary companies were audited by the local audit staff of the same auditing firm.

5.6Disclosures in accordance with Article 70(6) of the Companies Act21

Sava Re is subject to the Slovenian Takeovers Act (ZPre-1).

The composition of Sava Re’s share capital, the list of qualified shareholders under the Slovenian Takeovers Act as at 31 December 2023, the rights and obligations attached to the shares, the restrictions on share transfer and the absence or existence of shares carrying special control rights are presented in section 3 “Shareholders and share trading”.

Employee share scheme

Sava Re has no employee share scheme.

Restrictions of voting rights

Sava Re has adopted no restrictions on voting rights.

21 GRI 201-04.

Shareholders’ agreements restricting transferability of shares and voting rights

Sava Re is not aware of any such agreements between shareholders.

Rules on appointment or removal of members of management or supervisory bodies and on amendments to the articles of association

Company rules on appointment or removal of management board members

Under the Sava Re articles of association, the chair and the members of the management board are appointed by the supervisory board for a period of five years. Such appointments are renewable without limitation. To be appointed as a member of the management board, natural persons must have full legal capacity and meet the requirements set down by law and the Company’s internal rules. The process and criteria for the selection of candidates for members of the management board and the process of periodic fit and proper assessments of individual members, as well as the assessment of the competence of the management board as a collective body, are clearly set out in the Company’s fit and proper policy for relevant persons.

The management board as a whole and its individual members may be removed from office by the supervisory board for reasons prescribed by law.

Company rules on appointment and removal of supervisory board members

Under the Sava Re articles of association, the supervisory board is composed of six members, of which four (shareholder representatives) are elected by the Company’s general meeting, and two (employee representatives) are elected by the works council, which subsequently informs the general meeting of its decision. Shareholder representatives of the supervisory board are elected by the general meeting by a majority of votes present. The term of office of supervisory board members is four years and is renewable. To be appointed as a member of the supervisory board, natural persons must have full legal capacity and meet the requirements set down by law and the Company’s internal rules. The process and criteria for selecting candidates for membership of the supervisory board and for drafting proposals for general meeting resolutions on the appointment of supervisory board members, including the process of periodic fit and proper assessments of individual members, as well as the assessment of the competence of the supervisory board as a collective body, are clearly set out in the Company’s fit and proper policy for relevant persons.

Supervisory board members who are shareholder representatives may be removed from office by the general meeting for reasons prescribed by law, by a resolution passed by a majority of at least three quarters of the share capital represented.

Company rules on amendments to its articles of association

The Sava Re articles of association do not contain special provisions governing their amendment. Under the applicable legislation, they may be amended by resolution of the general meeting by a majority of at least three quarters of the share capital represented.

Powers of the management board (increase in share capital, acquisition of treasury shares)

The management board has no authorisation to increase the share capital.

The Company’s management board has no authorisation to purchase treasury shares.

With the additional treasury share repurchases in April 2016, the management board fully exhausted the general meeting authorisation granted in 2014 to purchase treasury shares up to 10% minus one share of the share capital.

Important agreements that become effective, change or terminate after a public takeover bid results in a control change

Sava Re limits its exposure by reinsuring its own account (retrocession). As is customary in the industry, retrocession contracts contain provisions governing contract termination in cases involving significant changes in ownership or control of the counterparty.

Agreements between an entity and members of its management or supervisory bodies on compensation in case of (i) resignation, (ii) dismissal without cause or (iii) termination of employment relationship due to any bid specified in the law governing takeovers

Management board members are not entitled to severance pay in case of resignation.

A management board member is entitled to severance pay if recalled for other economic or business reasons (major change in shareholder structure, reorganisation, launch of a new product, major change in the Company’s business and such like) and the employment relationship with a company of the Sava Insurance Group is terminated.

A management board member is also entitled to severance pay in the event of termination of their office by mutual consent, in which case there must be no grounds of fault for their removal from office, in conjunction with the termination of their employment relationship with a company of the Sava Insurance Group.

A management board member is also entitled to severance pay upon retirement.

5.7Governance of Sava Insurance Group members22

The parent company’s management and supervisory bodies are the Group’s bodies responsible for the proper governance and supervision of the entire Group and for setting up a governance framework appropriate to the structure, business and risks of the Sava Insurance Group as a whole and of its individual members.

The parent company fully exercises its governance function by setting the business strategy from the top down, taking into account both the Group as a whole and its individual members. For optimal capital allocation and resilience against unforeseen events, capital allocation and capital adequacy are managed on the Group level following the top-down principle. As part of its risk strategy, the Group sets the risk appetite at the Group level and the level of its members.

The Group has set up a systematic approach to risk management, including risk management at the level of individual companies, appropriate monitoring of the risks of individual companies by the parent company and risk management at the Group level. The latter takes into account any interaction between the risks of individual Group companies, in particular risk concentration and other material risks associated with the operation of the Group.

Management or supervisory bodies of Sava Insurance Group subsidiaries individually pursue the same values and corporate governance policies as the parent company, unless otherwise required by law, the local regulator or based on the principle of proportionality. Therefore, the management or supervisory bodies of each Sava Insurance Group subsidiary, as part of their responsibility for the governance of their company with regard to the implementation of the Group’s policies, consider the need for any adjustments to local legislation as well as any other necessary adjustments and, in accordance with the procedures set out in the Group’s policies, determine their adjustments to these policies, ensuring that the subsidiary complies with applicable laws, implementing regulations and the rules of sound and prudent operation.

22 GRI 3-3.

The governance of the Sava Insurance Group is described in more detail in the Corporate Governance Policy of Sava Re d.d. posted on the Company’s website.

Ljubljana, 15 March 2024

Ljubljana, 4 April 2024

Sava Re Management Board

Sava Re Supervisory Board

Marko Jazbec, Chairman

Davor Ivan Gjivoje Jr, Chairman

Polona Pirš Zupančič, Member

Peter Skvarča, Member

David Benedek, Member

6Mission, vision, strategic focus and goals

6.1Our purpose23

Through a positive climate, good business culture, continuous training and investments in employees, we contribute to the ongoing development of insurance and ancillary products and to more optimal business processes. We are developing a Group-specific corporate culture that will be reflected in the quality of services and in the loyalty of our employees to their company and the Group.

By definition, insurance is the provision of economic security through the spreading of financial risk, which is why the industry is tightly intertwined with the larger overall economy. Within this system, Sava Re has a responsibility to support activities that contribute to improving the social environment. Sustainable development is an area to which the Company is increasingly committed. Special attention is given to the exchange of knowledge, ongoing training of employees and external stakeholders, and the utilisation of synergies among Sava Insurance Group companies. The social responsibility demonstrated reflects the values on which we intend to focus more in the future.

We are working to become a recognised provider of comprehensive insurance and reinsurance services in our target markets, to create a climate of trust and loyalty among our stakeholders and to be recognised as a company that communicates fairly and transparently. We strive to meet the expectations of our shareholders and achieve an adequate return on equity, to raise awareness about the organisation’s values and to integrate these into core business policies and the way people conduct themselves.

23 GRI 2-23.

Our mission

Through commitment and constant progress, we ensure security and quality of life.

Our vision

We are building a customer-centric, flexible and sustainability-oriented insurance group.

Our values

We build relationships with care, integrity and respect.

We exceed customer expectations through our ongoing effort to make improvements and strengthen relationships.

We are active in relation to our natural and social environment.

6.2Strategic focus of the Sava Insurance Group

The strategy of the Sava Insurance Group sets out strategic goals in two ways, based on its three key focus areas in the 2023–2027 strategy period and based on the Group’s key pillars of business operations.

Key Group pillars:

For the 2023–2027 period, the Group has adopted a strategy that will drive the Group forward on three key priorities:

•The Group will take the customer-at-the-centre approach to the next level by always ensuring that customers, their wishes and their needs are central to the way business is done. To this end, the Group has set itself three objectives. The first objective is customer-oriented communication, which is achieved by integrating all communication channels through a centralised customer relationship management system. The second objective is to establish a hybrid sales model that will allow the sales network to focus on more complex types of insurance and on advising customers. The third objective is to set up self-care platforms, such as customer portals, websites, and mobile applications, which will improve customer service during sales, claims handling and other services.

Slika, ki vsebuje besede besedilo, posnetek zaslona, pisava, številka

Opis je samodejno ustvarjen

•The Group has two key objectives in optimising its business processes: to speed up and simplify customer service and internal processes. This will also help achieve cost efficiency, which will play a more important role in the next strategy period than in the past, given the changed macroeconomic environment. To achieve this strategic priority, the Group will undertake a comprehensive review of its processes to identify opportunities for improvement. Processes will then be redesigned, and any other necessary changes will be made to align the organisation with these new processes.

•The Group will pursue sustainability in all key areas: environmental, social and governance. It will continue to support global sustainability trends and focus on goals related to climate change and caring for the health and well-being of its customers, employees and the wider community.

Long-term strategic targets:

•Over a five-year period, we will achieve a return on equity (excluding the fair value reserve) of between 9.5% and 10.5%.

•Over the 2023–2027 period, the solvency ratio at the Sava Insurance Group level will be between 170% and 210% (within the optimal capitalisation range).

•Non-life (re)insurance operations will achieve an underwriting combined ratio not exceeding 95%.

•The return on the Group’s investment portfolio, net of subordinated debt expenses, will increase to reach 2.2% in 2027.

6.3Business plan of the Sava Insurance Group for 2024

The Sava Insurance Group has set the following financial targets for 2024.

Major targets for 2024

2024 plan

Business volume*

> EUR 925 million

Business volume growth*

> 5%

Return on equity

> 10.5%

Profit, net of tax

> EUR 70 million

Solvency ratio

170%–210%

Combined ratio

< 95%

Return on investment portfolio

2.2%

* Gross premiums written are taken into account for (re)insurance companies and operating revenue for non-insurance companies.

Planned growth in business volume for 2024

2024 plan

Non-life, EU

> 6%

Life, EU

> 2%

Reinsurance

> 1%

Non-life, non-EU

> 8%

Life, non-EU

> 10%

Asset management

> 5%

6.4Goals achieved in 202324

6.4.1Targets achieved in 2023

Planned profit achieved

Achievement of targets in 2023

EUR million

2023

2023 plan

As % of plan

Business volume

910.1

> 800

113.8%

Business volume growth

14.4%

> 4%

✓

Return on equity

10.8%

> 9.5%

✓

Profit, net of tax

64.7

> 53

22.1%

Solvency ratio

188%–194%

170%–210%

✓

Combined ratio

93.1%

< 95%

✓

Return on investment portfolio

2.1%

> 1.5%

✓

The Sava Insurance Group achieved all its financial targets in 2023. It increased its business volume to EUR 910.1 million, 13.8% ahead of plan. All operating segments exceeded their targets. The net profit was EUR 64.7 million, which translates into an above-target return on equity. The combined ratio deteriorated compared to last year due to the summer storms in Slovenia and other markets in which the Group operates, but it remained within the target range. The Group’s active management of its investment portfolio also resulted in a return well above the lower end of the target range. The reinsurance segment and the net investment result were the main contributors to the above-target performance.

6.4.2Achievement of strategic targets

Goals achieved in the Group’s strategic focus areas

Customer at the centre

The main customer-centricity activities focused on consolidating customer support processes in call centres and introducing multichannel solutions in several companies of the Sava Insurance Group, with an emphasis on managing processes involving a large number of organisational units and additional interconnected communication channels.

We enhanced our digital and self-service solutions for customers, especially those dedicated to online sales, and optimised the user experience.

We launched a technology- and design-focused transformation of Zavarovalnica Sava’s website on a target digital customer experience management platform, making possible a simplified roll-out of this solution to other Group companies.

At Zavarovalnica Sava, we implemented a solution to automate digital communication and used it to launch additional e-communication campaigns, increasing the share of electronic communication to 13.2%.

Process optimisation

By optimising business processes and, at the same time, planning the IT solutions on which business processes are implemented, we have standardised internal procedures for preparing functional specifications, adapted the way we manage change, and implemented activities to improve our

24 GRI 3-3, 201-01.

employees’ skills required for better-quality process optimisation (full-day workshops, individual training, mentoring and presentations at internal conferences).

The most visible optimisations were implemented in automated claims reporting, the procurement process, automated mass task allocation and extended internal use of the electronic central population register (eCRP of Slovenia).

For the changeover of the core business system in the Slovenian insurance segment, we continued the inventory and simultaneous changes of processes related to product configuration, sales, register of persons, investment accounts, reinsurance, commissions, receipt and control of quotes, bookkeeping and claims.

Sustainable development

We have further enhanced the sustainability of the Group’s business in line with our sustainable development strategy. We pay particular attention to reducing the carbon intensity of our operations – through investments in energy efficiency and the digitalisation of processes. By increasing the share of ESG investments in our portfolio and responsible (re)insurance underwriting, we are also bringing sustainability into the value chain and focusing on sustainable elements in our range of products. We support global sustainability trends and focus on goals related to climate change and caring for the health and well-being of our customers, employees and the wider community.

Achievement of strategic goals by key business pillar

Non-life insurance

In the financial year 2023, we continued to successfully pursue the product development and upgrading planned for the strategy period. In terms of products with a strong sustainability component, we expanded our micromobility and solar power products to the non-EU markets while responding to additional market requirements by modifying some of our products (personal accident, health and assistance insurance). At the Group level, we further strengthened our cooperation with banks, launched credit protection insurance to cover borrowers in the event of their inability to repay a loan due to accidental death, loss of employment, illness and similar risks, and successfully prepared the technical basis for redesigning non-life policies for micro, small and medium-sized companies. We successfully addressed the challenges associated with the development of claims inflation, and we began to work more broadly on changes and adjustments to non-life underwriting rules in light of the emerging reality of increasingly extreme climate change. We responded in good time to the increased reporting standards associated with the EU Taxonomy on sustainability and, following the successful acquisition of ASP.ins, prepared a more concrete roadmap for the development of software solutions for 2024.

Life insurance and pensions

In the life and pensions segment, in the past year the Group focused on accelerating the increase in the number of policyholders covered by the life risk insurance ecosystem, which provides customers with pay-as-you-live life insurance while giving them access to a wide range of benefits and services from selected contractual partners. We paid particular attention to developing and enhancing a wide range of additional coverages for health risks, such as critical illness treatment abroad and access to a second opinion, and we further expanded our range of products with new critical illness cover packages. The existing group accident and health insurance packages were redesigned, the unit-linked life insurance products were adapted to the new accounting standards, the selection of bancassurance products was expanded, cooperation was strengthened and new banking partners were gained. In addition, cooperation between the North Macedonian pension company and the new banking partner was established. In process development, the underwriting process in the non-EU markets was

overhauled, while in the domestic market the product development and management control processes were upgraded in line with the requirements of the Insurance Distribution Directive.

Reinsurance

One of the key strategic focus areas is the appropriate diversification of the reinsurance portfolio, geographically, within individual markets, by classes of insurance and form of reinsurance cover. Sava Re systematically followed this approach when renewing its contracts in 2023. Developments in 2023 remained strongly linked to the geopolitical and macroeconomic picture of the global economy: the situation in the Middle East (Israel and Gaza), the war in Ukraine and the related volatility in global energy markets. The situation was further exacerbated by more severe natural catastrophes (storms, floods, fires, etc.) and other loss events, which led the reinsurance industry to further tighten reinsurance conditions, in terms of both pricing and content (stricter conditions in reinsurance contracts). The main focus was on portfolio restructuring by form of reinsurance, with a shift from proportional business to non-proportional business, thereby achieving a more appropriate portfolio diversification. There was also a strong strategic focus on a more appropriate geographic diversification, where Sava Re made some significant changes. We reduced concentrations in individual major markets, sought opportunities in markets where Sava Re did not have a strong presence and reduced exposures on individual treaties. This trend is expected to continue in 2024, and, with the measures already introduced and implemented, Sava Re will achieve a better-balanced reinsurance portfolio, in line with the key strategic focus of achieving the required profitability and low volatility of the portfolio.

Asset management

Sava Infond continued to digitalise its business in 2023, maintaining its position in key sales channels and recording positive net inflows into its fund of funds.

Assistance services

In 2023, TBS Team 24 achieved record performance and outstanding operating results. The company efficiently introduced the automatic transfer of case data to non-EU companies and, in cooperation with Zavarovalnica Sava, set up digital reporting of assistance cases. This innovation is key to achieving the company’s goal of becoming a digitally focused assistance company.

During the year, TBS Team 24 also expanded its services with the introduction of e-Call services in partnership with some of the world’s leading car manufacturers. Together with our partners and our continued investment in digital technologies, the company remains committed to achieving high quality and customer satisfaction standards.

7Business environment

Global economic developments25

Despite a moderation, high inflation, stagnant euro area economic activity and persistent geopolitical tensions remained at the forefront of 2023. The euro area has been stagnating since the third quarter of 2022, and this is projected to continue until mid-2024. The slowdown is the result of several factors, including tight monetary policy and lower savings surpluses, as well as external factors, such as the general weakness of the global industrial cycle and the energy shock in the region. The expected level of gross domestic product (GDP) is below the pre-pandemic trend and business sentiment in Europe is weaker, with some of the negative sentiment stemming from a deterioration in the economic outlook for Germany.

Inflation in euro area countries was set to fall from a peak of 10.6% in 2023 to 2.9% at year end. The decline in inflation rates in the euro area and elsewhere in the developed world was mainly due to central banks’ restrictive monetary policies. Although inflation is not yet at the European Central Bank’s target level, the declining trend in inflation suggests that no further rate hikes are expected, and the market is already pricing in an interest rate cut in 2024. Similar to the euro area, inflation in the US fell from a peak of 9.1% to 3.4% in December 2023. In addition to high inflation, risks to future economic growth include a possible slowdown in the Chinese economy and geopolitical tensions, notably Russia’s ongoing military aggression against Ukraine and the war in the Middle East.

A positive factor for future economic growth is the robustness of the US economy, which grew by 3.3% in the fourth quarter despite high interest rate hikes, with consumer spending (as a result of savings during the pandemic) and ample fiscal support being the key drivers of growth. US households and businesses are in a strong financial position, so the likelihood of more serious financial problems is diminished.

The year 2023 was better than expected in terms of returns at year-end 2022. Both shares and bonds closed in positive territory. The European STOXX 600 Index rose by 12.7%, the US S&P 500 Index by 20.3%, and the MSCI ACWI Global Equity Index by 16.3% for the year, all in euro terms. European and US government bond yields also fell in 2023, contributing to the positive performance of government bond indices. As interest rates normalise, the starting point for expected returns on shares and bonds will be historical averages. Higher yields made bonds an attractive asset class again, especially compared with domestic bank deposits, where yields are still very low.

25 Source: Eurostat, U.S. Bureau of Labor Statistics in Bloomberg 2023, data for the period from 30 December 2022 to 29 December 2023.

Economic developments in markets in which the Sava Insurance Group operates

Markets in the region were affected by the same factors as mentioned above. In all markets, economic growth continued in 2023 and inflation, while still high, eased slightly compared to the previous year. In most markets, economic growth in 2024 is estimated to be similar to or slightly higher than in 2023, and average inflation growth rates are expected to moderate.

Overview of the main macroeconomic indicators for the countries in which the Sava Insurance Group operates26

GDP

Average rate of inflation

Unemployment rate

(real growth in %)

(%)

2020

2021

2022

E2023

P2024

2020

2021

2022

E2023

P2024

2020

2021

2022

E2023

P2024

Slovenia

-4.2%

8.2%

2.5%

1.6%

2.8%

-0.1%

1.9%

8.8%

7.6%

3.9%

5.0%

4.7%

4.0%

3.6%

3.5%

Croatia

-8.5%

13.1%

6.2%

2.7%

2.6%

0.0%

2.7%

10.7%

8.6%

4.2%

9.0%

8.1%

6.8%

6.3%

5.9%

Serbia

-0.9%

7.6%

2.3%

2.0%

3.0%

1.6%

4.1%

12.0%

12.4%

5.3%

9.7%

11.0%

9.4%

9.1%

9.0%

North Macedonia

-4.7%

3.9%

2.1%

2.5%

3.2%

1.2%

3.2%

14.2%

10.0%

4.3%

16.4%

15.4%

14.4%

14.3%

14.1%

Kosovo

-5.3%

10.7%

3.5%

3.8%

4.0%

0.2%

3.3%

11.7%

4.7%

3.1%

26.0%

20.8%

n/a

Montenegro

-15.3%

13.0%

6.1%

4.5%

3.7%

-0.2%

2.4%

13.1%

8.3%

4.3%

17.9%

16.6%

14.7%

n/a

Impact of the business environment on the operations of the Sava Insurance Group

After 2022, the impact of claims inflation on the Group’s business in 2022 increased as the inflation rate rose sharply, and the Group’s insurers responded by increasing their premium rates, reducing the impact of claims inflation on the Group’s business in 2023. Continued high inflation increased the expenses of Group companies.

In the summer, Slovenia and some other countries in which the Group operates were hit by a wave of storms and floods that caused significant damage to property. The gross claims resulting from these events totalled EUR 88.3 million in 2023 and, taking into account our reinsurance protection, the impact of these events on the Group’s result was EUR 27.4 million. The largest impact on the financial performance was reported by Zavarovalnica Sava (EUR 26.4 million).

The finance result of insurance companies and the performance of pension and asset management companies benefited from favourable developments in the financial markets, which increased interest income, assets under management and fund inflows.

Markets in which the Sava Insurance Group operates

Sava Re, the parent company of the Sava Insurance Group, transacts the reinsurance business in over 100 countries worldwide27. The following section contains a description of the international non-life insurance market and insurance markets in which the Sava Insurance Group operates.

Global non-life reinsurance markets28

The year 2023 saw a challenging international environment, with both the start of the Israel–Hamas war and the ongoing war in Ukraine, with the associated volatility in global energy markets. Non-life claims showed an upward trend, driven by higher replacement costs compared to the pre-pandemic period. While the pressure on the cost of construction materials generally eased during the year, higher salary and financing costs came to the fore as a result of increased inflation rates in the international environment and restrictive monetary policies by central banks. At the same time, insured losses from natural catastrophes have been on the rise, exceeding USD 100 billion in 2023 for the fourth consecutive year, with climate change and intensive urbanisation in exposed areas cited as key factors in the increased frequency and magnitude. Challenging market conditions have led to a

26 Source: IMAD, Economic Mirror, No. 1/2024, International Monetary Fund, World Economic Outlook, October 2023, www.statista.com.

27 GRI 2-6.

28 Source: Sigma, Nos. 6/2023 and 3/2023, https://www.swissre.com/institute/research/sigma-research.html.

sharp increase in non-life reinsurance prices in 2023, and the global outlook is for continued but less pronounced price increases in the future. Increased geopolitical and macroeconomic instability weakens growth prospects but reinforces the key role of insurance in risk transfer. In this context, the closing of the insurance gap, price increases and higher investment returns in a higher interest rate environment are positive factors that improve expected profitability.

Insurance markets

All insurance markets in which Sava Insurance Group operates grew in 2023, and most of the Group’s insurers maintained or increased their market shares compared to 2022.

Overview of the main indicators of the trends in the insurance markets in which the Sava Insurance Group operates

Growth/decline in premiums

Premiums per capita

Premiums as % of GDP

(%)

(EUR)

(%)

2020

2021

2022

2023

2020

2021

2022

2023

2020

2021

2022

E2023

Slovenia*29

2.0%

2.5%

7.0%

9.0%

1,208.9

1,236.4

1,320.7

1,432.3

5.4%

5.0%

4.9%

4.8%

Croatia**30

-2.3%

10.7%

8.0%

7.8%

345.1

392.8

427.8

449.1

2.7%

2.6%

2.5%

2.3%

Serbia***31

2.5%

8.7%

12.4%

16.5%

134.6

147.8

167.9

200.2

2.1%

2.0%

1.9%

North Macedonia32

-5.2%

15.7%

10.0%

12.3%

78.5

90.9

113.5

127.4

1.5%

1.6%

Kosovo33

-0.2%

15.4%

14.2%

9.2%

56.3

65.3

75.9

82.9

1.5%

1.6%

1.5%

Montenegro34

-1.1%

5.5%

9.6%

10.3%

150.6

159.4

174.1

188.7

2.2%

2.0%

1.8%

* The above premium figures exclude the premiums of the Croatian branches of Zavarovalnica Sava and Generali.

** For 2023, gross premiums written are no longer available, so premiums paid are shown. For the 2023/2022 premium growth, the premiums paid in 2022 are also taken into account for comparability. Premium figures exclude the premiums of the Austrian and Italian branches of Euroherc.

*** The 2023 estimate is based on premium growth in the first nine months of 2023.

Slovenia: in 2023, the Slovenian insurance market consisted of 12 domestic insurance companies, 6 foreign branches and 2 reinsurance companies, which are all members of the Slovenian Insurance Association (SIA). In 2023, the non-life insurance business accounted for 72.5% of total insurance premiums and life insurance for 27.5%. In 2023, gross premiums written in the Slovenian insurance market grew by 9.0% (non-life premiums by 9.6% and life premiums by 7.6%). The Sava Insurance Group operates in the market with two insurance companies, Zavarovalnica Sava and Vita. Together, the two insurers ranked second among Slovenian insurers in 2023, with a market share of 20.6%.

29 Source for premiums: Slovenian Insurance Association; source for GDP: IMAD, Economic Mirror, No. 1/2024; source for population: Statistical Office of the Republic of Slovenia.

30 Source for premiums: Croatian Insurance Bureau; source for GDP and population: 2020–2022: Croatian National Bank, 2023: International Monetary Fund.

31 Source for premiums: National Bank of Serbia; source for GDP and population: Statistical Office of the Republic of Serbia; GDP 2023: International Monetary Fund.

32 Source for premiums: Insurance Supervision Agency, North Macedonia; source for GDP 2020–2022: National Bank of the Republic of North Macedonia; source for GDP 2023: International Monetary Fund; source for population: State Statistical Office, North Macedonia.

33 Source for premiums: Central Bank of the Republic of Kosovo; source for GDP 2020–2022 and population: Kosovo Agency of Statistics; GDP 2023: International Monetary Fund.

34 Source for premiums: Insurance Supervision Agency, Montenegro; source for GDP 2020–2022 and population: Statistical Office, Montenegro; GDP 2023: International Monetary Fund.

* Premium figures exclude the premiums of the Croatian branches of Zavarovalnica Sava and Generali.

Two reinsurance companies are domiciled in Slovenia and are members of the Slovenian Insurance Association. The following table shows the market shares of the two reinsurance companies in the Slovenian market.

EUR

2023

2022

Gross premiums written

Market share

Gross premiums written

Market share

Sava Re

215,914,974

40.3%

199,405,329

44.3%

Triglav Re

319,389,312

59.7%

250,292,376

55.7%

Total

535,304,286

100.0%

449,697,705

100.0%

Croatia: at the end of 2023, the Croatian insurance market consisted of 14 domestic insurers and 2 foreign branches. In 2023, the non-life insurance business accounted for 81.2% of total insurance premiums and life insurance for 18.8%. In 2023, premiums paid (data on gross premiums written are no longer collected by the insurance bureau as of 2023) in the Croatian insurance market grew by 7.8% (non-life premiums grew by 14.6% and life premiums fell by 14.2%). The Sava Insurance Group operates on the market through a branch of Zavarovalnica Sava, which sells non-life and life insurance in Croatia. In 2023, it ranked 13th among all companies operating in the Croatian insurance market, with a market share of 1.1%.

* For 2023, gross premiums written are no longer available, so premiums paid are shown. Premium figures exclude the premiums of the Austrian and Italian branches of Euroherc.

Serbia: the Serbian insurance market in 2023 consisted of 16 insurance companies. The non-life insurance business accounted for 81.5% of total insurance premiums in the first nine months of 2023 and life insurance for 18.5%. In the first nine months of 2023, gross premiums written in the Serbian insurance market grew by 16.5% (non-life premiums by 19.3% and life premiums by 6.3%). The Sava Insurance Group is present on the market with the non-life insurance company Sava Neživotno Osiguranje (SRB) and the life insurance company Sava Životno Osiguranje (SRB). Together, the two insurers ranked 10th among all insurers on the market in the first nine months of 2023, with a market share of 3.6%.

Slika, ki vsebuje besede besedilo, posnetek zaslona, grafika, grafično oblikovanje

Opis je samodejno ustvarjen

Slika, ki vsebuje besede posnetek zaslona, besedilo, diagram, grafika

Opis je samodejno ustvarjen

North Macedonia: the North Macedonian insurance market in 2023 consisted of 17 insurance companies. In 2023, the non-life insurance business accounted for 82.7% of total insurance premiums and life insurance for 17.3%. In 2023, gross premiums in the North Macedonian insurance market grew by 12.3% (non-life premiums by 12.9% and life premiums by 9.4%). The Sava Insurance Group is present on the market with its non-life insurance company, which ranked sixth among all insurers on the market in 2023, with a market share of 8.8%.

Montenegro: the Montenegrin insurance market in 2023 consisted of 9 insurance companies. In 2023, the non-life insurance business accounted for 80.2% of total insurance premiums and life insurance for 19.8%. In 2023, gross premiums written in the Montenegrin insurance market grew by 10.3% (non-life premiums by 10.3% and life premiums by 10.5%). The Sava Insurance Group is present on the market with the non-life insurance company Sava Osiguranje (MNE), which ranked second among all insurers on the market in 2023, with a market share of 17.3%.

Kosovo: in 2023, the Kosovo insurance market consisted of 14 insurance companies. In 2023, the non-life insurance business accounted for 95.5% of total insurance premiums and life insurance for 4.5%. In 2023, gross premiums written in the Kosovo insurance market grew by 9.2% (non-life premiums by 9.5% and life premiums by 3.5%). The Sava Insurance Group is present on the market with the non-life insurance company Illyria (RKS) and the life insurance company Illyria Life (RKS). Together, the two insurers ranked first among all insurers on the market in 2023, with a market share of 14.8%.

Slika, ki vsebuje besede besedilo, posnetek zaslona, diagram, večpredstavnostna programska oprema

Opis je samodejno ustvarjen

Slika, ki vsebuje besede besedilo, posnetek zaslona, diagram, pisava

Opis je samodejno ustvarjen

Slika, ki vsebuje besede besedilo, posnetek zaslona, diagram, grafika

Opis je samodejno ustvarjen

8Review of operations of the Sava Insurance Group and Sava Re35

8.1Sava Insurance Group

8.1.1Business volume

Business volume grew by 14.4% to EUR 910.1 million in 2023, mainly driven by growth in non-life and life gross premiums written. In non-life insurance, this growth was generated by higher prices and organic business growth, and in life insurance by strong sales of new policies and additional payments made to existing policies. Business volume increased in all segments.

EUR

2023

2022

Change

Index

Business volume

910,113,382

795,535,596

114,577,786

114.4

Business volume by segment

Gross written premiums increased by 14.3% to EUR 884.6 million in 2023.

Gross premiums written by class of business

EUR

2023

2022

Amount

Property

201,173,345

22.7%

190,850,080

24.7%

Land motor vehicles

192,694,694

21.8%

153,629,655

19.8%

Motor vehicle liability

166,180,679

18.8%

137,553,032

17.8%

Accident, health and assistance

89,833,560

10.2%

75,076,200

9.7%

General liability

24,729,085

2.8%

23,368,600

3.0%

Marine, suretyship and goods in transit

17,488,998

2.0%

14,817,533

1.9%

Other insurance

3,212,344

0.4%

2,832,415

0.4%

Total non-life

695,312,704

78.6%

598,127,515

77.3%

Unit-linked life

121,013,982

13.7%

109,918,305

14.2%

Traditional life

68,235,616

7.7%

66,088,471

8.5%

Total life

189,249,598

21.4%

176,006,776

22.7%

Total

884,562,302

100.0%

774,134,291

100.0%

35 A glossary of selected insurance terms and calculation methods for ratios is appended to this annual report.

Slika, ki vsebuje besede besedilo, posnetek zaslona, zaslon, diagram

Opis je samodejno ustvarjen

8.1.2Business and performance

Summary of the consolidated income statement

EUR

2023

2022

Change

Index

Insurance revenue

697,562,811

608,987,793

88,575,018

114.5

Insurance service expenses

-657,125,518

-537,510,550

-119,614,968

122.3

Claims incurred

-465,474,154

-368,309,774

-97,164,380

126.4

Operating expenses

-189,565,020

-165,031,036

-24,533,984

114.9

Onerous contracts

-2,086,344

-4,169,740

2,083,396

50.0

Insurance service result before reinsurance

40,437,293

71,477,243

-31,039,950

56.6

Reinsurance service result

43,040,469

4,596,174

38,444,295

936.4

Insurance service result

83,477,762

76,073,417

7,404,345

109.7

Net investment result

27,923,277

6,536,061

21,387,216

427.2

Net insurance finance result

-13,304,198

-9,140,857

-4,163,341

145.5

Net exchange gains

1,192,505

1,836,939

-644,434

64.9

Finance result

15,811,584

-767,857

16,579,441

Non-insurance revenue

25,551,080

21,404,517

4,146,563

119.4

Other expenses

-51,014,545

-44,382,684

-6,631,861

114.9

Income from investments in subsidiaries and associates

2,286,209

2,279,735

6,474

100.3

Net other operating income

3,501,264

3,894,917

-393,653

89.9

Profit before tax

79,613,353

58,502,045

21,111,308

136.1

Income tax expense

-14,956,182

-11,578,604

-3,377,578

129.2

Net profit

64,657,171

46,923,441

17,733,730

137.8

2023

2022

Change

Index

Combined ratio

93.1%

92.6%

+0.5 p.p.

Loss ratio

64.5%

64.4%

+0.1 p.p.

Expense ratio

28.6%

28.2%

+0.4 p.p.

Return on investment portfolio

2.1%

0.6%

+1.5 p.p.

Return on equity

10.8%

8.3%

+2.5 p.p.

Insurance service result

The insurance service result before reinsurance was EUR 31.0 million lower than in the previous year, reflecting the high volume of claims related to the summer extreme weather events. Reinsurance protection significantly mitigated the impact of these claims on the insurance service result, and the Group also significantly increased its insurance revenue, both of which contributed to a stronger insurance service result than in the previous year. It is also important to note that the insurance service result in 2022 was impacted by inflation and the resulting increase in claims incurred.

Insurance revenue grew by EUR 88.6 million, driven by premium growth, particularly in the non-life business, where it increased by EUR 72.3 million due to price increases resulting from claims inflation and due to organic growth. In the reinsurance segment, revenue was up EUR 11.2 million due to a change in its composition towards the more profitable non-proportional business. In the life segment, revenue increased by EUR 4.9 million due to growth in gross premiums and a shift in the portfolio composition towards life risk insurance products. These products have a higher share of premiums counted as insurance revenue compared to those with a savings component.

Insurance revenue by segment

Claims incurred increased by EUR 97.2 million in 2023. The non-life business accounted for the majority of the increase, at EUR 82.9 million, mainly due to the extreme summer weather events that affected Slovenia, Croatia and Serbia.

Claims incurred by segment

Claims incurred by class of business

EUR

2023

2022

Amount

Property

166,525,223

35.8%

119,448,121

32.4%

Land motor vehicles

140,695,828

30.2%

101,518,032

27.6%

Motor vehicle liability

85,356,588

18.3%

81,936,483

22.2%

Accident, health and assistance

44,048,404

9.5%

34,379,109

9.3%

General liability

6,716,482

1.4%

15,697,709

4.3%

Other insurance

4,577,072

1.0%

2,313,336

0.6%

Total non-life

447,919,597

96.2%

355,292,790

96.5%

Total life

17,554,557

3.8%

13,016,984

3.5%

Total

465,474,154

100.0%

368,309,774

100.0%

454.4

61.5

92.8

0.3

526.7

66.4

104.0

0.4

0.0

100.0

200.0

300.0

400.0

500.0

600.0

Non-life

Life

Reinsurance

Pensions and AM

2022

2023

€m

Operating expenses increased by EUR 24.5 million in 2023. Acquisition costs were up EUR 12.1 million due to higher sales, while administrative costs increased by EUR 12.4 million, particularly due to higher business volume and general price increases driven by inflation.

Operating expenses by segment

Expenses for onerous contracts decreased significantly (by EUR 2.1 million, or 50.0%). In 2022, the life business incurred more of these expenses as part of the portfolio moved from profitable to unprofitable following the update of mortality assumptions. However, in 2023, the trend was reversed due to the improved profitability of the non-life business.

The reinsurance service result for 2023 showed a higher surplus due to the difference in the volume of claims between the two years that triggered the reinsurance protection. In 2023, the amounts recovered from reinsurance were significantly higher than in the previous year because of the severe summer weather events.

Finance result and investment return

EUR

2023

2022

Change

Index

Net investment result

27,923,277

6,536,061

21,387,216

427.2

Net insurance finance result

-13,304,198

-9,140,857

-4,163,341

145.5

Net exchange gains

1,192,505

1,836,939

-644,434

64.9

Finance result

15,811,584

-767,857

16,579,441

2023

2022

Change

Index

Return on investment portfolio

2.1%

0.6%

+1.5 p.p.

The net investment result was EUR 27.9 million, up EUR 21.4 million from the previous year. Consequently, the return on the investment portfolio was also higher, at 2.1%. The result improved mainly due to higher interest income from investing at higher interest rates and the net increase in the fair value of FVTPL investments.

Income and expenses relating to investment portfolio

EUR

2023

2022

Change

Interest income at effective interest rate

20,603,022

15,437,863

5,165,159

Change in fair value of FVTPL assets

9,487,368

10,274,947

-787,579

Gains on disposal of FVTPL assets

138,529

362,779

-224,250

Gains on disposal of other IFRS asset categories

67,299

1,307,558

-1,240,259

Income from dividends and shares – other investments

1,090,425

1,312,273

-221,848

Movement in expected credit losses (ECL)

1,028,500

1,356,121

-327,621

Other income

4,637,235

4,840,772

-203,537

Income relating to investment portfolio

37,052,378

34,892,313

2,160,065

Change in fair value of FVTPL assets

6,526,739

22,054,962

-15,528,223

Losses on disposal of FVTPL assets

164,670

358,481

-193,811

Losses on disposal of other IFRS asset categories

880,674

1,715,175

-834,501

Impairment losses on other investments

216

Movement in expected credit losses (ECL)

738,818

1,027,660

-288,842

Other expenses

817,984

3,199,974

-2,381,990

Expenses relating to investment portfolio

9,129,101

28,356,252

-19,227,151

Net investment result

27,923,277

6,536,061

21,387,216

Net income and expenses from subsidiaries and associates

2,286,209

2,279,735

6,474

Net investment income relating to the investment portfolio

30,209,486

8,815,796

21,393,690

Return on investment portfolio

2.1%

0.6%

1.5 p.p.

The net insurance finance result decreased by EUR 4.2 million due to higher discount rates, which reflect the increase in market interest rates.

Net other operating expenses

Non-insurance revenue increased by EUR 4.1 million to EUR 25.6 million. The major part of this revenue originated from asset management (EUR 19.6 million), where revenue increased by EUR 1.6 million due to more assets under management in pension funds and in funds of a mutual fund management company. The remainder (EUR 6.0 million) was mainly generated by assistance services, where revenue increased by EUR 2.5 million as a result of a higher volume of assistance cases and inflation-adjusted price increases.

Other operating expenses amounted to EUR 51.0 million, up EUR 6.6 million. These expenses included non-attributable expenses (EUR 29.4 million) and expenses of non-insurance companies (EUR 21.6 million). The rise in personnel costs, an increase in the volume of assistance cases due to higher claims volume and inflation, and increased IT service costs were the main reasons for this.

Net profit

Net profit increased by EUR 21.1 million to EUR 79.6 million in 2023. This increase was primarily due to the improved finance result driven by favourable financial markets and partly due to the insurance service result explained earlier. All operating segments ended 2023 with higher profits before tax than in 2022. In absolute terms, the non-life business saw the largest increase, up EUR 10.1 million, followed by the life business, which improved by EUR 5.7 million, the reinsurance business by EUR 2.3 million, pensions and assets under management by EUR 2.6 million and the “other” segment by EUR 0.3 million.

Composition of profit or loss before tax

Composition of profit or loss before tax by segment

In line with growth in profit before tax, the net profit also increased by EUR 17.7 million. As a result, the return on equity was higher, at 10.8%.

Combined ratio

2023

2022

Change

Combined ratio

93.1%

92.6%

+0.5 p.p.

Loss ratio

64.6%

64.4%

+0.2 p.p.

Expense ratio

28.6%

28.2%

+0.4 p.p.

The combined ratio deteriorated due to both the loss and expense ratios. The level of the loss ratio was a result of an increased claims experience in the non-EU markets caused by extreme weather events during the summer, some larger claims and claims inflation, and a major loss event in the reinsurance segment in early 2023. The movement in the expense ratio was primarily attributable to the extraordinary income in 2022. Without factoring this in, the expense ratio for 2022 would have been 28.5%.

8.1.2.1Non-life segment

+19.9%Gross premiums written

+48.1%Profit before tax

EUR

2023

2022

Change

Index

Gross premiums written

572,614,385

477,626,640

94,987,745

119.9

474,543,582

397,063,411

77,480,171

119.5

Non-EU

98,070,803

80,563,229

17,507,574

121.7

Insurance service result

39,492,006

33,769,867

5,722,140

116.9

32,526,322

27,765,359

4,760,963

117.1

Non-EU

6,965,685

6,004,508

961,176

116.0

Finance result

7,192,077

40,659

7,151,418

4,735,833

-1,521,324

6,257,157

Non-EU

2,456,244

1,561,983

894,261

157.3

Net other operating income/expenses

-15,568,022

-12,802,482

-2,765,540

121.6

-11,934,216

-11,181,301

-752,915

106.7

Non-EU

-3,633,807

-1,621,181

-2,012,625

224.1

Profit before tax

31,112,307

21,008,044

10,104,264

148.1

25,324,185

15,062,734

10,261,451

168.1

Non-EU

5,788,122

5,945,310

-157,188

97.4

Combined ratio

95.4%

+0.0 p.p.

95.3%

95.6%

-0.3 p.p.

Non-EU

96.1%

93.9%

+2.2 p.p.

Gross premiums written

Unconsolidated gross premiums written – non-life

EUR

2023

2022

Change

Index

Slovenia

457,932,561

381,780,244

76,152,317

119.9

Croatia

17,140,681

15,458,348

1,682,333

110.9

475,073,243

397,238,592

77,834,650

119.6

Serbia

39,541,716

29,625,362

9,916,355

133.5

Montenegro

20,670,382

17,392,666

3,277,715

118.8

North Macedonia

20,451,548

17,432,536

3,019,012

117.3

Kosovo

17,436,254

16,134,131

1,302,124

108.1

Non-EU

98,099,900

80,584,694

17,515,206

121.7

Total non-life

573,173,143

477,823,287

95,349,856

120.0

Gross written premiums of the non-life segment increased by EUR 95.0 million, or 19.9%. Growth was achieved in all markets, with a 19.5% increase in the EU markets and a 21.7% increase in the non-EU markets. The motor insurance market saw the highest nominal growth across all markets, primarily due to an increase in the price of insurance services in response to the rise in the price of car repair services. In addition, this growth was driven by the acquisition of new policyholders and an upswing in the number of policies sold. In the EU markets, motor insurance experienced the strongest growth in the personal lines segment. In the non-EU markets, in addition to motor premiums, health (up 50.3%) and property (up 18.0%) insurance premiums increased significantly.

As a result, the share of motor insurance in the composition of gross premiums by class of business increased in 2023 compared to 2022.

Gross non-life insurance premiums by class of business

Insurance service result

EUR

2023

2022

Change

Index

Insurance revenue

526,708,126

454,382,860

72,325,266

115.9

436,996,472

380,796,268

56,200,204

114.8

Non-EU

89,711,654

73,586,592

16,125,062

121.9

Insurance service expenses

-529,588,320

-425,530,465

-104,057,855

124.5

Claims incurred

-376,489,416

-293,595,276

-82,894,140

128.2

-324,341,925

-255,758,019

-68,583,906

126.8

Non-EU

-52,147,491

-37,837,257

-14,310,234

137.8

Operating expenses

-150,333,728

-129,728,534

-20,605,194

115.9

-118,758,015

-102,624,831

-16,133,184

115.7

Non-EU

-31,575,713

-27,103,703

-4,472,010

116.5

Onerous contracts

-2,765,176

-2,206,655

-558,521

125.3

-2,856,770

-2,185,670

-671,100

130.7

Non-EU

91,594

-20,985

112,579

-436.5

Insurance service result before reinsurance

-2,880,194

28,852,395

-31,732,589

-10.0

-8,960,238

20,227,748

-29,187,986

-44.3

Non-EU

6,080,044

8,624,647

-2,544,603

70.5

Reinsurance service result

42,372,200

4,917,472

37,454,729

861.7

41,486,560

7,537,611

33,948,949

550.4

Non-EU

885,641

-2,620,139

3,505,779

-33.8

Insurance service result

39,492,006

33,769,867

5,722,140

116.9

32,526,322

27,765,359

4,760,963

117.1

Non-EU

6,965,685

6,004,508

961,176

116.0

The insurance service result before reinsurance was EUR 31.7 million lower than in the previous year due to claims events related to summer storms and floods. Reinsurance protection significantly reduced the impact of these large claims on the insurance service result. This result was EUR 5.7 million higher compared to the figure from the previous year. The main reason for this was the increase in insurance revenue, which rose by EUR 72.3 million as a result of growth in gross premiums described earlier. The Group’s revenue grew both in its EU markets (EUR 56.2 million) and in its non-EU markets

(EUR 16.1 million). It is important to note that in 2022 the insurance service result was impacted by claims inflation and the resulting increase in claims incurred.

Insurance service expenses were up EUR 104.1 million, by EUR 85.4 million in the EU markets and EUR 18.7 million in the non-EU markets. The level of claims incurred was mainly affected by loss events resulting from summer storms and floods. These adverse weather events had the greatest impact on land motor vehicle insurance and property insurance. Operating expenses rose by EUR 20.6 million due to growth in the insurance portfolio, inflationary increases in labour and other costs, and an increase in the statutory fire brigade charge. Expenses for onerous contracts were up EUR 0.6 million due to deterioration in the combined ratio in the property segment resulting from the increased frequency of adverse weather events.

Furthermore, the insurance service result was impacted by an improved reinsurance service result. The volume of claims reinsured in 2023 was significantly higher than in the previous year due to summer storms and floods.

Finance result and investment return

EUR

2023

2022

Change

Index

Net investment result

10,976,899

1,400,265

9,576,634

783.9

7,882,690

-562,285

8,444,975

-1,401.9

Non-EU

3,094,209

1,962,550

1,131,659

157.7

Net insurance finance result

-3,699,927

-1,309,186

-2,390,740

282.6

-3,070,764

-930,698

-2,140,067

329.9

Non-EU

-629,162

-378,489

-250,674

166.2

Net exchange losses

-88,650

-50,420

-38,230

175.8

-79,847

-28,341

-51,506

281.7

Non-EU

-8,803

-22,079

13,276

39.9

Finance result

7,188,323

40,659

7,147,664

17,679.7

4,732,079

-1,521,324

6,253,403

-311.1

Non-EU

2,456,244

1,561,983

894,261

157.3

2023

2022

Change

Index

Return on investment portfolio

1.8%

0.2%

+1.6 p.p.

1.5%

-0.1%

+1.6 p.p.

Non-EU

3.4%

2.3%

+1.1 p.p.

The finance result was up EUR 7.1 million due to an improved net investment result. The latter increased by EUR 9.6 million year on year due to the more favourable conditions in financial markets. In 2022, the result was impacted by negative revaluation of equity securities at fair value through profit or loss, whereas in 2023 these securities had a positive impact, mainly due to higher interest income. The net insurance finance result decreased by EUR 2.4 million due to higher discount rates on insurance contracts resulting from the increase in market interest rates. The return on the investment portfolio improved by 1.6 percentage points to 1.8%.

Net other operating expenses

Net other operating expenses mainly comprise non-attributable operating expenses and income not related to the insurance business. In 2023, these net expenses increased by EUR 2.8 million. The majority of the increase in the non-EU markets, which totalled EUR 2.0 million, was attributable to a one-time event that occurred in 2022 with one of the insurers. At that time, the Group received a one-off income as a result of a court case related to a previous major accident that was settled in the insurer’s favour. The remaining EUR 0.8 million mainly relates to higher non-attributable expenses.

Profit before tax

Profit before tax increased by EUR 10.1 million to EUR 31.1 million in 2023. As previously stated, the increase was primarily due to the improved finance and insurance service results.

Combined ratio

2023

2022

Change

Combined ratio

95.4%

+0.0 p.p.

95.3%

95.6%

-0.3 p.p.

Non-EU

96.1%

93.9%

+2.2 p.p.

Loss ratio

64.0%

-0.0 p.p.

65.4%

65.8%

-0.4 p.p.

Non-EU

57.0%

55.0%

+2.0 p.p.

Expense ratio

31.5%

31.3%

+0.2 p.p.

29.9%

+0.0 p.p.

Non-EU

39.1%

38.9%

+0.2 p.p.

The combined ratio remained at the same level as last year, at 95.4%. The combined ratio improved by 0.3 percentage points in the EU markets but deteriorated by 2.2 percentage points in the non-EU markets. The improvement in the EU markets was driven by a better loss ratio resulting from higher insurance revenue and a more favourable reinsurance service result from the effective reinsurance cover of the storm and flood claims. The decline in the non-EU markets was due to a higher loss ratio caused by claims from the summer storms, some large individual claims, and increased average claims due to claims inflation. The expense ratio remained unchanged. In the non-EU markets, it outperformed in 2022 as a result of the aforementioned extraordinary income with one of the insurers. Without factoring in this one-off income, the expense ratio in the non-EU markets for 2022 would have been 40.7%.

8.1.2.2Life segment

+38.3%Gross profit

EUR

2023

2022

Change

Index

Gross premiums written

185,767,542

172,175,270

13,592,272

107.9

174,441,547

162,202,436

12,239,110

107.5

Non-EU

11,325,996

9,972,834

1,353,162

113.6

Insurance service result

20,434,704

19,487,106

947,598

104.9

18,724,682

18,842,269

-117,587

99.4

Non-EU

1,710,022

644,837

1,065,185

265.2

Finance result

6,369,936

1,176,784

5,193,153

541.3

5,799,629

719,483

5,080,146

806.1

Non-EU

570,307

457,300

113,007

124.7

Net other operating expenses

-6,181,819

-5,748,157

-433,662

107.5

-5,669,054

-5,715,108

46,054

99.2

Non-EU

-512,766

-33,050

-479,716

1,551.5

Profit before tax

20,622,821

14,915,732

5,707,089

138.3

18,855,257

13,846,644

5,008,613

136.2

Non-EU

1,767,563

1,069,088

698,476

165.3

31 December 2023

31 December 2022

Change

Index

Contractual service margin (CSM)

141,629,289

124,608,539

17,020,750

113.7

132,599,225

115,335,766

17,263,459

115.0

Non-EU

9,030,064

9,272,773

-242,709

97.4

Gross premiums written

Unconsolidated gross premiums written – life

EUR

2023

2022

Change

Index

Slovenia

172,197,851

160,155,233

12,042,619

107.5

Croatia

2,243,695

2,047,204

196,491

109.6

174,441,547

162,202,436

12,239,110

107.5

Serbia

7,062,615

5,615,038

1,447,577

125.8

Kosovo

4,263,381

4,357,796

-94,415

97.8

Non-EU

11,325,996

9,972,834

1,353,162

113.6

Total life

185,767,542

172,175,270

13,592,272

107.9

Gross written premiums of the EU-based life insurers increased by 7.5% year on year due to higher sales of both life risk and unit-linked insurance products. The non-EU life insurers managed to increase gross written premiums by a remarkable 13.6%. In addition to maintaining the existing portfolio, sales of life risk and unit-linked insurance products, which had not been sold in the previous year, also increased.

Composition of consolidated gross life insurance premiums by class of business

The rise in the share of unit-linked insurance was a result of the increased sales of unit-linked policies in Slovenia and the maturing of traditional life savings policies, which are no longer available for purchase in Slovenia.

Insurance service result

EUR

2023

2022

Change

Index

Insurance revenue

66,403,513

61,496,184

4,907,329

108.0

59,872,919

56,462,308

3,410,611

106.0

Non-EU

6,530,594

5,033,876

1,496,718

129.7

Insurance service expenses

-45,730,102

-41,518,952

-4,211,150

110.1

Claims incurred

-17,469,137

-12,950,460

-4,518,677

134.9

-15,502,210

-11,447,246

-4,054,964

135.4

Non-EU

-1,966,927

-1,503,214

-463,713

130.8

Operating expenses

-28,800,168

-26,502,721

-2,297,447

108.7

-25,752,177

-23,970,652

-1,781,525

107.4

Non-EU

-3,047,991

-2,532,069

-515,922

120.4

Onerous contracts

539,203

-2,065,771

2,604,974

-26.1

344,857

-1,712,015

2,056,872

-20.1

Non-EU

194,346

-353,756

548,102

-54.9

Reinsurance service result

-238,707

-490,126

251,419

48.7

Insurance service result

20,434,704

19,487,106

947,598

104.9

18,724,682

18,842,269

-117,587

99.4

Non-EU

1,710,022

644,837

1,065,185

265.2

The insurance service result improved by EUR 0.9 million. In the non-EU markets, the result increased due to portfolio growth and lower-than-expected realised claims, whereas in the EU markets it decreased by EUR 0.1 million due to a higher volume of claims incurred.

Insurance revenue grew by 6.0% in the EU markets due to increased sales and a shift in premium composition towards life risk insurance products. These products have a higher share of premiums counted as insurance revenue compared to those with a savings component. The Group’s insurance revenue outside the EU increased by 29.7% due to higher sales in the Serbian market and updates to actuarial models and assumptions.

Insurance service expenses rose by 10.1%, mainly as a result of an increase in claims incurred. The latter increased due to the higher volume of business and a slight rise in claims from riders and death benefits on existing policies (e.g. accidental disability and critical illness). This was mainly due to the more favourable claims experience during the Covid-19 pandemic, but, after all restrictions were lifted, population activity increased, leading to an increase in accidents. Operating expenses also increased due to both higher acquisition costs resulting from increased sales and higher administrative costs resulting mainly from inflationary increases in personnel costs, and depreciation and amortisation costs (the start of amortisation of intangible assets related to major projects and depreciation of new premises). The rise in insurance service expenses was slightly offset by a positive change in expenses for onerous contracts of EUR 2.6 million, resulting from the improved expected profitability of the portfolio.

Finance result and investment return

EUR

2023

2022

Change

Index

Net investment result

10,059,429

4,460,089

5,599,340

225.5

9,103,691

3,709,640

5,394,050

245.4

Non-EU

955,738

750,448

205,290

127.4

Net insurance finance result

-3,702,612

-3,242,471

-460,141

114.2

-3,302,541

-2,974,900

-327,641

111.0

Non-EU

-400,071

-267,571

-132,500

149.5

Net exchange gains/losses

13,120

-40,834

53,954

-32.1

-1,520

-15,257

13,737

10.0

Non-EU

14,640

-25,577

40,217

-57.2

Finance result

6,369,936

1,176,784

5,193,153

541.3

5,799,629

719,483

5,080,146

806.1

Non-EU

570,307

457,300

113,007

124.7

2023

2022

Change

Index

Return on investment portfolio

2.0%

0.8%

+1.2 p.p.

1.9%

0.7%

+1.2 p.p.

Non-EU

2.9%

2.4%

+0.5 p.p.

The finance result was up EUR 5.2 million, mainly due to the improved net investment result, which was EUR 5.6 million higher in 2023 because of more favourable conditions in financial markets. In 2022, the result was impacted by negative revaluation of equity securities at fair value through profit or loss, whereas in 2023 these securities had a positive impact, mainly due to higher interest income. The return on the investment portfolio increased to 2.0%, in line with the improved net investment result.

On the other hand, the more favourable financial market conditions had a negative impact on the net insurance finance result, which decreased by EUR 0.5 million due to the rise in discount rates.

Net other operating expenses

Net other operating expenses increased by EUR 0.4 million as a result of the updated methodology for calculating the insurance service result for the non-EU insurers in 2023. Non-attributable expenses also increased due to inflation.

Profit before tax

The increase in profit before tax of 38.3% was primarily attributable to the improved finance result in the EU markets from the previous year. Meanwhile, the increase in the non-EU markets was mainly a reflection of the improved insurance service result.

Contractual service margin

31 December 2023

31 December 2022

Change

Index

Contractual service margin (CSM)

141,629,289

124,608,539

17,020,750

113.7

132,599,225

115,335,766

17,263,459

115.0

Non-EU

9,030,064

9,272,773

-242,709

97.4

The 13.7% growth in the contractual service margin was achieved through new business written, maintaining the profitability of the life insurance portfolio. The expected higher future profits were also driven by positive developments in financial markets, which boosted the value of unit-linked life insurance assets and, consequently, the future income from managing these assets. The CMS also increased due to additional single-premium payments to existing policies. The CSM on new business

written was EUR 23.3 million, exceeding its release to profit (EUR 17.2 million) by 35.6%, which reflects strong sales and increased profitability.

8.1.2.3Reinsurance segment36

+12.1%Insurance revenue

EUR

2023

2022

Change

Index

Gross premiums written

122,966,992

120,876,083

2,090,909

101.7

Insurance service result

23,442,000

22,651,373

790,626

103.5

Finance result

1,581,486

-898,616

2,480,102

Net other operating expenses

-2,422,611

-965,742

-1,456,869

250.9

Profit before tax

20,699,290

18,369,768

2,329,522

112.7

Combined ratio

81.6%

79.2%

+2.4 p.p.

31 December 2023

31 December 2022

Change

Index

Contractual service margin (CSM)

5,455,348

4,671,184

784,164

116.8

Gross premiums written

Gross written premiums grew by EUR 2.1 million, the most important being the positive shift in premium composition towards more profitable non-proportional contracts. The premiums for these contracts increased by 19.4%. This growth in gross written premiums was achieved through both rate increases in line with global reinsurance market developments and organic volume growth.

Insurance service result37

EUR

2023

2022

Change

Index

Insurance revenue

104,029,407

92,799,955

11,229,632

112.1

Insurance service expenses

-81,494,383

-70,317,410

-11,176,973

115.9

Claims incurred

-71,430,181

-61,697,514

-9,732,667

115.8

Operating expenses

-10,318,051

-8,703,623

-1,614,428

118.5

Onerous contracts

253,849

83,727

170,122

303.2

Reinsurance service result

906,976

168,828

738,147

537.2

Insurance service result

23,442,000

22,651,373

790,626

103.5

The insurance service result improved by EUR 0.8 million due to increased insurance revenue and a more favourable reinsurance service result.

Insurance revenue increased by EUR 11.2 million as a result of improved premium composition towards non-proportional reinsurance because these premiums are recognised more quickly in revenue.

Insurance service expenses rose by EUR 11.2 million, with claims incurred accounting for EUR 9.7 million. This increase was mainly due to a major loss event earlier in the year. Operating expenses were up EUR 1.6 million, primarily due to acquisition costs and partly due to inflation.

The reinsurance service result improved by EUR 0.7 million. Revenue from reinsurance contracts held increased by EUR 3.0 million (recoverable income from a major loss event in 2023), whereas expenses for reinsurance contracts held rose by EUR 2.3 million as a result of the increased volume of reinsurance protection and higher prices.

36 Unconsolidated data are presented in more detail in section 8.2 “Sava Re”.

37 GRI 201-02.

Finance result and investment return

EUR

2023

2022

Change

Index

Net investment result

5,521,148

1,545,065

3,976,083

357.3

Net insurance finance result

-5,210,186

-4,386,386

-823,799

118.8

Net exchange gains

1,270,540

1,942,705

-672,165

65.4

Finance result

1,581,486

-898,616

2,480,102

2023

2022

Change

Index

Return on investment portfolio

2.1%

0.6%

+1.5 p.p.

The finance result improved as a result of a stronger net investment result, which increased by EUR 4.0 million in 2023 due to higher interest income (reinvestment at higher interest rates) and positive revaluation of equity investments at fair value through profit or loss. As a result, the return on the investment portfolio was also higher, at 2.1%.

The net insurance finance result was lower in 2023 due to higher discount rates, reflecting the changed situation in financial markets.

Net other operating expenses

Net other operating expenses rose by EUR 0.9 million, mainly driven by higher non-attributable expenses resulting from inflation and development activities.

Profit before tax

Profit before tax increased by EUR 2.3 million as a result of the improved insurance service and net investment results.

Combined ratio

2023

2022

Change

Combined ratio

81.6%

79.2%

+2.4 p.p.

Loss ratio

67.5%

66.2%

+1.3 p.p.

Expense ratio

14.1%

13.0%

+1.1 p.p.

The combined ratio remained at a very favourable level but increased due to both the loss ratio (impacted by a major loss event at the beginning of the year) and the expense ratio (impacted by higher acquisition and other operating expenses).

Contractual service margin

As at 31 December 2023, the contractual service margin totalled EUR 5.5 million. In 2023, the CSM increased by EUR 0.8 million, or 16.8%. The newly recognised CSM was EUR 5.4 million lower than the CSM released, reflecting a higher volume of recognised non-proportional reinsurance contracts in 2023. The level of CSM was mainly positively impacted by onerous contracts that became profitable during the reporting period (EUR 1.8 million) as a result of the positive development of the proportional portfolio for the previous underwriting years.

8.1.2.4Pensions and asset management segment

+9.0%Asset management revenue

EUR

2023

2022

Change

Index

Business volume

22,802,778

21,434,886

1,367,892

106.4

Asset management revenue

19,589,410

17,978,588

1,610,822

109.0

Gross premiums written (annuities)

3,213,368

3,456,298

-242,930

93.0

Insurance revenue

421,765

308,794

112,971

136.6

Claims incurred

-85,420

-66,524

-18,896

128.4

Operating expenses

-13,483,703

-11,977,899

-1,505,805

112.6

Finance result of investments and insurance contracts

674,344

-1,072,171

1,746,515

Net other operating income/expenses

399,810

-302,421

702,231

-132.2

Profit before tax

7,516,206

4,868,367

2,647,838

154.4

Cost-to-income ratio (CIR)

67.0%

65.2%

+1.8 p.p.

EUR

31 December 2023

31 December 2022

Change

Index

Assets under management

1,803,264,665

1,507,752,304

295,512,361

119.6

Business volume increased by EUR 1.4 million due to higher asset management revenue. This increase was mainly driven by management fee income, although there was also a rise in income from entry fees.

Insurance revenue was up EUR 0.1 million due to more profitable new business written and gains from exceeding guaranteed returns on annuity accounts.

Claims incurred were slightly higher, which was in line with growth in the part of the portfolio relating to annuities.

Operating expenses rose by EUR 1.5 million due to the inflationary effects, which led to higher service and personnel costs. As a result, the cost-to-income ratio, which excludes one-off income, increased by 1.8 percentage points.

The finance result improved by EUR 1.7 million due to a positive revaluation of equity investments at fair value through profit or loss of EUR 2.2 million. On the other hand, finance expenses for insurance contracts increased by EUR 0.5 million due to higher discount rates. The rate of investment return was also higher, at 2.7%.

Net other operating income/expenses improved by EUR 0.7 million as a result of the sale of a property and the release of provisions for non-achievement of guaranteed returns.

Profit before tax was up EUR 2.6 million, primarily due to higher asset management revenue and an improved investment result driven by favourable financial market conditions.

Assets under management rose by EUR 295.5 million. The main reasons for this increase were the high net inflows into the funds and the 10.2% return achieved. Assets under management increased for all companies in this segment.

Performance of funds under management (accumulation part; pensions and asset management segment)

EUR

2023

2022

Index

Opening balance of fund assets

1,507,752,304

1,541,670,574

97.8

Fund inflows

195,800,605

171,692,469

114.0

Fund outflows

-50,622,078

-59,758,943

84.7

Asset transfers

-15,184,025

-13,798,074

110.0

Net investment income of funds

168,060,395

-128,126,162

Entry and exit charges

-2,585,551

-2,397,556

107.8

Exchange differences and fair value reserve

43,015

-1,530,006

Closing balance of fund assets

1,803,264,665

1,507,752,304

119.6

Index in relation to period start

119.6

97.8

Funds under management at period end (accumulation part; pensions and asset management segment)

EUR

31 December 2023

31 December 2022

Sava Pokojninska

179,443,359

165,831,325.5

Sava Penzisko Društvo

995,217,064

847,491,761.5

Sava Infond

628,604,242

494,429,217.2

Total

1,803,264,665

1,507,752,304

8.1.2.5“Other” segment

+44.5%Income

EUR

2023

2022

Change

Index

Income

8,270,833

5,722,565

2,548,268

144.5

Expenses

-8,608,103

-6,382,431

-2,225,671

134.9

Profit or loss before tax

-337,270

-659,866

322,597

Revenue grew by EUR 2.5 million due to higher business volumes in assistance and healthcare services. In 2022, revenue also included the one-time sale of a subsidiary. Without factoring this in, revenue growth in 2023 would have been EUR 1 million higher.

Expenses were up EUR 2.2 million due to higher business volumes and inflationary pressures. Expenses of this segment in both periods also included subordinated debt expenses of EUR 2.9 million.

The loss of the segment decreased by EUR 0.3 million due to higher profits from assistance and healthcare services.

8.1.3Financial position

The following are explanations of assets and liabilities that are relevant to the understanding of the Group’s financial position.

EUR

31 December 2023

31 December 2022

Change

Index

Equity

585,663,613

531,463,677

54,199,936

110.2

Contractual service margin (CSM)

155,307,485

136,396,088

18,911,397

113.9

Risk adjustment

90,366,848

94,005,064

-3,638,216

96.1

Investment portfolio position

1,503,282,095

1,415,231,399

88,050,696

106.2

Total assets

2,568,546,136

2,312,140,248

256,405,888

111.1

Assets under management

2,411,800,064

2,006,528,480

405,271,584

120.2

8.1.3.1Equity and solvency

Equity amounted to EUR 585.7 million, up EUR 54.2 million compared to the end of 2022. The increase in the profit for 2023 and a positive change in other comprehensive income were the primary reasons for the overall increase, while the decrease was mainly due to the dividend payouts.

Thus, the Group’s estimated solvency position as at 31 December 2023 shows that the Group is well capitalised, with a solvency ratio of between 188% and 194% (31 December 2022: 183%). The Group thus has a solvency ratio well above the regulatory requirement of 100% and is well capitalised according to its internal criteria, which define an optimal solvency ratio between 170% and 210%.

8.1.3.2Contractual service margin

The contractual service margin (CSM) is an estimate of future profits from insurance contracts that relate to future periods and have not yet been recognised in profit or loss. As at 31 December 2023, it totalled EUR 155.3 million (net of reinsurance, EUR 149.4 million). The majority of the contractual service margin (EUR 141.6 million, or 91.2% of the total CSM) arose from the life business, followed by the non-life business with EUR 6.3 million (4.1%) and the reinsurance business with EUR 5.5 million (3.5%), with the remainder attributable to the pensions business (EUR 1.9 million, or 1.2%). In 2023, the contractual service margin increased by EUR 18.9 million, or 13.9%. In the life business, the increase was EUR 17.0 million, or 13.7%. The newly written contracts had a slightly higher contractual service margin than the amount released to profit or loss (specifically, the newly recognised CSM was EUR 46.7 million, whereas the release was EUR 44.9 million). In the life segment, the newly recognised CSM exceeded the release by EUR 6.1 million, and in the reinsurance segment the newly recognised CSM was EUR 5.4 million lower than the release due to the volume of non-proportional reinsurance contracts recognised in 2023. The increase in the contractual service margin was also positively affected by the change in future cash flow assumptions of EUR 15.4 million (primarily in the life segment) due to improved financial market conditions and additional single-premium payments to existing policies. The remainder of the change related to interest and foreign exchange differences.

Movement in the contractual service margin

8.1.3.3Risk adjustment

As at 31 December 2023, the risk adjustment was EUR 90.4 million, down EUR 3.6 million compared to the previous year. Around two-thirds of the risk adjustment (EUR 55.8 million) stems from liabilities for claims incurred, mainly in the non-life business (EUR 39.0 million), followed by reinsurance (EUR 16.3 million) and the non-life business (EUR 0.6 million). This part of the risk adjustment decreased by EUR 4.3 million, or 7.1%.

The other part of the risk adjustment (EUR 34.5 million) relates to liabilities for remaining coverage and arises from the life business (EUR 31.1 million), followed by the reinsurance (EUR 1.9 million) and

non-life (EUR 1.3 million) business, with the remainder attributable to pensions (EUR 0.2 million). This part of the risk adjustment increased by EUR 0.7 million, or 1.9%, due to portfolio growth.

8.1.3.4Investment portfolio

The investment portfolio of the Sava Insurance Group is made up of financial investments, investment property, financial investments in associates and joint ventures, and cash and cash equivalents.

Investment portfolio position

EUR

31 December 2023

31 December 2022

Change

Index

Deposits and CDs

25,616,171

18,848,261

6,767,910

135.9

Government bonds

818,836,368

721,024,386

97,811,982

113.6

Corporate bonds

457,974,606

433,777,269

24,197,337

105.6

21,754,273

24,883,924

-3,129,651

87.4

Mutual funds

18,564,549

22,157,732

-3,593,182

83.8

Infrastructure funds

57,339,858

53,856,376

3,483,482

106.5

Real estate funds

13,888,193

16,497,061

-2,608,868

84.2

Loans granted

754,141

1,194,821

-440,680

63.1

Total financial investments

1,414,728,159

1,292,239,830

122,488,329

109.5

Financial investments in associates

23,834,619

21,856,109

1,978,510

109.1

Investment property

24,890,278

22,795,759

2,094,519

109.2

Cash and cash equivalents

39,829,039

78,339,699

-38,510,660

50.8

Total investment portfolio

1,503,282,095

1,415,231,397

88,050,699

106.2

The investment portfolio increased by EUR 88.0 million compared to year-end 2022. The major change in the value of investments was mainly in government and corporate bonds, as available funds from operations and investment maturities and disposals were invested mainly in these types of assets. The level of cash and cash equivalents decreased by almost half as cash was invested in higher-yielding assets. The value of shares and mutual funds fell slightly as a result of the disposals.

Composition of the investment portfolio

EUR

31 December 2023

Shareas at 31 December 2023

31 December 2022

Shareas at 31 December 2022

Change

in share (p.p.)

Fixed-rate financial investments

1,302,427,145

86.6%

1,173,649,916

82.9%

3.7

Infrastructure funds

57,339,858

3.8%

53,856,376

3.8%

0.0

Cash and cash equivalents

39,827,379

2.6%

78,339,699

5.5%

-2.9

Property

24,890,278

1.7%

22,795,759

1.6%

0.0

Financial investments in associates

23,834,619

1.6%

21,856,109

1.5%

0.0

21,754,273

1.4%

24,883,924

1.8%

-0.3

Mutual funds

18,564,549

1.2%

22,157,732

1.6%

-0.3

Real estate funds

13,888,193

0.9%

16,497,061

1.2%

-0.2

Loans granted

754,141

0.1%

1,194,821

0.1%

0.0

Total

1,503,280,435

100.0%

1,415,231,397

100.0%

0.0

Composition of fixed-rate investments

EUR

31 December 2023

Shareas at 31 December 2023

31 December 2022

Shareas at 31 December 2022

Change

in share (p.p.)

Government bonds

760,045,073

50.6%

679,225,272

48.0%

2.6

Regular corporate bonds

374,739,651

24.9%

373,372,829

26.4%

-1.5

Government-guaranteed bonds

59,038,019

3.9%

55,047,777

3.9%

0.0

Covered bonds

52,439,089

3.5%

14,476,732

1.0%

2.5

Subordinated bonds

30,549,141

2.0%

32,679,047

2.3%

-0.3

Deposits

25,616,171

1.7%

18,848,260

1.3%

0.4

Total

1,302,427,144

86.6%

1,173,649,918

82.9%

3.7

8.1.3.5Assets under management

EUR

31 December 2023

31 December 2022

Change

Index

Assets held in pension company savings funds

1,174,660,423

1,013,323,087

161,337,336

115.9

Assets under management with a fund management company

628,604,242

494,429,217

134,175,025

127.1

Assets held for the benefit of policyholders who bear the investment risk

608,535,399

498,776,176

109,759,223

122.0

Assets under management

2,411,800,064

2,006,528,480

405,271,584

120.2

Assets under management amounted to EUR 2,411.8 million, up 20.2%. This growth was driven both by an increase in fund returns resulting from favourable developments in financial markets and by positive net inflows into all three types of funds (pension funds, funds of a mutual fund management company and unit-linked funds).

8.1.3.6Financing sources and their maturity

As at 31 December 2023, the Sava Insurance Group held EUR 585.7 million in shareholders’ equity and EUR 75.0 million in subordinated liabilities. In October 2019, the parent company issued subordinated bonds with a scheduled maturity in 2039 and an early recall option for 7 November 2029. The bond is admitted to trading on the regulated market of the Luxembourg Stock Exchange. As at 31 December 2023, the market price of the bond was 77.717% and the market value EUR 58,702,709 (31 December 2022: the market price was 74.499% and the market value EUR 56,290,346).

8.1.4Income statement by segment

Income statement by segment

EUR

Non-life, EU

Non-life, non-EU

Life, EU

Life, non-EU

Reinsurance

Pensions and asset management

Other

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Insurance revenue

436,996,472

380,796,268

89,711,654

73,586,592

59,872,919

56,462,308

6,530,594

5,033,876

104,029,407

92,799,955

421,765

308,794

697,562,811

608,987,793

Insurance service expenses

-445,956,710

-360,568,520

-83,631,610

-64,961,945

-40,909,530

-37,129,913

-4,820,572

-4,389,039

-81,494,383

-70,317,410

-312,713

-143,723

-657,125,518

-537,510,550

Claims incurred

-324,341,925

-255,758,019

-52,147,491

-37,837,257

-15,502,210

-11,447,246

-1,966,927

-1,503,214

-71,430,181

-61,697,514

-85,420

-66,524

-465,474,154

-368,309,774

Operating expenses

-118,758,015

-102,624,831

-31,575,713

-27,103,703

-25,752,177

-23,970,652

-3,047,991

-2,532,069

-10,318,051

-8,703,623

-113,073

-96,158

-189,565,020

-165,031,036

Onerous contracts

-2,856,770

-2,185,670

91,594

-20,985

344,857

-1,712,015

194,346

-353,756

253,849

83,727

-114,220

18,959

-2,086,344

-4,169,740

Insurance service result before reinsurance

-8,960,238

20,227,748

6,080,044

8,624,647

18,963,389

19,332,395

1,710,022

644,837

22,535,024

22,482,545

109,052

165,071

40,437,293

71,477,243

Reinsurance service result

41,486,560

7,537,611

885,641

-2,620,139

-238,707

-490,126

906,976

168,828

43,040,469

4,596,174

Insurance service result

32,526,322

27,765,359

6,965,685

6,004,508

18,724,682

18,842,269

1,710,022

644,837

23,442,000

22,651,373

109,052

165,071

83,477,762

76,073,417

Net investment result

7,882,690

-562,285

3,094,209

1,962,550

9,103,691

3,709,640

955,738

750,448

5,521,148

1,545,065

1,365,801

-869,358

27,923,277

6,536,061

Net insurance finance income or expenses

-3,070,764

-930,698

-629,162

-378,489

-3,302,541

-2,974,900

-400,071

-267,571

-5,210,202

-4,386,386

-691,457

-202,813

-13,304,198

-9,140,857

Net exchange gains/losses

-79,847

-28,341

-8,803

-22,079

-1,520

-15,257

14,640

-25,577

1,270,540

1,942,705

-2,505

-14,512

1,192,505

1,836,939

Finance result

4,732,079

-1,521,324

2,456,244

1,561,983

5,799,629

719,483

570,307

457,300

1,581,486

-898,616

671,839

-1,086,683

15,811,584

-767,857

Non-insurance revenue

3,212

19,589,410

17,978,588

5,806,493

3,422,717

25,395,903

21,404,517

Other expenses

-16,349,800

-14,842,893

-6,237,092

-5,742,288

-5,161,413

-5,092,506

-492,069

-418,355

-3,693,151

-2,908,447

-13,370,630

-11,881,741

-5,710,391

-3,496,453

-51,014,545

-44,382,684

Income from investments in subsidiaries and associates

3,754

2,282,455

2,279,735

2,286,209

2,279,735

Net other operating income/expenses

4,411,830

3,661,593

2,603,285

4,117,895

-507,641

-622,602

-20,696

385,306

-631,045

-474,542

516,535

-306,868

-2,715,827

-2,865,865

3,656,441

3,894,917

Profit or loss before tax

25,324,185

15,062,734

5,788,122

5,945,310

18,855,257

13,846,644

1,767,563

1,069,088

20,699,290

18,369,768

7,516,206

4,868,367

-337,270

-659,866

79,613,354

58,502,045

Income tax expense

-14,956,182

-11,578,604

Net profit or loss for the period

64,657,172

46,923,441

Restated income statement

The income statement, which is used for the presentation of the operating analysis in the business report, has been restated to present certain categories more clearly and to shorten the line items, as shown in the following table.

EUR

Income statement

Income statement (restated)

2023

2022

2023

2022

Revenue from insurance services

697,562,811

608,987,793

Insurance revenue

697,562,811

608,987,793

Expenses from insurance services

-657,125,518

-537,510,550

Insurance service expenses

-657,125,518

-537,510,550

Net result from insurance contracts

40,437,293

71,477,243

Insurance service result before reinsurance

40,437,293

71,477,243

Revenue from reinsurance contracts held

86,112,246

43,335,084

Expenses for reinsurance contracts held

-43,071,777

-38,738,910

Net result from reinsurance contracts held

43,040,469

4,596,174

Reinsurance service result

43,040,469

4,596,174

Result from insurance contracts

83,477,762

76,073,417

Insurance service result

83,477,762

76,073,417

Net investment result

78,424,741

-53,182,881

Net investment result

27,923,277

6,536,061

Finance result from insurance contracts

-62,000,579

52,044,359

Finance result from reinsurance contracts

-612,578

370,665

Net insurance finance result

-62,613,157

52,415,024

Net insurance finance result

-13,304,198

-9,140,857

Net exchange gains/losses

1,192,505

1,836,939

Net insurance and finance result

15,811,584

-767,857

Finance result

15,811,584

-767,857

Asset management revenue

19,589,410

17,981,800

Non-insurance revenue

25,551,080

21,404,517

Non-attributable operating expenses

-29,432,276

-26,979,168

Other expenses

-51,014,545

-44,382,684

Net impairment losses and reversals of impairment losses on non-financial assets

231,724

79,737

Finance costs

-3,114,997

-3,021,150

Share of profit or loss of investments accounted for using equity method

2,169,860

1,285,731

Income from investments in subsidiaries and associates

2,286,209

2,279,735

Net income and expenses from subsidiaries and associates

116,348

994,004

Gains or losses on disposal of discontinued operations

353,684

Net other operating income and expenses

-9,589,746

-7,144,469

Net other operating income/expenses

3,501,264

3,894,917

Profit before tax

79,613,353

58,502,045

Profit before tax

79,613,354

58,502,045

Income tax expense

-14,956,182

-11,578,604

Income tax expense

-14,956,182

-11,578,604

Net profit or loss for the period

64,657,171

46,923,441

Net profit or loss for the period

64,657,171

46,923,441

The following reclassifications were made:

•Exchange differences on investments and insurance liabilities are reclassified from the net investment result and net insurance finance result to net exchange gains.

•Returns on life insurance policies where policyholders bear the investment risk are reclassified from the net investment result to the net insurance finance result.

•Asset management revenue and income from other Group companies, which are included in net other operating income and expenses, are reported together as non-insurance revenue.

•Non-attributable expenses and operating expenses of non-insurance companies, which are included in net other operating income and expenses, are collectively reported as other expenses.

•The share of profit or loss of investments accounted for using the equity method and net income and expenses from subsidiaries and associates are combined under income from investments in subsidiaries and associates.

•Gains or losses on disposal of discontinued operations are included in net other operating income.

8.2Sava Re

8.2.1Gross premiums written

Gross written premiums increased by 8.3% to EUR 215.9 million in 2023.

Gross premiums written

EUR

2023

2022

Change

Index

Non-Group

122,966,992

120,876,083

2,090,909

101.7

Group

92,947,982

78,529,246

14,418,736

118.4

Total

215,914,974

199,405,329

16,509,645

108.3

Non-Group gross written premiums grew by EUR 2.1 million, the most important being the positive shift in premium composition towards more profitable non-proportional contracts. The premiums for these contracts increased by 19.4%. This growth in gross written premiums was achieved through both price increases in line with global reinsurance market developments and organic volume growth.

Group gross written premiums increased by EUR 14.4 million (18.4%) as a result of premium growth in the Slovenian market.

Gross premiums written by class of business

Gross premiums written by form of reinsurance

Slika, ki vsebuje besede besedilo, posnetek zaslona, diagram, krog

Opis je samodejno ustvarjen

Slika, ki vsebuje besede besedilo, posnetek zaslona, krog, diagram

Opis je samodejno ustvarjen

8.2.2Business and performance

EUR

2023

2022

Change

Index

Insurance revenue

167,804,126

150,760,655

17,043,471

111.3

Insurance service expenses

-174,490,918

-132,523,250

-41,967,667

131.7

Claims incurred

-162,708,295

-122,849,828

-39,858,467

132.4

Operating expenses

-12,027,831

-9,991,521

-2,036,310

120.4

Onerous contracts

245,208

318,099

-72,891

77.1

Reinsurance service result

43,669,147

9,867,581

33,801,564

442.6

Insurance service result

36,982,356

28,104,988

8,877,368

131.6

Net investment result

7,827,977

1,813,210

6,014,767

431.7

Net insurance finance result

-6,815,712

-4,876,551

-1,939,161

139.8

Net exchange gains

1,293,761

1,820,272

-526,511

71.1

Finance result

2,306,026

-1,243,070

3,549,095

-185.5

Other expenses

-13,805,508

-11,803,863

-2,001,645

117.0

Income from investments in subsidiaries and associates

30,755,010

51,728,827

-20,973,817

59.5

Net other operating expenses

-2,648,673

-2,854,982

206,309

92.8

Profit or loss before tax

53,589,208

63,931,896

-10,342,688

83.8

Income tax expense

-4,114,406

-2,580,945

-1,533,461

159.4

Net profit or loss for the period

49,474,802

61,350,951

-11,876,149

80.6

2023

2022

Change

Index

Combined ratio

80.8%

84.2%

-3.4 p.p.

Loss ratio

70.8%

74.7%

-3.9 p.p.

Expense ratio

10.0%

9.5%

+0.5 p.p.

Investment return

2.2%

0.5%

+1.7 p.p.

Return on equity

11.6%

15.5%

-3.9 p.p.

Insurance service result

The insurance service result was up EUR 8.9 million, mainly due to the improved performance of the Group business (an increase of EUR 8.1 million). The insurance service result for the non-Group business was higher by EUR 0.8 million as a result of a more favourable performance of inward and outward business.

Insurance revenue increased by EUR 17.0 million (11.3%) due to growth in both the non-Group and Group business.

Insurance service expenses38 rose by EUR 42.0 million, mainly as a result of an increase in claims incurred.

Claims incurred

EUR

2023

2022

Change

Index

Non-Group

71,430,180

61,697,514

9,732,666

115.8

Group

91,278,115

61,152,314

30,125,801

149.3

Total

162,708,295

122,849,828

39,858,466

132.4

Claims incurred rose by EUR 39.9 million. The higher level of claims incurred for the non-Group business were mainly the result of a major loss event at the beginning of the year, whereas for the

38 GRI 201-02.

Group business they were the result of summer storms in Slovenia and other countries in which the Group operates. Operating expenses increased by EUR 2.0 million in 2023, primarily due to higher acquisition costs for the non-Group business.

The reinsurance service result was stronger compared to 2022 for both the non-Group and Group business. This was the result of a different mix of claims that triggered the Group’s reinsurance protection to a greater extent and were ceded to reinsurers.

The combined ratio improved due to a more favourable loss ratio. The improved loss ratio was a reflection of the stronger ratio for the Group business. The movement in the expense ratio was mainly driven by higher acquisition and other operating expenses.

Combined, loss and expense ratios

2023

2022

Change

Combined ratio

80.8%

84.2%

-3.4 p.p.

Loss ratio

70.8%

74.7%

-3.9 p.p.

Expense ratio

10.0%

9.5%

+0.5 p.p.

Finance result and investment return

EUR

2023

2022

Change

Index

Net investment result

7,827,977

1,813,210

6,014,767

431.7

Net insurance finance result

-6,815,712

-4,876,551

-1,939,161

139.8

Net exchange gains

1,293,761

1,820,272

-526,511

71.1

Finance result

2,306,026

-1,243,070

3,549,096

The finance result improved on the back of a stronger net investment result.

The net investment result increased by EUR 6.0 million compared to 2022 due to higher interest income (reinvestment at better interest rates) and positive revaluation of equity investments at fair value through profit or loss. The return on the investment portfolio was 5.6%.

Investment return and net investment income relating to the Sava Re investment portfolio

EUR

2023

2022

Change

Index

Income from financial investments

11,074,476

10,444,556

629,919

106.0

Expenses for financial investments

3,246,499

8,631,346

-5,384,848

37.6

Net investment result

7,827,977

1,813,210

6,014,767

431.7

Net income and expenses from subsidiaries and associates

30,755,010

51,728,827

-20,973,817

59.5

Net investment income relating to the investment portfolio

38,582,987

53,542,037

-14,959,050

72.1

2023

2022

Change

Index

Investment return

2.2%

0.5%

+1.7 p.p.

Return on investment portfolio

5.6%

7.8%

-2.2 p.p.

Income, expenses, and net investment income relating to the Sava Re investment portfolio

EUR

2023

2022

Change

Interest income at effective interest rate

4,735,050

2,688,043

2,047,007

Gain on change in fair value of FVTPL assets

3,903,887

4,129,770

-225,883

Gains on disposal of FVTPL assets

9,388

77,683

-68,295

Gains on disposal of other IFRS asset categories

12,456

1,163,032

-1,150,576

Income from dividends and shares – other investments

217,967

458,074

-240,108

Movement in expected credit losses (ECL)

89,921

153,926

-64,006

Other income

1,097,797

1,120,444

-22,648

Other income from alternative funds

1,008,011

653,583

354,428

Total income from the investment portfolio

11,074,475

10,444,556

629,919

Loss on change in fair value of FVTPL assets

2,692,105

7,232,854

-4,540,749

Losses on disposal of FVTPL assets

158,893

69,230

89,663

Losses on disposal of other IFRS asset categories

132,904

965,345

-832,441

Movement in expected credit losses (ECL)

35,495

132,103

-96,608

Other expenses

227,101

231,814

-4,713

Total expenses for the investment portfolio

3,246,498

8,631,346

-5,384,848

Net investment result

7,827,977

1,813,210

6,014,767

Net income and expenses from subsidiaries and associates

30,755,010

51,728,827

-20,973,817

Net investment income relating to the investment portfolio

38,582,988

53,542,037

-14,959,049

Return on investment portfolio

5.6%

7.8%

-2.2 p.p.

The result of investments in subsidiaries and associates was EUR 30.8 million, down EUR 21.0 million compared to 2022 due to lower dividends received from subsidiaries. In 2023, there were no impairment losses on subsidiaries, whereas in 2022 an impairment loss of EUR 1.2 million was recognised in subsidiaries.

The net insurance finance result was down EUR 1.9 million as a result of higher discount rates.

Profit or loss for the period

Profit before tax decreased by EUR 10.3 million compared to 2022. Excluding dividends received from subsidiaries, the result would have been EUR 10.9 million higher. In line with the decline in profit before tax, the net profit for the period also decreased by EUR 11.9 million. As a result, the return on equity was lower, at 11.6%.

8.2.3Financial position

The following are explanations of assets and liabilities that are relevant to the understanding of the Company’s financial position.

EUR

31 December 2023

31 December 2022

Change

Index

Equity

430,897,178

401,675,656

29,221,521

107.3

Contractual service margin (CSM)

9,521,208

8,401,764

1,119,444

113.3

Risk adjustment

30,691,156

34,695,702

-4,004,546

88.5

Investment portfolio position

699,468,206

679,014,491

20,453,715

103.0

Total assets

813,954,323

754,248,344

59,705,979

107.9

8.2.3.1Equity and solvency

Equity amounted to EUR 430.9 million, up EUR 29.2 million compared to the end of 2022. The increase in the profit for 2023 and a positive change in other comprehensive income were the primary reasons for the overall increase, partly decreased by dividend payouts.

Thus, Sava Re’s audited solvency position as at 31 December 2023 shows that the Company is well capitalised, with a solvency ratio of 289% (31 December 2022: 266%). The Company thus has a solvency ratio well above the regulatory requirement of 100% and is well capitalised according to its internal criteria, which define an optimal solvency ratio above 200%.

8.2.3.2Contractual service margin

As at 31 December 2023, the contractual service margin totalled EUR 9.5 million (net of reinsurance, EUR 5.1 million). In 2023, it increased by EUR 1.1 million, or 13.3%. The newly recognised CSM was EUR 15.7 million lower than the CSM released, reflecting a higher volume of recognised non-proportional reinsurance contracts in 2023. The increase in the contractual service margin was also positively impacted by the change in future cash flow assumptions of EUR 16.0 million.

Movement in the contractual service margin

8.2.3.3Risk adjustment

As at 31 December 2023, the risk adjustment was EUR 30.7 million, down EUR 4.0 million compared to the previous year. The majority of the risk adjustment (EUR 26.8 million) arises from liabilities for claims incurred and decreased by EUR 4.4 million. The other part of the risk adjustment (EUR 3.9 million) relates to liabilities for remaining coverage and increased by EUR 0.4 million due to portfolio growth.

8.2.3.4Investment portfolio

The investment portfolio is made up of financial investments in subsidiaries, financial investments in associates and joint ventures, investment property, and cash and cash equivalents.

The Sava Re investment portfolio totalled EUR 699.5 million as at 31 December 2023 (31 December 2022: EUR 679.0 million).

Sava Re investment portfolio by asset class

EUR

31 December 2023

31 December 2022

Change

Index

Deposits and CDs

1,021,347

Government bonds

229,591,819

214,198,680

15,393,139

107.2

Government bonds (excl. gvmt-guaranteed bonds)

211,054,563

198,953,856

12,100,707

106.1

Government-guaranteed bonds

18,537,256

15,244,825

3,292,432

121.6

Corporate bonds

88,089,961

73,992,930

14,097,031

119.1

Regular corporate bonds

72,416,318

66,695,422

5,720,896

108.6

Covered bonds

11,353,007

2,021,505

9,331,503

561.6

Subordinated bonds

4,320,636

5,276,003

-955,367

81.9

3,538,972

7,080,606

-3,541,633

50.0

Mutual funds

4,458,315

3,933,982

524,333

113.3

Infrastructure funds

21,084,448

18,843,871

2,240,577

111.9

Real estate funds

3,884,428

4,584,214

-699,785

84.7

Loans granted

2,714,904

1,796,693

918,212

151.1

Total financial investments

354,384,196

324,430,976

29,953,220

109.2

Investments in subsidiaries and associates

325,241,793

322,935,793

2,306,000

100.7

Investment property

7,582,168

7,721,693

-139,525

98.2

Cash and cash equivalents

12,260,049

23,926,029

-11,665,980

51.2

Total investment portfolio

699,468,206

679,014,491

20,453,715

103.0

The investment portfolio increased by EUR 20.5 million, or 3.0 percentage points, compared to year-end 2022. The major change in the value of investments was mainly in government and corporate bonds, as available funds from operations and investment maturities and disposals were invested mainly in these types of assets. The level of cash and cash equivalents decreased by almost half as cash was invested in higher-yielding assets. The value of shares and mutual funds fell slightly as a result of the disposals.

Composition of the investment portfolio

31 December 2023

31 December 2022

Change in composition in p.p.

Investments in subsidiaries and associates

46.5%

47.6%

-1.1

Fixed-rate financial investments

45.6%

42.4%

3.1

Infrastructure funds

3.0%

2.8%

0.2

Cash and cash equivalents

1.8%

3.5%

-1.8

Shares and mutual funds

1.1%

1.6%

-0.5

Property

1.1%

-0.1

Real estate funds

0.6%

0.7%

-0.1

Other*

0.4%

0.3%

0.1

Total

100.0%

* The “other” item includes loans granted.

The largest share of the investment portfolio at year-end 2023 were financial investments in subsidiaries and associates, which accounted for 46.5%. Fixed-rate investments followed closely behind at 45.6%. Cash decreased by 1.8 percentage points, while fixed-rate investments increased by 3.1 percentage points, mainly due to the investment of surplus cash in this asset type. Sales resulted in a slight decrease in investments in shares and mutual funds.

Composition of fixed-rate investments as part of the investment portfolio

EUR

31 December 2023

Shareas at 31 December 2023

31 December 2022

Shareas at 31 December 2022

Change in composition in p.p.

Government bonds

211,054,563

30.2%

198,953,856

29.3%

0.9

Regular corporate bonds

72,416,318

10.4%

66,695,422

9.8%

0.5

Government-guaranteed bonds

18,537,256

2.7%

15,244,825

2.2%

0.4

Covered bonds

4,320,636

0.6%

5,276,003

0.8%

-0.2

Subordinated bonds

11,353,007

1.6%

2,021,505

0.3%

1.3

Deposits and CDs

1,021,347

0.1%

0.0%

0.1

Total

318,703,128

45.6%

288,191,610

42.4%

3.1

There were no major changes in the composition of fixed-rate investments at the end of 2023 compared to year-end 2022.

8.2.3.5Other investments of Sava Re in the insurance industry

As at 31 December 2023, in addition to its investments in subsidiaries, Sava Re held investments in other companies in the insurance industry.

Other investments of Sava Re in the insurance industry

Holding (%)as at 31 December 2023

Slovenia

Zavarovalnica Triglav d.d.

0.07%

EU and other international

Bosna Reosiguranje d.d., Sarajevo, Bosnia and Herzegovina

0.51%

Dunav Re a.d.o., Belgrade, Serbia

0.93%

8.2.3.6Financing sources and their maturity

As at 31 December 2023, Sava Re held EUR 430.9 million in equity capital and EUR 75.0 million in subordinated liabilities. In October 2019, it issued subordinated bonds with a scheduled maturity date of 2039 and with an early recall option for 7 November 2029. The bond is admitted to trading on the regulated market of the Luxembourg Stock Exchange. As at 31 December 2023, the market price of the bond was 77.717% and the market value EUR 58,702,709 (31 December 2022: the market price was 74.499% and the market value EUR 56,290,346).

100

9Human resource management39

In the Sava Insurance Group, we are aware of our responsibility to our employees and, therefore, strive to closely follow our objectives in strategic human resource management.

Sava Insurance Group employs 3,009 people.

9.1Strategic guidelines for human resource management40

At the Sava Insurance Group, we have set five priorities in human resource management for the 2023–2027 strategy period:

1.Attracting and retaining the best talent: we justify the trust of our employees and take care of the image and reputation of the Sava Insurance Group in the labour market.

2.Development orientation: we ensure continuous identification and targeted development of employees’ potential.

3.Performance management: we enable the development of a high-performing culture in which successful employees are supported, rewarded, encouraged to improve and managed effectively.

4.Sustainable operations: we promote a culture based on values, with a focus on diversity, inclusion, well-being and sustainable business.

5.Digitalisation and optimisation: we adapt the organisation, processes, positions and ways of working towards the future of business.

9.2Key activities in human resource management41

In 2023, our human resource management focused on the following objectives and activities:

planning and implementing the communication strategy in line with the employer’s promise and image;

establishing a system for regularly monitoring employee satisfaction;

drafting a policy on human resource development and succession planning;

maintaining good climate and commitment among employees, transparent communication and good relationships with internal clients;

analysing and planning the digitalisation of human resource processes.

9.3Employer brand development and management

Our aim is to attract and retain the best people in the Group, and to achieve this we systematically manage the external and internal image of our companies as employers.

We carefully plan and implement activities to build the external image of the Sava Insurance Group as a group of attractive employers. To this end, we worked with colleagues from Group companies in 2023 to produce and publish an employer video, update the career pages on the companies’ websites and strengthen communication through social networks, internal ambassadors, and appearances at corporate events and career fairs.

39 GRI 2-7.

40 GRI 3-3.

41 GRI 3-3.

101

The companies of the Sava Insurance Group ensure regular internal communication with their employees in a uniform manner. Some companies are also in the process of updating their internal employee portal. Different processes and communication channels allow us to ensure two-way and transparent communication between the employer and the employees. We foster a good climate and commitment among our employees through various events and benefits at the Group, company and organisational unit levels.

9.4Recruitment and staffing levels

Recruitment is based on timely identification of needs, careful planning and the recruitment of skilled and motivated people, ensuring that they receive induction and training to enable them to integrate quickly into their workplace. We develop and train our employees in line with the needs of the Company and the Group, and strive to create a productive and motivating working environment.

The following shows the number and structure of employees in the parent company, Sava Re, and in total for the entire Sava Insurance Group, according to various criteria.

In addition to its core reinsurance business, Sava Re also manages the Sava Insurance Group. The diagram shows the organisational chart of Sava Re.

Organisational chart of Sava Re as at 31 December 202342

42 GRI 2-9.

Slika, ki vsebuje besede besedilo, posnetek zaslona, oblikovanje

Opis je samodejno ustvarjen

102

9.4.1Number of employees as at year end43

Employees by Group market as at year end

* Zavarovalnica Sava and its Croatian branch are also included.

The companies of the Sava Insurance Group are present in Slovenia, Croatia, Serbia, Montenegro, North Macedonia and Kosovo.

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Number of employees as at year end

3,009

2,952

160

147

Full-time equivalent as at year end

2,744.8

2,704.3

144.1

133.3

The number of employees in Sava Re and the Sava Insurance Group increased in 2023 compared to the previous year. The changes mainly concern sales support and IT.

New staff was recruited due to increased workload, redeployment within the Group, departures and maternity leave.

Number of employees by type of employment (part-time, full-time) as at year end44

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Type of employment

Number

Part-time

375

12.5%

306

10.4%

18.1%

16.3%

Full-time

2,634

87.5%

2,646

89.6%

131

81.9%

123

83.7%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The majority of Sava Insurance Group employees are in full-time employment. Part-time employees included those recognised as disabled, those who exercised the right to child-care leave, agents in first employment, and employees in split employment in the Group.

43 GRI 2-7.

44 GRI 2-7.

103

Number of employees by type of contract as at year end45

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Type of employment

Number

Fixed-term contract

513

17.0%

485

16.4%

1.3%

1.4%

Contract of indefinite duration

2,496

83.0%

2,467

83.6%

158

98.8%

145

98.6%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The most common type of employment in the Sava Insurance Group is a contract of indefinite duration. Fixed-term contracts are most commonly used to cover the needs of employees who are absent for long periods or due to temporary increases in workload.

Employees covered by collective bargaining agreements as at year end46

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Employees covered by the collective bargaining system

Number

Employees covered by the collective bargaining agreement

2,865

95.2%

2,819

95.5%

137

85.6%

125

85.0%

Employees not covered by the collective bargaining agreement

144

4.8%

133

4.5%

14.4%

15.0%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The majority of employees are covered by the collective bargaining system. The members of management and senior management are outside the collective bargaining system.

Employees by level of education as at year end47

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Level of formal education

Number

Primary and lower secondary education

0.2%

0.0%

Secondary education

1,187

39.4%

1,175

39.8%

8.1%

8.8%

Higher education

302

10.0%

304

10.3%

2.5%

2.7%

University education

1,369

45.5%

1,322

44.8%

122

76.3%

110

74.8%

Master’s degree or doctorate

145

4.8%

144

4.9%

13.1%

13.6%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The structure of employees by level of education did not change significantly in 2023 compared to the previous year. At the Group level, the percentage of employees with primary education remains very low, while the percentage of employees with secondary education is mainly related to insurance sales. The majority of employees have at least a university degree.

The Group’s activity requires and relies on highly qualified staff, who are encouraged to take part in further training and participate in various formal education programmes.

45 GRI 2-7.

46 GRI 2-30.

47 GRI 2-7.

104

Employees by age group as at year end48

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Age group

Number

From 20 to 25

147

4.9%

140

4.7%

0.0%

2.0%

From 26 to 30

217

7.2%

202

6.8%

13.1%

8.8%

From 31 to 35

402

13.4%

382

12.9%

15.0%

15.6%

From 36 to 40

427

14.2%

427

14.5%

14.4%

12.2%

From 41 to 45

567

18.8%

568

19.2%

18.1%

19.0%

From 46 to 50

473

15.7%

454

15.4%

16.9%

19.7%

From 51 to 55

378

12.6%

390

13.2%

12.5%

10.9%

Over 56

398

13.2%

389

13.2%

10.0%

11.6%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The composition of Sava Insurance Group employees by age group in 2023 was similar to previous years.

Employees by gender as at year end49

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Gender

Number

Women

1,803

59.9%

1,709

57.9%

101

63.1%

63.3%

Men

1,206

40.1%

1,243

42.1%

36.9%

36.7%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

The composition of Sava Insurance Group employees by gender has been higher for women than for men for several years. Both women and men are represented in all business areas and at all levels of management.

The base salary of women is the same as the base salary of men in all employee categories50.

Employees by years of service in company as at year end51

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Years of service

Number

From 0 to 5 years

1,352

44.9%

1,108

37.5%

56.3%

53.1%

From 6 to 10 years

517

17.2%

554

18.8%

15.0%

16.3%

From 11 to 15 years

406

13.5%

478

16.2%

13.8%

16.3%

From 16 to 20 years

359

11.9%

364

12.3%

5.6%

5.4%

From 21 to 30 years

298

9.9%

341

11.6%

7.5%

Over 30 years

2.6%

107

3.6%

1.9%

1.4%

Total

3,009

100.0%

2,952

100.0%

160

100.0%

147

100.0%

In terms of years of service, most of Sava Re’s employees are in the first and second groups, which is largely due to increased recruitment in the last decade. The percentage of employees with up to 30 years of service in the company decreased compared to the previous year.

Members of management body by gender

Sava Insurance Group

Sava Re

Members of management body by gender

Number

Number of men in management body

72.3%

75.0%

Number of women in management body

27.7%

25.0%

Total

100.0%

100%

48 GRI 2-7.

49 GRI 2-7, 405-01.

50 GRI 405-02.

51 Service in the company or Group.

105

The Sava Insurance Group employs 47 members of management. The majority, 72.3%, are men.

Employees at management levels 1 and 2 by gender

Sava Insurance Group

Sava Re

Employees by gender

Number

Number of men at management levels 1 and 2

149

55.6%

59.3%

Number of women at management levels 1 and 2

119

44.4%

40.7%

Total

268

100.0%

100%

The management of Sava Re consists of four members, the chairman and three members of the management board. The Sava Insurance Group has a balanced composition of employees at management levels 1 and 2. Sava Re has a slightly lower percentage of women at management levels 1 and 2.

The management board of Sava Re, as defined in the Company’s internal regulations on work organisation and job classification, also includes three authorised representatives of the management board who are not authorised to conduct the business.

Absenteeism rate52

Absenteeism is calculated as the number of working days lost due to absences divided by the product of the average number of employees multiplied by the average number of working days during the year. The following table shows the absenteeism rate by company in 2023 relative to 2022. The absenteeism rate in Sava Insurance Group companies remained largely the same as in the previous year.

Absenteeism rate53

Sava Insurance Group

Sava Re

2023

2022

Difference

2023

2022

Difference

Average number of working days lost

1,361

1,504

-143

157

114

Average number of employees

2,988

2,926

154

143

Average number of working days per year

241

252

-11

249

260

-11

Absenteeism rate (%)

0.19%

0.20%

-0.01%

0.41%

0.31%

0.10%

Work-related injuries54

Work-related injuries

Sava Insurance Group

Sava Re

2023

2022

Index

2023

2022

Index

Number of injuries

88.9

Number of working days lost

357

123

290.4

Number of working hours lost

2,858

639

447.3

The number of injuries in the Sava Insurance Group continued to be low in 2023. The number of working days and hours lost increased in 2023 compared to 2022 because employees were absent for several months due to an occupational injury.

52 GRI 403-02.

53 GRI 403-02.

54 GRI 401-2.

106

Employee turnover rate55

Employee turnover rate

Sava Insurance Group

Sava Re

2023

2022

Difference

2023

2022

Difference

Number of employees who left

506

490

-6

Number of employees as at previous year end

2,952

2,903

147

142

Employee turnover rate

17.1%

16.9%

0.3%

6.1%

10.6%

-4.4%

The employee turnover rate is measured as the ratio of the number of employees who left during the year to the total number of employees as at the year end. The employee turnover rate remained roughly the same across the Group.

Overview of employee arrivals and departures by gender in current year

Sava Insurance Group

Sava Re

Arrivals

Departures

Arrivals

Departures

Gender

Number

Women

377

67.0%

287

56.7%

54.5%

44.4%

Men

186

33.0%

219

43.3%

45.5%

55.6%

Total

563

100.0%

506

100.0%

The number of arrivals in the Sava Insurance Group in 2023 was higher than the number of departures. There were more women than men among the new arrivals. The gender ratio for employees who left remained similar.

Overview of employee arrivals and departures by age in current year

Sava Insurance Group

Sava Re

Arrivals

Departures

Arrivals

Departures

Age group

Number

From 20 to 25

108

19.2%

12.5%

0.0%

From 26 to 30

107

19.0%

10.5%

31.8%

0.0%

From 31 to 35

16.2%

15.8%

13.6%

11.1%

From 36 to 40

14.0%

11.9%

27.3%

0.0%

From 41 to 45

13.9%

14.4%

9.1%

11.1%

From 46 to 50

6.7%

8.3%

9.1%

33.3%

From 51 to 55

5.3%

7.7%

9.1%

22.2%

Over 56

5.7%

19.0%

0.0%

22.2%

Total

563

100.0%

506

100.0%

Parental leave56

Employees on parental leave

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Gender

Number

Women

4.5%

5.3%

5.0%

5.4%

Men

0.8%

0.6%

5.1%

5.6%

Total

3.0%

3.3%

5.0%

5.4%

At the Sava Insurance Group level, 91 employees took parental leave the previous year. Of these, 81 were women and 10 were men.

55 GRI 401-01, 2-7.

56 GRI 401-03.

107

Employees who returned from parental leave

Sava Insurance Group

Sava Re

2023

2022

2023

2022

Gender

Number

Women

2.1%

2.3%

4.0%

1.1%

Men

0.8%

0.6%

8.5%

5.6%

Total

1.6%

5.6%

2.7%

At the Sava Insurance Group level, 48 employees – 38 women and 10 men – returned to work from parental leave in 2023.

9.5Employee training and development57

9.5.1Types and scope of training

We are aware that the personal and professional development of each employee is a prerequisite for the development and attainment of goals at the level of the individual, the company and the entire Sava Insurance Group.

We provide professional and personal development opportunities for our employees by:

•engaging in work and projects in a culturally diverse international environment;

•promoting and integrating a wide range of education and training programmes that are relevant to the needs of the workplace and the business, taking into account the individual’s personal and career development;

•encouraging intergenerational cooperation between young talents and experienced employees;

•identifying promising professional and managerial talent and involving them in targeted development programmes.

We promote the development and transfer of knowledge and skills throughout the Sava Insurance Group. To achieve this, we hold expert meetings for representatives of all companies at events or professional conferences, providing an opportunity to share knowledge and skills and to inform each other of results and plans. In 2023, we held internal conferences for data protection, compliance, human resources, procurement, sustainability, reinsurance, internal audit, actuarial and risk management, finance, controlling and accounting, and IT.

We also hosted an international strategic conference at the Group level, which brought together members of the management and other key personnel from across the Sava Insurance Group, and an Adriatic region conference for non-Slovenian subsidiaries, aimed at members of the management of these companies. The main objective was to address specific issues, problems and opportunities in the non-EU markets.

In 2023, Zavarovalnica Sava received the Top Investor in Education certificate, which is awarded to companies that systematically invest in the education and training of their employees and exceed the national average in at least two out of three selection criteria. We were also nominated as a finalist in the Golden Thread and Štajerska Region Employer of the Year 2023 awards, placing us among the best employers in Slovenia.

57 GRI 3-3.

108

Key data on employee training58

Sava Insurance Group

Sava Re

2023

2022

Index

2023

2022

Index

Hours of training

55,144

57,139

96.5

3,024

2,184

138.5

Number of training participants

2,451

2,326

105.4

113

121.5

Our aim is to keep the number of training participants and the number of training hours per employee at the same level throughout the Sava Insurance Group.

We place great emphasis on internal training, delivered by internal or external providers who tailor the programme to our needs.

Number of training hours by type of training59

Sava Insurance Group

Sava Re

2023

2022

Index

2023

2022

Index

Number of internal education/training hours

39,205

45,762

85.7

1,112

240

463.3

Number of external education/training hours

15,939

11,377

140.1

1,912

1,944

98.4

Total education/training hours

55,144

57,139

96.5

3,024

2,184

138.5

Average hours of employee training by gender60

Year 2023

Sava Insurance Group

Sava Re

Gender

Number

Hours of training

Average

Number

Hours of training

Average

Women

1,487

32,018

21.5

1,688

20.1

Men

964

23,126

24.0

1,336

46.1

Total

2,451

55,144

22.5

113

3,024

26.8

Both men and women are involved in education and training programmes.

9.5.2Succession planning

In 2023, we have redefined our policy on human resource development and succession planning. Our aim is to place greater emphasis on systematically identifying and securing succession, particularly for key professional and management roles.

Group companies are establishing a process to identify deputies and potential successors for management board members and directors reporting directly to the board, as well as other key management and professional staff.

9.6Employee management and motivation61

At the Sava Insurance Group, we foster an environment in which our employees can develop and achieve their potential. We continuously invest in the development of leadership competencies and effective collaboration. We encourage employee motivation and commitment to achieving common

58 GRI 404-01.

59 GRI 404-01.

60 GRI 404-01.

61 GRI 3-3.

109

goals. We recognise and reward good performance. We revamp and adapt our processes in order to provide for effective work organisation and engagement of employees in various projects.

At the Sava Insurance Group, we build and promote a culture of improvement and innovation. The companies have established formal and informal systems for making proposals for improvement and innovation.

9.6.1Leader development

In all the companies, leaders are the key people who have a significant impact on creating a positive climate, employee engagement, satisfaction and loyalty. It is therefore very important that we invest in their development and strengthen their leadership competencies. Companies organise various forms of development programmes and group and individual coaching sessions for leaders.

For the first time, we organised a “Leader as Coach” training in 2023 for a group of high-potential employees from most Group companies.

9.6.2Employee benefits62

The Sava Insurance Group offers numerous benefits to our employees:

•flexible working hours and working from home,

•preventive health and well-being activities,

•various sports activities,

•events for employees (e.g. group and departmental team-building events and pre-New Year’s Eve social events),

•small gifts for personal holidays, work anniversaries and other occasions (e.g. Women’s Day),

•parent-friendly benefits to help parents balance work and family life,

•various group insurance schemes and more affordable personal insurance,

•more accessible holiday facilities.

In addition, we offer other benefits to create and encourage team building, a motivating and positive working atmosphere, work-life balance and general well-being in the workplace.

In 2023, we held the second Sava Insurance Group Sports Games, bringing together employees from all Group companies and countries. The games have become an annual event where employees from different companies meet, make new friends, nurture old friendships and get together in an informal setting.

9.6.3Annual performance appraisal interviews63

Employees involved in annual performance appraisal interviews

Year 2023

Sava Insurance Group

Sava Re

Employees involved in annual performance appraisal interviews

Number

Women

824

45.7%

85.1%

Men

616

51.1%

88.1%

Total

1,440

47.9%

138

86.3%

62 GRI 3-3.

63 GRI 404-03.

110

We encourage our employees to pursue the goals that relate to the Company’s strategy, which in effect implies that each employee contributes to the attainment of common goals. We regularly review employee progress, which allows us to promptly evaluate performance and coordinate our efforts in the process towards achieving our goals.

9.6.4Health and safety at work64

Our goal is to ensure that our employees feel safe both inside and outside the workplace, which is why occupational safety and health is one of the priorities of the Sava Insurance Group, involving all employees, the management, the human resource department, the accredited occupational health provider and the relevant external professional service. Each year, Group companies carry out various health promotion activities.

9.6.5Health promotion activities

Throughout the Sava Insurance Group, companies take all the necessary measures for occupational safety, health and fire protection, as required by law and internal regulations. Our companies promptly refer their employees to pre-recruitment and periodical work-related medical examinations as well as to new and periodic training in occupational safety and health, and fire safety.

In 2023, most companies offered employees the opportunity to participate in health days, such as group sports events (hiking, cycling, Nordic walking, skiing and the like), lectures (healthy eating, stress management and healthy lifestyle) or similar individual activities of their choice.

During the year, companies also offer their employees various team sports activities (e.g. volleyball or basketball), short active breaks or more beneficial individual sports activities (e.g. yoga, active exercise or fitness). Some companies also offer their employees healthy snacks or fruit at work.

9.6.6Ensuring inviolability of individuals and protection of personal dignity

In 2023, we have established a policy on ensuring the inviolability of individuals and the protection of personal dignity at the Group level. Ensuring the inviolability and protection of the personal dignity of employees and others involved in work and business processes is one of the Group’s key priorities, and we strive to provide and maintain a safe workplace in which no one is exposed to violence (in particular sexual violence), harassment (in particular sexual harassment), discrimination and bullying.

The inviolability and protection of personal dignity are guaranteed by mechanisms and measures that provide for a clear, transparent, swift and predefined procedure for detecting and sanctioning undesirable conduct, independent decision-making, professionalism, autonomy and independence of the arbitration board, decision-making at a level outside the Sava Insurance Group, and the strictly protected principle of confidentiality of reporting persons and infringers.

As in the previous year, there were no reports of harassment, bullying or other form of violence in the workplace in 2023.

64 GRI 403-1, 3-3.

111

9.6.7Socially responsible projects and activities65

Corporate volunteerism has been a tradition in all Sava Insurance Group companies, because we believe that by doing so, we do much good in our local communities and give something back to society. In 2023, we organised various events in Slovenian companies, such as planting trees in the Karst region, helping at the zoo and animal shelters, working with the elderly and other vulnerable groups, and collecting clothes and supplies for those in need. Each employee can choose one event and dedicate one day to volunteering activities held by a company. For more information on corporate volunteerism, see section 13 “Sustainability report”.

9.6.8Other activities66

Employees at the Sava Insurance Group can join representative labour bodies in their respective companies. Employee representatives are regularly informed of important changes and involved in their implementation, as required by law.

Group developments are presented to employees on the intranet portal of each company or on the Sava Insurance Group intranet portal.

We encourage employee interaction through various formal and informal meetings. We are committed to a culture in which we communicate in a transparent manner and value mutual respect. Zavarovalnica Sava also received the Family-Friendly Company certificate, awarded by the Ekvilib Institute.

65 GRI 413-01, 3-3.

66 GRI 3-3.

112

10Risk management67

We present the risk and capital management systems and the significant risks to which the Sava Insurance Group is exposed. Qualitative and quantitative treatment of risk exposures is presented in section 16.7 “Risk management”. These areas will be presented in more detail also in the Solvency and Financial Condition Report of Sava Re as at 31 December 2023, which will be posted on Sava Re’s website on 5 April 2024, and in the Solvency and Financial Condition Report of the Sava Insurance Group as at 31 December 2023, which will be published on the Sava Re website on 17 May 2024.

10.1Risk management system

The Sava Insurance Group management is aware that risk management is key to achieving operational and strategic objectives and to ensuring the long-term solvency of the Group. Therefore, the Group is continuously upgrading its risk management system at both the company and Group level.

The risk management system is based on Solvency II requirements, but additionally takes into account the legal specifics of non-insurance companies. The risk management system in these companies is adapted according to the business activities of each of them and the scope of these activities and risks to which a company is exposed. Good practices from Sava Re’s risk management model and the organisation of risk management are also transferred to other Group companies.

The Sava Insurance Group has implemented a risk strategy that defines the Group’s risk appetite and policies that cover the entire risk management framework, its own risk and solvency assessments and risk management for each risk category.

Risk management is integrated into all stages of business management and consists of the following key elements:

•the risk strategy,

•risk management processes within the first and second lines of defence,

•the own risk and solvency assessment (ORSA) process.

As part of our systematic approach to risk management, we focus on:

•establishing a clear risk appetite within the framework of the risk strategy and, on this basis, setting operational limits;

•developing our own risk assessment models and improving the ORSA;

•integrating the ORSA and the risk strategy into business planning and strategy setting;

•integrating risk management processes into business processes;

•systematically improving the internal control environment, adapting processes to new activities and monitoring the occurrence of adverse events;

•establishing appropriate risk management standards in all Group companies, depending on the scope, nature and complexity of the business and the associated risks.

10.1.1Organisation of risk management

The efficient functioning of the risk management system is primarily the responsibility of the Sava Re management board and the management board of each individual subsidiary. To ensure effective risk management, the Group uses a three-lines-of-defence model, which clearly segregates responsibilities and tasks among the lines of defence. The first line of defence consists of all organisational units with

67 GRI 2-23, 3-3.

113

operational responsibilities. The second line of defence consists of three key functions and the risk management committee, if set up in the company. The third line of defence consists of the internal audit function.

The Group’s risk management system is presented in the following diagram.

The Group’s risk management system has been set up on a top-down principle, taking into account the specificities of each company. The management board of each company plays a key role and bears ultimate responsibility for the effectiveness of the risk management processes in place and their alignment with the Group’s standards and the applicable laws.

The supervisory board of each company also plays an important role by reviewing and approving all key risk-related documents. A risk committee has been set up within the supervisory board of the parent company to provide relevant expertise and support in the risk management process in the company and in the Group.

Under the second line of defence, the company and the Group have three key functions in place: the actuarial function, risk management function and compliance function. In addition, the Group’s large members have a risk management committee in place. Each company ensures the independence of the key functions, which are organised as management support services and report directly to the management board.

The risk management function of each individual company is mainly responsible for setting up effective risk management processes and for the coordination of risk management processes already in place at the company or Group level. It is involved in identifying, assessing, monitoring, managing and reporting on risks. It is also involved in the preparation of the risk strategy and the setting of risk tolerance limits. The risk management function regularly monitors and reports on risks at all levels. It also provides decision-making support to the management board.

114

The main tasks of the actuarial function in the risk management system are to provide an opinion on the underwriting policy, to provide an opinion on the adequacy of reinsurance arrangements, and to independently verify and challenge the calculation of liabilities and assets from (re)insurance contracts, including the assumptions, methods and professional judgement used. The actuarial function of each company works in cooperation with the Group’s actuarial function.

The main tasks of the compliance function in relation to the risk management system are the identification, management and reporting of non-compliance, including the monitoring of the legal environment, the analysis of existing processes in relation to their compliance with internal and external regulations and any changes to regulations.

The third line of defence is provided by the internal audit function, whose responsibilities are defined in section 11 “Internal auditing in the Sava Insurance Group”.

10.1.2Risk and capital management strategies

The Group seeks to operate in compliance with its business strategy and meet the key strategic objectives while maintaining an adequate capital level. The risk strategy is prepared in line and in parallel with the strategic plan. The Group has adopted the Sava Insurance Group Risk Strategy for 2023–2027, which defines the risk appetite by operating segment, a set of key indicators and their limits, and a set of operational indicators for ongoing monitoring. Each Group company sets its own risk strategy, risk tolerance limits and operational limits based on the Group’s risk appetite.

The key indicators for monitoring and measuring compliance with risk appetite are:

•the solvency ratio,

•the profitability of the operating segments, including their acceptable level of volatility (tolerance),

•investment and liquidity indicators.

The Group manages its capital to ensure that each Group company has sufficient funds available, on an ongoing basis, to meet its obligations and regulatory capital requirements. The composition of own funds held to ensure capital adequacy must comply with regulatory requirements.

The solvency ratio is the most important indicator of the risk strategy in relation to capital management. The Group’s solvency requirement is designed to meet regulatory and rating agency requirements while maintaining sufficient surplus capital to cover the potential capital needs of the subsidiaries in the event of a major stress scenario materialising in any of them.

10.1.3Risk management processes

The main risk management processes are identifying, assessing (measuring) and monitoring risks, determining appropriate actions to manage them and reporting on them. Risk management processes are inherently connected with and incorporated into the basic processes conducted at both the company and Group level. They take place in all three lines of defence of the risk management system and are integrated into the decision-making system, so that all important business and strategic decisions are also evaluated from a risk perspective.

Risk identification

As part of the risk identification process, each Group company identifies the risks to which it is exposed. The key risks, which are compiled in each company’s risk register and form the company’s risk profile, are regularly reviewed, and new risks are added as necessary. Risk identification at the Group level is conducted in the same way. Risk identification in the individual Group companies and at the Group

115

level is both a top-down and a bottom-up process. The top-down approach is mainly used for strategic risks, such as reputational risk and regulatory risk, and to identify emerging risks. Bottom-up risk identification takes place in individual organisational units and with risk owners (first line of defence).

Risk identification is essentially ongoing, but is particularly important during business planning and for all major projects and business initiatives, such as new product launches, investments in a new asset class, acquisitions and others.

Risk assessment (measurement)

The Group has regular risk assessment (measurement) processes in place for all the risks to which individual companies or the Group are exposed. Risks are measured using both qualitative and quantitative methods, which are constantly being refined.

Different approaches and models are used to measure each risk, depending on their suitability:

•the Solvency II standard formula,

•own risk and solvency assessment (ORSA),

•stress testing and scenario analysis,

•qualitative risk assessment in the risk register,

•various risk measures that facilitate the measurement and monitoring of the current risk profile.

Risk monitoring

Risk monitoring is conducted at several levels: in each organisational unit, the risk management department, the risk management committee and at the level of the management board, the risk committee of the supervisory board (in Sava Re) and the supervisory board of each Group company. In addition, the risk profile of each Group company is monitored at the Group level with regard to its impact on the Group’s risk profile.

In order to monitor risks and compliance with the risk strategy on a regular basis, each Group company defines a basic set of risk measures for each risk category to monitor the current risk profile and capital position of the Group and each Group company. In addition, risk management measures are monitored and controlled. Adverse events and the implementation of relevant corrective measures to prevent the recurrence of an individual event are also monitored.

Risk management

Risk management takes into account the cost-benefit aspect of each action and any recommendations made by the risk management committee and key functions. If there is a need to adopt a new measure to limit a specific risk, the company concerned will carry out an analysis of this measure, taking into account the aspect of cost-effectiveness in its decision-making process.

Each Group company considers the impact of its business strategy on its risk profile and capital position as part of its business planning. When decisions are made during the year that have a significant impact on the risk profile but were not assessed for risk in the business planning process, the company concerned assesses the impact of these decisions on its own and the Group’s risk profile, checks compliance with its risk appetite and takes the necessary action.

Risk reporting

A regular risk reporting system is in place in the larger Group companies and at the Group level. Risk owners report to the risk management function on specific risk categories, such as a predefined set of relevant risk measures and additional qualitative information. On this basis, the risk management function, in collaboration with the risk owners, prepares a risk report covering the overall risk profile of each company. The report is discussed at all levels and is shared with the Group’s risk management

116

function. Relevant risk information is also monitored at Group level and reported in the Group’s risk report.

10.1.4Own risk and solvency assessment (ORSA)

ORSA is a process that runs in parallel with business planning. It aims to understand the risk profile and analyse the impact of changes in the risk profile over the next three years on capital adequacy. The analysis takes into account both the standard Solvency II formula and the own risk assessment and impact analysis of various stress tests and scenarios.

The ORSA assesses all significant measurable and unmeasurable risks that could affect the performance of an individual Group company or the Group as a whole. Sustainability risks, in particular climate change risks, including climate scenarios, are also addressed and assessed.

The ORSA is embedded in the decision-making process and ensures that key decisions and the business strategy are made in light of the risks and associated capital requirements. The results of the ORSA are used to review the alignment of the business strategy with the risk strategy. This links business strategy, the risks taken and the resulting capital required, and capital management.

The company’s management board, risk management committee and specialist staff from different areas are actively involved in the entire ORSA process.

10.2Material risks of the Sava Insurance Group

The Group and its individual companies classify all identified risks into the following key risk categories – underwriting risks, financial risks (comprising market risk, liquidity risk, credit risk and the risk of failure to achieve guaranteed returns), operational risks and strategic risks.

In addition, the Group and its companies monitor emerging risks that may affect any of the above risk categories. As part of the identification of these risks, sustainability risks are also identified and assessed, which in the Sava Insurance Group mainly affect market and underwriting risks. They are discussed in the strategic risks section of this report.

Individual risks are described in detail in the notes to the financial statements of the Sava Insurance Group and Sava Re in section 16.7 “Risk management”.

In the following, we describe each risk category and the risks within each category.

10.2.1Underwriting risks

Underwriting risk arises from insurance transactions, the primary purpose of which is to assume risk from insureds (underwriting) and to perform (re)insurance contracts and transactions that are directly related to (re)insurance transactions. It relates to the risks covered under (re)insurance contracts and related processes and arises from uncertainty as to the occurrence, extent and timing of obligations.

In addition to the risks assumed directly by the Group’s direct insurers, Sava Re assumes underwriting risk from cedants outside the Group (accepted reinsurance). Sava Re retains a portion of the assumed risks (Group and non-Group) and retrocedes the portion that exceeds its own capacity.

Underwriting risks are broadly divided into non-life underwriting risks, life underwriting risks and health underwriting risks (which include accident (re)insurance). The Group and Sava Re are exposed to all three categories of risks.

117

10.2.1.1Non-life underwriting risks

Non-life underwriting risks are further subdivided into premium risk, risk of insufficient liabilities and assets from (re)insurance contracts, lapse risk and catastrophe risk.

Premium risk: this is the risk that premiums written are insufficient to meet the obligations arising from (re)insurance contracts. This risk depends on many factors, such as inadequate assessment of market developments, inadequate assessment of claims development, use of inadequate statistics, deliberately insufficient premiums for certain classes of business that are expected to be offset by other classes of business, or inadequate assessment of external macroeconomic factors that may change significantly during the term of a contract; in certain classes of business, there is also inadequate assessment of environmental factors, including climate change. This includes underwriting process risk, price risk and the risk of unexpected increase in claims.

Given the Group’s portfolio structure, the largest contributors to premium risk include motor vehicle and property (re)insurance (fire and other damage to property, including related business interruption insurance).

The Group seeks to mitigate underwriting process risk by restricting authorisations for mass underwriting, ensuring additional training for underwriters and agents, providing understandable, clear and detailed instructions, and setting appropriate underwriting limits that are consistent with the business strategy, the risk strategy and the reinsurance programme. We also pay particular attention to offering products to appropriate target clients (to avoid mis-selling and adverse selection), accepting reinsurance from trusted cedants, and ensuring that appropriate limits are in place for exposure concentrations by geographic location and homogeneous risk groups, thereby maintaining favourable risk diversification.

Risk of insufficient liabilities and assets from (re)insurance contracts: this is the risk that the liabilities and assets from (re)insurance contracts are either (i) insufficient to meet the obligations arising from (re)insurance contracts due to inadequate methods, inappropriate, incomplete and inaccurate data, inefficient procedures and controls, inadequate expert judgement, or (ii) misstated, resulting in unreliable information about the financial position of the company or the Group. This includes the risk of data availability and accuracy, the risk of using inappropriate methods or assumptions, the risk of calculation errors, and the risk that the complexity of the tools used in the process may lead to misleading results. Sustainability risks, including those related to climate change, are also considered when assessing the adequacy of provisions.

As with premium risk, the majority of the risk of insufficient liabilities and assets from (re)insurance contracts arises from the motor and property business, where liabilities and assets from (re)insurance contracts are structurally the largest due to the Group’s traditional focus on such business.

The Group manages the risk of insufficient liabilities and assets from (re)insurance contracts through robust processes and effective controls for their calculation under both IFRS and Solvency II regulations. In addition, each year we back-test the adequacy of the (re)insurance contract liabilities and assets established in previous years, which is used to identify any major causes of inadequate (re)insurance contract liabilities and to apply the lessons learned to the setting of these liabilities in the future.

Lapse risk: this is the risk of loss or adverse change in the value of insurance liabilities resulting from changes in the level or volatility of lapse rates. The Group and Sava Re are not materially exposed to this type of risk. This risk is mitigated primarily by maintaining good relationships with policyholders and cedants and by closely monitoring market conditions.

Catastrophe risk: this is the risk of a catastrophic event occurring; such events are rare, but their financial impact is too great to be covered by otherwise adequate premiums and provisions alone.

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Catastrophe risk may materialise in the case of extreme events or a large number of catastrophic events over a short period. The risk also includes an excessive geographical accumulation of risk. The Group’s portfolio is relatively well diversified geographically, with a slightly higher concentration of risks in Slovenia, which is further addressed through the reinsurance programme. This risk is managed by means of a well-designed underwriting process, by controlling risk concentration for products covering larger property against natural catastrophes and fire, by geographical diversification, and by adequate retrocession protection against natural and man-made catastrophes.

Sustainability risks: These also include climate change risks, which have recently become more and more relevant and are therefore receiving more attention at both the Group and company level. We carry out qualitative assessments, exposure analyses and longer-term scenario analyses, and we monitor the progress of their modelling. The knowledge gained in this area is then applied in setting insurance premiums, determining liabilities and assets from (re)insurance contracts and arranging sufficient reinsurance protection to keep risks within the risk appetite. Other underwriting risks, such as economic environment risk and policyholder behaviour risk, may be relevant, but their impact is already indirectly reflected in the non-life underwriting risk above.

10.2.1.2Life underwriting risks

We divide life underwriting risks into biometric risks, life expenses risk and life lapse risk.

Biometric risks: among these, mortality risk, which is the most significant risk for the Group, is the risk that the actual mortality of insured persons will turn out to be higher than that projected in the mortality tables used for premium pricing. It depends on the use of relevant statistics and the identification of insured persons whose health or lifestyle may increase their mortality risk. The procedures used to manage this risk include the consistent application of underwriting protocols, detailing deviations from the normal mortality risk, regular monitoring of exposures and the adequacy of the mortality tables used, and appropriate reinsurance protection.

Life expense risk: this is the risk that the actual cost of servicing life insurance contracts will be higher than that assumed in pricing. The level of risk depends on the use of appropriate statistics and an increase in the actual cost of servicing life insurance contracts. The Group manages the life insurance expense risk by periodically monitoring the expenses incurred in servicing life insurance contracts, monitoring the macroeconomic situation (e.g., inflation) and appropriately planning of these expenses for the coming years.

Life lapse risk: this is the risk of a (low or high) increase in lapse rates (rate of early contract termination) due to surrenders, conversions to paid-up status or premium default. The level of risk depends on the use of appropriate statistics, the identification of lapses for various reasons in an underwriting year and the economic situation, which may also affect policyholder behaviour. The level of risk also depends on the competitive insurance products available in the market and the advice provided by insurance intermediaries and financial advisers. The Group manages this risk mainly by monitoring the number and percentage of policy lapses on a quarterly basis, by restricting surrenders where insurer approval is required and by systematically preventing insurance rearrangements by intermediaries.

Sustainability risks: these also include climate change risks, which have become increasingly relevant in recent years and can affect life insurance in a number of ways, including an increase in cancellations and surrenders, an increase in biometric risks (especially mortality and morbidity) and other impacts. We therefore take sustainability and climate change factors into account, among other things, when setting insurance premiums and making assumptions for the calculation of liabilities and assets from (re)insurance contracts.

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Life insurance risks also include other biometric risks (longevity risk and disability and morbidity risk), revision risk and life-catastrophe risk. These risks are minor for the Group and are therefore not discussed in detail.

10.2.1.3Health underwriting risk

Health underwriting risks are divided into risks arising from health insurance pursued on a similar technical basis to non-life insurance (NSLT health insurance) and health insurance pursued on a similar technical basis to life insurance (SLT health insurance).

The Group manages NSLT-health underwriting risks using techniques similar to those used in non-life insurance, namely prudent underwriting, control of risk concentrations in accident and health products and appropriate reinsurance protection. SLT health insurance is very similar to life insurance; therefore, the Group manages the risks arising from SLT health insurance using similar techniques as for life insurance.

10.2.2Financial risks

In their financial operations, individual Group companies are exposed to financial risks arising from their investment and underwriting portfolios relating to market, liquidity, credit risk and the risk of failure to realise guaranteed returns on the life insurance business.

10.2.2.1Market risk

As part of the management of market risk, the Group assesses interest rate risk, investment property risk, equity risk and currency risk.

Interest rate risk: this is the risk that the Group or a company will be exposed to losses resulting from fluctuations in interest rates. When interest rates change, the risk may materialise as a result of a decrease in the value of investments or an increase in liabilities. We try to avoid this by carrying out sensitivity analyses and by matching assets and liabilities, i.e., cash-flow matching.

Investment property risk: this is the risk of a change in the fair value of investment property owned directly or indirectly by the Group or a company. In addition to investment property, real-estate funds are also exposed to this risk.

Equity price risk: this is the risk that the value of investments will decrease due to fluctuations in equity markets. Shares as well as equity and mixed mutual funds are exposed to this risk. The Group manages the equity risk by diversifying this part of the investment portfolio across different capital markets and through a limit system that limits overexposure to the equity portfolio.

Currency risk: this is the risk that changes in exchange rates will reduce the value of assets denominated in foreign currencies or increase the value of liabilities denominated in foreign currencies. The Group and its companies manage currency risk through each company’s efforts to optimise the currency matching of assets and liability.

10.2.2.2Liquidity risk

This is the risk that, owing to unexpected or unexpectedly high obligations, a company will not be able to meet all its financial obligations. The liquidity risk assumed by each Group company is monitored by regularly measuring and monitoring defined liquidity indicators. One of the indicators is the maturity matching of financial assets and liabilities. Liquidity requirements are met by allocating funds to money market instruments in a percentage consistent with the estimated normal current liquidity

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requirement. In order to cover the estimated liquidity buffer, a company ensures that at least 20% of its portfolio investments are invested in highly liquid assets.

10.2.2.3Credit risk

This is the risk that an issuer of securities or other counterparty will default on its obligations. In the context of credit risk, each company and the Group address the excessive concentration of risk in a particular region, industry or issuer. Assets exposed to credit risk include financial investments (deposits, bonds, loans granted, bond and convertible mutual funds, and cash and cash equivalents) and other receivables.

10.2.2.4Risk of failure to realise guaranteed returns

The Group is exposed to the risk of failing to achieve the guaranteed return, specifically with investment contracts and with traditional and unit-linked life insurance business.

10.2.3Operational risks

This is the risk of loss arising from inadequate or failed internal processes, human behaviour, systems or external events. To manage operational risks effectively, the Group companies have processes in place to identify, measure, monitor, manage and report on such risks.

10.2.4Strategic risks

The Group companies and the Group are exposed to various internal and external strategic risks that may have a negative impact on earnings or capital adequacy. Strategic risks also include reputational, project and sustainability risks as well as emerging risks. To prevent these risks from materialising, the Group companies mainly carry out preventive activities and have processes in place to identify, measure, monitor, manage and report on strategic risks to ensure that they are managed effectively.

Strategic risks are also managed by continually monitoring the realisation of short- and long-term goals of Group companies and by monitoring upcoming regulatory changes and market developments.

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11Internal auditing in the Sava Insurance Group

The objective of internal auditing is to provide assurance and advice to the management board in order to add value and improve the effectiveness and efficiency of operations. Internal audit assists the Company in achieving its goals by systematically and methodically assessing the effectiveness and efficiency of the governance, risk management and internal control systems and making recommendations for their improvement.

The Company’s internal audit function is carried out by an independent organisational unit, the internal audit department (IAD), which reports to the management board and is functionally and organisationally separate from other units of the Company. This ensures the autonomy and independence of its work.

In accordance with the Slovenian Insurance Act and under an outsourcing agreement, Sava Re d.d. performs the key function of internal audit for the companies Zavarovalnica Sava d.d., Vita, Življenjska Zavarovalnica, d.d., Sava Pokojninska Družba d.d. and Sava Infond, Družba za Upravljanje, d.o.o. for an indefinite period.

In 2023, Sava Re’s internal audit conducted audits and performed other tasks in accordance with its annual work plan.

Based on all the tests performed and the methodologies applied in the various audit areas, the internal audit department is of the opinion that Sava Re’s internal controls are adequate and their reliability is good. It is also of the opinion that Sava Re’s governance has proven to be appropriate and is being continuously improved to achieve key business goals, and that risks are well managed in terms of efficiency and economy of operations. However, there is still room for improvement in the way the system operates. The audit engagements revealed individual irregularities and weaknesses, to which the IAD drew attention and recommended corrective actions to improve control procedures, corporate governance and risk management. The IAD’s recommendations were actively implemented by those responsible. The aim is to improve the effectiveness of internal controls and the regularity of operations.

The standard audits also focused on the potential for fraud and the exposure or potential vulnerability of IT support to the business. They also looked at the use of ethical and sustainable behaviour. In areas subject to internal audit, internal control systems are in place and functioning to prevent fraud. The audits also made recommendations to improve the IT system.

The IAD reports quarterly to the management board, the audit committee and the supervisory board on completed audit engagements, the effectiveness and efficiency of control systems, corporate governance, risk management, identified breaches and irregularities and the status of recommendations. It has also prepared an annual report on its activities in 2023, which is part of the materials for the general meeting of shareholders.

An external quality assessment of the internal audit at Sava Re (conducted on a five-year basis) was conducted by Deloitte Revizija d.o.o. in 2019. The assessment of the IAD’s operation confirmed that the internal audit complies with the International Standards for the Professional Practice of Internal Auditing, the Code of Ethics of Internal Auditors and the Code of Internal Auditing Principles. In 2024, external quality assessments of internal audit functions are planned for all Sava Insurance Group companies.

As a result of the progress made, the IAD issued its second and improved overall opinion for the Company and the Group in 2023. Activities related to the implementation of the new software to support the overall internal audit process at the Sava Insurance Group level were further refined, and the software support was replaced. Improvements were also made to the Group Internal Audit in virtually all of the Group companies. The IAD regularly monitors the development and quality of the

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internal audit departments in the Group’s subsidiaries and provides them with the necessary professional support.

12Information technology

In 2023, we adopted a new strategy and plans to implement the new strategy covering the period 2023–2027. We continued our practice of conducting IT process maturity audits, combined with independent external peer reviews of operational performance, architecture and the implementation of system and solution configurations. We use feedback and insights to make improvements. These are then put into operation. Accordingly, we streamlined IT change management, IT architecture, internal controls and risk processes, and we improved the planning and monitoring of IT costs and investments.

In developing business applications, we maintained existing solutions in line with companies’ business and regulatory requirements. We continued the project to replace the core IT solution for insurance and entered the final phase of the project to replace the core IT solution for reinsurance. At the Group level, we increased the number of shared solutions and the use of a common central data centre.

In business intelligence, we provided ongoing business support, upgraded existing solutions and completed the IFRS 17 regulatory reporting project. In line with the strategic priorities for the 2023–2027 strategy period, we upgraded the consolidated data warehouse solution by expanding the scope of data sources and reports.

The infrastructure team supported operations by upgrading technical and service capabilities to implement the strategy (implementation of new core business solutions and digitalisation). We continued our mission of continuous improvement and optimisation by configuring server and network systems and improving the monitoring of critical services. The system software and hardware infrastructure was upgraded in line with the business plan, the amortisation cycle, day-to-day service requirements and planned IT development projects, with more time spent on the architectural design of the various concepts.

In the area of information security, we upgraded sensors and controls in the 24/7 security operations centre and continued to test and deploy new security solutions. We run regular exercises to protect against social engineering attacks and train key personnel how to respond to a crisis in the event of a cyber-attack.

In terms of business continuity, we carried out all planned preventive and control activities, taking into account the increased use of hybrid work.

We take sustainability into account when planning new investments, by reducing the size of applications and centralising the use of shared infrastructure (in-house and cloud). Our business solutions enable hybrid access (remote or from home) for both customers and employees, reducing the need for transport.

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Sustainability report

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13Sustainability report

About the report68

In accordance with the GRI Standards, the 2023 sustainability report of the Sava Insurance Group analyses economic, social and environmental aspects.

Key topics of Sava Insurance Group sustainability reporting69

Economic aspects (GRI 200)

Economic performance

Market presence

Indirect economic impacts

Procurement practices

Prevention of corruption

Tax

Social aspects (GRI 400)

Recruitment and staffing levels

Employee training and development

Diversity and equal opportunities

Employee management and motivation

Health and safety at work

Customer relations / responsibility to consumers

Human rights

Relations with suppliers

Local community

Marketing and labelling

Customer privacy

Compliance

Environmental aspects (GRI 300)

Waste disposal policy

Energy

Supplier assessment

Emissions

Sustainability reporting is integrated into individual sections of the annual report. Disclosures are specially indicated with interactive references. This section provides disclosures and business impacts not covered by other sections of the annual report. In addition to general disclosures and in accordance with prescribed principles, it provides disclosures on the economic, social and environmental aspects that are of vital importance for the Group and relate directly to the Group’s strategy.

Disclosures in accordance with the GRI standard refer to all Group companies wherever possible and, if not, to the parent company and its EU-based subsidiaries.

No statements or information from the previous report have changed on account of new findings, and the report therefore contains no corrections70.

Sava Re did not seek external assurance of the sustainability report in 202371.

Non-financial statement

By providing non-financial information in accordance with the GRI standards, the Annual Report of the Sava Insurance Group and Sava Re d.d. for 2023 complies with (i) Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups or NFRD (Non-Financial Reporting Directive), (ii) Regulation (EU) 2020/852 of the European Parliament

68 GRI 3-1.

69 GRI 3-2.

70 GRI 2-4, 3-2.

71 GRI 2-5.

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and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 in conjunction with Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation, and (iii) the Slovenian Companies Act.

13.1Sustainable Development Strategy of the Sava Insurance Group for 2023–2027

We have been integrating sustainable development into the Sava Insurance Group strategy since 2017; since then we have given increasing attention to it as environmental, social and governance risks (ESG risks) significantly impact the insurance industry while offering new opportunities in the development of operations.

In December 2022, we adopted the Sustainable Development Strategy of the Sava Insurance Group for 2023–2027, which outlines sustainable development as one of the three key pillars of the Group’s further development.

The Sava Insurance Group’s objectives and sustainable development strategy are rooted in its values, mission and vision. Our goal for the strategy period was for stakeholders to recognise the Group as:

•a socially responsible insurance and reinsurance company, and a socially responsible and trustworthy partner,

•a socially responsible asset and equity manager,

•a socially responsible and attractive employer,

•an organisation that is socially responsible to the wider community.

The following principles guide us in the implementation of the Group’s key sustainable development policies:

Focus on the United Nations global sustainable development goal – good health and well-being: we promote healthy lifestyles and general well-being at all stages of life, both by providing appropriate insurance, financial products, healthcare and other services, and by caring for the health of our employees and society at large.

Focus on the United Nations global sustainable development goal – climate change: we are taking action to combat climate change and its impacts.

International commitment to the United Nations Global Compact: it is based on ten principles of responsible business management, particularly in terms of human rights, labour standards, climate and anti-corruption.

International commitment to the United Nations Principles of Responsible Investment (UN PRI): it guides investors to make responsible investment decisions.

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13.1.1Implementation of the sustainable development strategy in 2023

At the Sava Insurance Group, we have set the following sustainable strategic objectives for 2023–2027, taking into account ESG criteria72 and gradually and systematically integrating them into the Group’s decision-making processes:

•reducing the carbon intensity of its own operations and investment portfolio;

•guaranteeing responsible (re)insurance underwriting in accordance with the guidelines adopted by the Sava Insurance Group and the taxonomy standards;

•ensuring sustainability in the value chain and processes by increasing the share of ESG investments in the portfolio, and by further digitalisation and paperless business processes;

•improving customer satisfaction;

•having satisfied and committed employees and strengthening the culture of sustainability.

Throughout 2023, intensive preparations were also made at the Group level for the new regulation on CSRD sustainability reporting and ESRB standards.

The Group was preparing for the introduction and implementation of legal requirements according to these legal acts:

•Regulation (EU) 2019/2088 of 27 November 2019 on sustainability‐related disclosures in the financial services sector or SFDR (Sustainable Finance Disclosure Regulation) – in June 2023, information on the consideration of the principal adverse impacts of investment decisions on sustainability factors was published on Sava Re’s website at the Group level, while at the level of the individual company concerned this information was published on the websites of subsidiaries that meet the criteria of a financial market participant as set out in Article 2 of SFDR. The financial and financial-insurance products offered by the Group to its customers also include appropriate pre-contractual disclosures;

•Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, or the Taxonomy – the Group already reported in accordance with the Taxonomy for 2021 and 2022, based on available data and an estimate of revenue from Taxonomy-eligible activities. In 2023, we carried out activities to ensure the quality and relevance of the data required for disclosures of revenue from Taxonomy-aligned activities, and these disclosures will be published for the first time in 2024 for the year 2023;

•Directive (EU) 2022/2464 of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting or CSRD (Corporate Sustainability Reporting Directive) – the Group has accelerated preparations for the disclosure requirements under the new European Sustainability Reporting Standards (ESRS), in particular by organising and participating in external training sessions to ensure that we are adequately prepared for the 2025 reporting on 2024. In 2022 and 2023, training was provided to the top management of the subsidiaries, as well as to business line managers and all potential authors of reports.

In addition to closely following and complying with legal requirements on sustainable development, we also draw your attention to the following developments:

1.In January 2023, we revised the Sustainability Investment Policy of the Sava Insurance Group, which governs the Group’s approach to environmental, social and governance considerations in investment decisions and the management of sustainability risks. This policy, which was adopted on 30 June 2020, sets out the Group’s commitment to responsible and sustainable

72 ESG (Environmental, Social, Governance) criteria refer to socially responsible behaviour that is generally considered to meet three criteria: environmental and social criteria, and responsible corporate governance.

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investment practices and ensures that the Group complies with applicable laws and regulations governing investments.

2.In 2023, the carbon footprint measurements of the Sava Insurance Group for 2022 were verified for the first time, focusing on data from its own activities (scope 1 and scope 2 emissions). The carbon footprint of the Sava Insurance Group’s operations in 2022 is the baseline or benchmark against which the Group’s carbon footprint and the effectiveness of emission reduction measures in the coming years will be compared. At the same time, we plan to expand the scope of the data in the coming years.

3.We continued to expand our sustainable products into the non-EU markets – micromobility insurance and solar panel insurance.

4.In 2023, a questionnaire was developed and validated in line with the requirements of European standards to verify the suppliers’ sustainability. Data will be collected at the Group level from existing and new suppliers.

5.In November 2023, we held a sustainability conference for representatives of our subsidiaries and business line managers, focusing on European sustainability legislation, the challenges and opportunities it presents, and the Group’s strategic goals.

6.As part of the Heart for the World initiative, all subsidiaries have organised a number of corporate volunteering campaigns. At the Group level, Heart for the World is becoming an important initiative aimed at encouraging employees to act responsibly towards nature and society.

The activities carried out are described in the following sections.

Relations with stakeholders73

In terms of sustainable development, cooperation with stakeholders is also of key and strategic importance for the Sava Insurance Group. It is important that we identify the most important stakeholder groups and understand their views on dealings with us.

At the end of 2022, we surveyed the Sava Insurance Group’s stakeholders on key sustainability areas to identify those in which the Group has a significant economic, environmental and social impact and which significantly impact our business and stakeholder relationships.

In addition to the parent company, ten Group companies and one subsidiary carried out stakeholder surveys.

We surveyed stakeholder groups that we identify as key:

•suppliers,

•customers,

•employees,

•external sales network,

•reinsurers (Sava Re),

•shareholders (Sava Re).

We analysed the responses of more than 1,000 Group employees and 900 stakeholders from other groups. Their views are presented in a matrix of key topics for the Group.

73 GRI 2-23, 2-29, 3-1, 2-12, 2-13, 2-14, 2-15, 2-17, 2-18.

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Topics and aspects in terms of their importance for stakeholders and the Sava Insurance Group

No.

Y-axis: Assessment by stakeholders

Score

X-axis: Assessment by Group employees

Score

Human rights

9.30

Employee health and satisfaction

9.59

Diversity and equal opportunities

9.23

Diversity and equal opportunities

9.43

Employee health and satisfaction

9.22

Employee training and development

9.26

Employee training and development

9.08

Human rights

9.24

Long-term stability and profitability

9.07

Cyber threats

9.09

Cyber threats

9.02

Customer focus

9.07

Ethics and compliance with the law

8.95

Long-term stability and profitability

9.07

Protection of personal data

8.93

Ethics and compliance with the law

8.99

Customer focus

8.85

Protection of personal data

8.95

Innovative products and digital transformation

8.71

Innovative products and digital transformation

8.82

Extreme events

8.59

Extreme events

8.49

Demographic change

8.36

Demographic change

8.38

Environmental and climate change risks

8.23

Involvement in the local environment

8.23

Involvement in the local environment

7.92

Environmental and climate change risks

8.11

Sustainability investment policy

7.73

Sustainability investment policy

7.91

The following section of the report outlines the most important stakeholder groups and forms of engagement with them.

13.1.2Types of stakeholder involvement

We cultivate responsible and sincere relations with all our stakeholders. In doing so, we follow the recommendations and rules of public reporting, the code of ethics and internal rules.

Types and objectives of stakeholder involvement

Stakeholders

Type of involvement

Objectives

The most important activities in 2023

Sava Insurance Group employees

•Employee participation (works council and unions)

•Internal formal events (strategic conferences, professional and educational events)

•Internal informal events

•Internal training / consultations

•Management by objectives (annual performance appraisal interviews)

•Internal web and print media

•Thinking out of the box

•Electronic mail

•Social networks

•Personal contact

•Opinion polls / questionnaires

•Sports societies

•Corporate volunteerism

•Information, awareness

•Stimulating ideas to improve the work environment and business processes

•Two-way communication

•Culture building, improving relations and fostering a good organisational climate

•Pursuing the CO2 reduction target

•Building on the Never Alone employer brand in internal communication

•Informing all employees of pressing ESG issues by email

•Ongoing dialogue with employee and trade union representatives

•Events, conferences, lectures

•Departmental meetings

•Addresses by the chairman of the management board of Sava Re to all employees of the Group by email

•Development of the Heart for the World initiative in terms of corporate volunteerism, education, and awareness-raising on environmental and social issues – 5,114 hours of volunteering

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Stakeholders

Type of involvement

Objectives

The most important activities in 2023

Customers include:

•the insured

•policyholders

•injured parties

•cedants

•investors in mutual and pension funds

•One-to-one counselling

•Meetings

•Compliments and complaints

•Websites, blogs

•Contact centre

•Market communication through different channels

•Expert meetings / conferences

•Events

•Social networks

•Service quality

•Customer focus

•Information

•Quick problem solving

•Customer-friendly attitude

•Identifying actual market needs

•Modern sales channels

•Strengthening of the Sava Insurance Group brand with the slogan “Among good people”

•Year-long and ongoing communication of sales representatives with customers

•Interactive chats – on web pages

•Electronic monthly publications (Sava Infond sent to over 26,000 addresses)

•Direct mail

•Presentation brochure for cedants twice a year

•Social media notifications

External sales network consisting of:

•insurance agencies

•insurance intermediaries

•banks

•business partners, e.g. roadworthiness testing centres, tourist agencies

•Regular contacts

•Professional training

•Meetings/events

•Product and offer expertise

•Keeping up to date with developments in business processes

•Keeping up to date with developments in laws and regulations governing the business

•Building genuine partnerships

•Ongoing communication of specialist services with representatives of the external sales network

Suppliers

(services and materials)

•Tenders

•Invitations to participation

•Questionnaires

•Meetings

•Presentations

•Selection of the most appropriate supplier in accordance with the criteria

•Environmentally friendly materials

•Paperless operation

•Digitisation of operations

•Payment reliability

•Honouring agreements

•Delivery of waste disposal certificates

•Supporting local economy

•Pursuing sustainability in the value chain

•Standing invitations to tender and supplier selections

Shareholders and prospective investors in POSR shares

•At least once a year at the general meeting of shareholders

•Regularly through public notifications (SEOnet of the Ljubljana Stock Exchange)

•Regularly on the website (www.sava-re.si)

•At least once a year in the letter to shareholders

•Regularly via email (ir@sava-

re.si)

•Regularly in individual meetings and through conference calls

•Regularly at investment conferences at home and abroad

•Equal access to information

•Clear dividend policy and yields

•In-depth information on business operations, annual plan and strategic policy

•Sustainable operations

•Regular and transparent communication with shareholders and investors, participation in 7 events in 2023

•25 SEOnet announcements in 2023

Regulators

•Regular and extraordinary reporting to the Insurance Supervision Agency (ISA) and Securities Market Agency (SMA)

•Regular and extraordinary reporting to the Slovenian Competition Protection Agency (CPA)

•Compliance with legislation

•Business transparency

•Security of policyholders

•Compliance

•Consistent tracking of changes in legislations, regulatory measures and recommendations, and meetings

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Stakeholders

Type of involvement

Objectives

The most important activities in 2023

Credit rating agencies

•Regular annual review of the financial position, operations and business results

•Improved credit rating

•AM Best confirmed the credit rating “A” (stable)

•S&P confirmed the credit rating “A” (stable)

Media

•Regularly through press releases

•At least once a year at the press conference

•Periodically through interviews

•Regularly through answers to journalists’ questions

•Providing information to the general public

•Regular and transparent information on business operations

•Strengthening the positive, realistic image of the Company/Group

•Maintaining regular and positive relationships

•In 2023, Sava Re had 1,801 mentions in the media, Zavarovalnica Sava 2,176 mentions, and the Sava Insurance Group 418 mentions

•Responsive and timely communication with the media

Communities

•Direct contact with local decision-makers

•Support to non-profit organisations through sponsorships and donations

•Support for preventive actions

•Employee assistance

•Involving companies/employees in local communities and society at large

•Co-financing projects important for the local community

•Enhancing security through preventive actions

•Infrastructure investments

•Awareness raising among the population

•Section “Sponsorship, donations and preventive actions”

•Section “Responsibility to the community”

13.2Economic aspect74

Economic performance, defined by the strategic goals in all areas and reported more extensively in the financial part of the report, is the key performance indicator for the operations of the Sava Insurance Group. This is achieved through timely risk identification and management. We believe that both financial and non-financial risks have an impact on the economic performance of companies.

Distributed economic value of the Sava Insurance Group

EUR million

2023

2022

Index 2023/2022

Other economic impacts

Economic value generated*

867.6

729.9

118.9

Economic value distributed

827.4

705.2

117.3

Insurance service expenses, net of costs, and expenses for reinsurance contracts held

510.6

411.2

124.2

Investment expenses

30.8

49.2

62.6

Other expenses

5.5

0.4

1,287.0

Operating expenses**

137.7

114.6

120.2

Dividend payouts

24.9

23.4

106.7

Income tax expense

15.0

11.6

129.2

Investments in the social community (prevention, donations, sponsorships)

4.2

5.1

81.5

Employee payments, allowances and benefits

98.7

89.7

110.0

Economic value retained

40.1

24.6

163.1

* Economic value generated = total income less net investment income from life policies where policyholders bear the investment risk.

** Operating expenses = attributable expenses, non-attributable expenses and expenses of non-insurance companies, excluding personnel costs, sponsorship, prevention and donations.

74 GRI 3-3, 201-01.

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13.2.1Sponsorship, donations and preventive actions75

As a sustainability-oriented partner, Sava Insurance Group also strengthens its social responsibility to the wider community through sponsorship and donation projects. Prevention activities encourage stakeholders to identify different risks, thus contributing to the safety of health, life and property.

For more, refer to section 13.4 “Responsibility to the community”.

13.2.2Sustainability guidelines for investment76

13.2.2.1Responsible financial investment management77

When managing its investment portfolio, the Sava Insurance Group is committed to sustainability by:

•ensuring that the Group’s investment portfolios are in line with the Sustainability Investment Policy of the Sava Insurance Group;

•reducing the carbon footprint of investments;

•increasing the share of ESG-compliant investments in the entire portfolio;

•increasing the alignment of investments with the EU Taxonomy.

13.2.2.1.1Compliance of investments with the Sustainability Investment Policy of the Sava Insurance Group

The integration of environmental, social and governance (ESG) considerations into the investment process is described in the Sustainability Investment Policy of the Sava Insurance Group. This policy defines:

•guidelines on how not to finance economic activities at issue (e.g. production of alcohol, tobacco and coal for heating, adult industry, etc.). Compliance is reviewed at the time of investment and at least twice a year thereafter;

•adherence to international principles for responsible investment;

•consideration of the UN Global Compact principles in the investment process.

The UN PRI promotes the integration of ESG considerations into investment decision-making processes, and its signatories are committed to adhering to the UN PRI’s six core principles and reporting on their progress. The Group will report publicly on its compliance with the UN PRIs for the first time in 2024.

The UN Global Compact addresses human and labour rights, the natural environment and anti-corruption. At the Group level, we are committed to incorporating such principles and guidelines into our investment process, and in the future, as more detailed information becomes available, we will define the criteria for excluding such investments from our portfolio.

The investment portfolio includes all financial investments, investment property, and cash and cash equivalents, but excludes investments in subsidiaries and associates, and mutual funds covering unit-linked life insurance liabilities where the investment risk is borne by the policyholders.

The investment portfolio for which compliance with the sustainability investment policy is verified (the investment portfolio captured) includes all financial investments with the exception of deposits, loans and government securities. Also excluded are investment property, investments in subsidiaries and

75 GRI 201-01, 203-02.

76 GRI 3-3, 203-01.

77 GRI 3-3, 201-01.

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associates, cash and cash equivalents, and mutual funds covering unit-linked life insurance liabilities where the investment risk is borne by the policyholders.

Value of investments not aligned with the sustainability policy as at 31 December 2023

EUR

Value of non-aligned investments

Total

Non-life

4,707,095

298,725,406

Traditional life

21,400,954

255,163,668

UL with guaranteed NAVPS

18,871,571

Investment portfolio captured

26,108,049

572,760,644

As % of portfolio captured

4.6%

100.0%

As % of investment portfolio

1.7%

36.6%

Number of investments not aligned with the sustainability policy as at 31 December 2023

Number of non-aligned investments

Total

Non-life

294

Traditional life

318

UL with guaranteed NAVPS

Investment portfolio captured

645

The tables show that as at 31 December 2023, the Group had 19 investments in its investment portfolio with a carrying amount of EUR 26.1 million that are not aligned with the Sustainability Investment Policy of the Sava Insurance Group, representing 1.7% of the Group’s investment portfolio and respecting the defined tolerance of 3% of the investment portfolio.

We also focus on the risks associated with greenhouse gas (GHG) emissions. The first step in this effort is to stop investing in economic activities such as the production of coal for heating and shale oil.

In 2023, key performance indicators to measure GHG emissions in the investment portfolio were established and measured for the first time. We have analysed the investment portfolio in such a way as to identify the companies that contribute most to GHG emissions. The measurements made are limited by the coverage of GHG emissions data in investee companies and range from 20% to 24%, depending on the indicator. In the future, the Group will work to establish further measures to reduce or mitigate the GHG emissions in the investment portfolio and to meet the targets set out in the sustainable development strategy.

13.2.2.1.2Share of ESG investments

ESG investments include bonds issued to finance green and environmental projects (green bonds) and sustainability bonds issued to fund the green and social sustainability objectives of issuers. ESG investing also covers mutual funds that adhere to ESG principles and alternative funds that clearly adhere to ESG principles, including by signing the UN PRIs.

We prioritise investments that are in line with ESG principles.

The Group’s ESG investments have increased by EUR 43 million from EUR 211.8 million at the end of 2022 to EUR 254.8 million at year-end 2023, or from 14.9% of the portfolio at the end of 2022 to 16.9% of the portfolio at year-end 2023.

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Compliance with sustainability criteria is also emphasised in infrastructure investments, real estate funds and other alternative investments, since non-compliance with the ESG guidelines generally constitutes an exclusion criterion for participation in these types of investments. The managers of such investments in the Group’s portfolios comply with at least one industry sustainability standard (e.g. UN PRI – United Nations Principles of Responsible Investment, GRESB – Global ESG Benchmark for Real Estate or TCFD – Task Force on Climate-Related Financial Disclosures) and report in accordance with that standard.

ESG investments as at 31 December 2023

EUR

Uncalled commitment

Called up already

Total

Total investments called up or already made as % of the Group’s total investment portfolio

Infrastructure funds

3,467,053

51,231,961

54,699,014

3.4%

Real estate funds

14,625,508

1.0%

Direct infrastructure projects

338,858

0.0%

Private debt funds

444,447

4,555,553

5,000,000

0.3%

ESG (green and sustainable) bonds

172,893,245

11.5%

Bond mutual funds

6,494,309

0.4%

ETFs

4,626,781

0.3%

Total

3,911,499

254,766,215

258,677,714

16.9%

13.2.2.2Regulation on sustainability-related disclosures in the financial services sector

Regulation(EU) 2019/218878 (SFDR) requires financial market participants to publicly disclose their sustainable management policies. It also requires disclosure of how sustainability risks are integrated into investment decisions and how the company addresses the principal adverse impacts of its investment decisions on sustainability factors.

In line with the SFDR requirements for these disclosures, Group subsidiaries and associates that met the criteria of a financial market participant in 2023 updated their pre-contractual disclosures in financial products accordingly and defined their approach to the principal adverse impacts of their investment decisions. In accordance with Article 4(3) of SFDR, which applies to companies with an average annual number of employees of more than 500, Zavarovalnica Sava published information on its due diligence policies regarding the principal adverse impacts of investment decisions on sustainability factors (the Principal Adverse Impact Statement – PAI) on its website.

13.2.2.3EU Taxonomy

In 2020, Regulation (EU) 2020/85279 was adopted as the regulatory framework for promoting sustainable investments, better known as the EU Taxonomy. The regulation aims to promote transparency of sustainability disclosures for financial market participants and the rest of the business community.

The EU Taxonomy is a classification system that helps companies and investors identify “environmentally sustainable” economic activities and make sustainable investment decisions. Environmentally sustainable activities are those that make a significant contribution to at least one of the EU’s six environmental objectives, without significantly harming the other five, are carried out in

78 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector.

79 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.

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compliance with minimum safeguards and meet technical screening criteria. An economic activity that meets the above requirements is considered to be Taxonomy-aligned.

The EU’s environmental objectives are:

•climate change mitigation,

•climate change adaptation,

•the sustainable use and protection of water and marine resources,

•the transition to a circular economy,

•pollution prevention and control,

•the protection of healthy ecosystems.

13.2.2.3.1From EU Taxonomy eligibility of the investment portfolio to its EU Taxonomy alignment

The Group has already disclosed in its 2021 and 2022 annual reports the proportion of exposure to EU Taxonomy-eligible economic activities, as required by Delegated Regulation 2021/217880 on disclosures.

Economic activity is considered to be eligible if it is identified by the Climate Delegated Regulation81 and, in the future, by the Environmental Delegated Regulation82 as having a high potential to contribute to at least one environmental objective, regardless of whether it meets the technical criteria set out in these regulations.

However, from 2024, financial undertakings are required to disclose the proportion of exposure to EU Taxonomy-aligned economic activities, and a range of other sustainable investment information, in line with Article 8 of the EU Taxonomy, and the Group is following this requirement.

An economic activity that meets the above requirements is considered to be Taxonomy-aligned.

The content and presentation of the information that companies are required to disclose on environmentally sustainable economic activities and the methodology for fulfilling these disclosure obligations are set out in the Disclosures Delegated Regulation. In this respect, the Group discloses below one of its key performance indicators, the proportion of EU Taxonomy-aligned investments, which is the weighted average of the value of all investments aligned with this Taxonomy over the so-called captured assets.

The investment portfolio consists of the following items in the statement of financial position: financial investments, investment property and cash. However, exposures to central government units, central banks and supranational issuers are excluded from the covered assets in accordance with Article 7 of Delegated Regulation 2021/2178. They relate to portfolios covering non-life insurance liabilities, traditional life insurance liabilities, life insurance liabilities where the investment risk is borne by the policyholders, and the company’s own funds. In 2023, the assets covered amounted to 98.24% of the total amount of assets under management.

80 Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation (OJ L 443/2021 of 10 December 2021) – Disclosures Delegated Regulation.

81 Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives – Climate Change Delegated Regulation.

82 Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities – Environmental Delegated Regulation.

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For investments in mutual funds, exchange-traded funds (ETFs) and alternative funds (infrastructure funds, real-estate funds and private debt funds), the Group implemented a look-through approach to ensure that the EU Taxonomy alignment is calculated for each investment in these funds. The look-through approach was applied to level 1 investments in the fund. The Group did not apply the look-through approach to 5.9% of all funds as information on the breakdown of the funds into individual investments was not available.

The alignment of investments with the EU Taxonomy in 2023, based on revenue, was 1.57% of the assets covered or EUR 21.0 million. Meanwhile, the alignment of investments with the EU Taxonomy, based on capital expenditure, was 2.87% of the assets covered or EUR 38.2 million.

Information on the alignment of investments with the EU Taxonomy is provided by an external data provider, Moody’s Analytics, which relies exclusively on data obtained directly from companies and does not use estimated data.

Detailed information at the investment portfolio level is presented below in relation to the requirements of the EU Taxonomy as defined in template 2 of annex X to the Disclosures Delegated Regulation. The remaining disclosures required by the Disclosures Delegated Regulation are set out in appendix C to the annual report. It was not possible to obtain the information required by annex XII to the Disclosures Delegated Regulation. Sava Re will disclose the data from annex XII in subsequent reporting periods when they become available.

The proportion of the insurance or reinsurance undertaking’s investments that are directed at funding, or are associated with, Taxonomy-aligned activities in relation to total investments

Sava Insurance Group

The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities relative to the value of total assets covered by the KPI (%)

The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities, with following weights for investments in undertakings per below (EUR):

Turnover-based:

1.57%

20,965,625

Capital expenditures-based:

2.87%

38,238,940

The percentage of assets covered by the KPI relative to total investments of insurance or reinsurance undertakings (total AuM). Excluding investments in sovereign entities.

The monetary value of assets covered by the KPI (EUR). Excluding investments in sovereign entities.

Coverage ratio:

98.24%

1,331,208,352

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The proportion of the insurance or reinsurance undertaking’s investments that are directed at funding, or are associated with, Taxonomy-aligned activities in relation to total investments

Sava Re

The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities, with following weights for investments in undertakings per below (EUR):

Turnover-based:

3.37%

4,867,511

Capital expenditures-based:

5.34%

7,718,052

The percentage of assets covered by the KPI relative to total investments of insurance or reinsurance undertakings (total AuM). Excluding investments in sovereign entities.

The monetary value of assets covered by the KPI (EUR). Excluding investments in sovereign entities.

Coverage ratio:

30.62%

144,634,594

13.2.2.3.2Restrictions

The low percentage of alignment is due to the discrepancy between the investments included in the numerator and denominator of the KPI. The numerator, unlike the denominator, does not include exposures to companies not subject to the requirements of Articles 19a and 29a of the Accounting Directive (2013/34/EU) and exposures to derivatives, but consequently includes a smaller number of investments than the denominator.

The calculation is also limited by the low coverage of the investment portfolio with data on the alignment of companies with the EU Taxonomy. The limited database of companies for which the external provider provides data is one of the reasons for this. In addition to large companies that are already subject to Taxonomy-alignment reporting, the investment portfolio also includes small and medium-sized companies that are not yet subject to such reporting. In view of the above, it is reasonable to expect that data coverage will improve as regulatory requirements are extended to more companies and information on the alignment of investments with the EU Taxonomy becomes more relevant.

13.2.3Risks and opportunities arising from climate change83

Climate change poses a serious risk to society and the economy and has a significant impact on the activities of insurance and reinsurance companies, affecting the ability of policyholders to take out insurance, and the underwriting, operating and investing activities of insurers.

The Sava Insurance Group and Sava Re are directly and indirectly exposed to climate change risks as a result of their operations, so it is crucial to monitor and manage these risks. The Group and the Company monitor climate change risks, including physical and transition risks. Physical risks are those that arise from the physical effects of climate change. Transition risks are those that arise from the transition to a low-carbon and climate-resilient economy.

Physical risks are extremely important, as the harmful effects of global warming on natural and human systems are already visible today. Without further international climate action, the average global temperature will continue to rise, and so will the unpredictability of damage associated with the risk of natural disasters. This may result in higher underwriting risk and, consequently, the need to change

83 GRI 3-3, 201-02.

139

business strategies. Also significant is transition risk, which relates to potential material negative impact on the value of investments and other significant effects on business operations.

Both transition risk and physical risks are and will continue to be of great importance to the Group and its companies, so they are subject to constant Group-level monitoring. Climate risks are also addressed (qualitatively and quantitatively) in the own risk and solvency assessment (ORSA).

In terms of physical risks from natural catastrophes, 2023 was a more turbulent year for the Sava Insurance Group than the previous year, as Slovenia and several other countries where the Group operates were hit by a series of storms and floods that caused significant damage to property. The gross claims resulting from these events amounted to EUR 88.3 million in 2023 and, taking into account our reinsurance protection, the impact of these events on the Group’s result was EUR 27.4 million. Zavarovalnica Sava, which was affected by five loss events exceeding EUR 1 million during the year, and Sava Neživotno Osiguranje, Belgrade, which was affected by two such loss events, had the most significant impact on the business result in relation to the aforementioned events.

In the non-Group reinsurance portfolio, Sava Re suffered five loss events for which its share of the loss exceeded EUR 1 million. More severe natural catastrophes have further tightened reinsurance conditions, which can make it more difficult to underwrite reinsurance.

Investments in sustainable development and preventive activities (renewables and awareness-raising among policyholders) will continue to be factors that will have a significant impact on the scope and scale of losses due to natural disasters.

13.2.3.1Product development and underwriting84

Ecological (increasing pressure on the environment due to population growth, pollution from waste and other ecological issues), climate (greenhouse gas emissions and extreme weather events) and social changes (introduction of new technologies, changes in legislation, demographic trends and population migration) are shaping a new landscape for the development of new products and underwriting. This leads to:

•new opportunities in the development of innovative products and services,

•preparations for the transformation of underwriting rules for new and unfamiliar risks (e.g. climate change and related less common or unusual weather-related natural disasters), further supported by the significant adverse weather events in Slovenia in 2023.

Sustainability factors in products

In 2023, we continued to expand some of the Sava Insurance Group’s products with a strong sustainability component. In addition to the solar panel insurance already marketed by the Slovenian part of the Sava Insurance Group, subsidiaries in Serbia, Montenegro and North Macedonia also started to develop such products in 2023.

Insurance companies operating in markets subject to European regulation carry out ongoing assessments of compliance with sustainability factors for each new or renewed insurance product. Their findings are set out in separate documents dealing with the oversight and governance arrangements for these products.

In line with the criteria already developed to identify sustainability factors, when developing new insurance products or modifying existing ones, insurers operating in markets subject to European regulation assess whether each new or modified insurance product meets any of the sustainability factors. They also assess their direct or indirect impact on the environment, society, employee issues and respect for human rights. For each new or modified insurance product, the product approval

84 GRI 3-3, 305-01, 305-02, 305-03, 302-01.

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process must identify the target market and the group of compatible customers. The target market must be identified by taking into account the characteristics, risk profile, complexity and nature of the insurance product, and its sustainability factors.

Development of financial products

The Taxonomy and SFDR have standardised the criteria for the entire European market. Sustainability factors in financial products are clear and prevent greenwashing. The Sava Insurance Group keeps track of regulations and implements them in a timely manner (relevant disclosures, adoption of relevant policies, etc.).

Responsible insurance and reinsurance underwriting

As the Group’s insurers and reinsurer, we recognise the importance of environmental risks, and we are committed to adopting and introducing internal regulations that will contribute to responsible underwriting of environmental, social and governance risks in non-life insurance.

In accordance with the Sava Insurance Group Guidelines for Responsible Underwriting Environmental, Social and Governance Risks in Non-Life Insurance Business, adopted in 2022, our main focus in 2023 was to find ways to improve the monitoring and reporting system in relation to these guidelines. In this respect, we have taken some steps to increase automation in this area while making the purpose of the guidelines more transparent to help stakeholders better understand environmental, social and governance risks.

Group companies have prepared reports in accordance with these guidelines, which also include information on cases requiring special attention in the underwriting process. These are cases defined in the guidelines as “potentially high or imminent risk”. We found a total of 899 such cases in the Group, while the share of the premium related to these cases represents around 0.33% of the total non-life premium. In this respect, companies in an underwriting environment also monitor the profile of such policyholders to the extent possible, meaning that if they perceive that the policyholders’ system for managing risks is ineffective, they will refuse to underwrite those risks.

In addition to the insurance business, the guidelines have also been taken into account in the reinsurance business, together with any necessary conforming changes.

In reinsurance, based on the above guidelines, we monitored transactions exposed to ESG criteria at the time of reinsurance underwriting, in particular for the non-Group facultative reinsurance. In the non-Group treaty reinsurance, we have been looking for new reinsurance opportunities that would have a positive impact on sustainability.

Providing adequate data

Given the increasing complexity of the decision-making process with regard to ESG criteria, we have continued to establish an appropriate data collection system within the Group in order to introduce the guidelines for responsible insurance portfolio management and to ensure the provision of relevant data in accordance with existing and emerging regulations. We have also taken steps to standardise the way we report and monitor the impact of the introduction of ESG criteria. The Group also follows the Taxonomy reporting commitment, where disclosures are linked to the proportion of Taxonomy eligibility.

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13.2.3.2Taxonomy-aligned non-life insurance activities

The Sava Insurance Group offers the following insurance coverages:

Consolidated gross premiums written as a percentage of premiums by class of business*

EUR

Gross premiums written

2023

2022

Index

Medical expense insurance

17,820,110

12,802,027

139.20

2.56%

Income protection insurance**

3,230,277

0.00

0.00%

Workers’ compensation insurance

17,028,861

23,805,490

71.53

2.45%

Motor vehicle liability insurance

165,750,692

137,553,034

120.50

23.81%

Other motor vehicle insurance

93,518,266

73,431,760

127.35

13.43%

Marine, aviation and transport insurance

7,053,876

15,063,293

46.83

1.01%

Fire and other damage to property insurance

151,519,399

182,211,159

83.16

21.77%

Assistance

31,405,947

24,906,233

126.10

4.51%

Total (1–8)

484,097,150

473,003,272

102.35

69.54%

Other non-life

212,042,985

38,568,918

549.78

30.46%

Total non-life

696,140,135

511,572,190

136.08

100%

Life insurance

189,518,285

176,006,776

107.68

Total

885,658,420

687,578,966

128.81

* Data on gross premiums written of Group insurers for the non-Group business (item 9). The above data in the table for 2023 do not include the portion of the premium that refers to risk coverage that is not directly related to climate change (points 10.1 and 10.2 of annex II to the Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021), while taking into account the substantive compliance with the technical criteria of the said Delegated Regulation in relation to Taxonomy alignment. The data in the table on the premium (item 9) related to climate change mitigation activities (do no significant harm (DNSH) within the scope of the above points of the Delegated Regulation) cover the estimated value of the portion of the premium.

** The data in the table related to the activity under item 2 of the table (income protection insurance) take into account the clarification of the European Commission of 21 December 2023 (Draft Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets – third Commission Notice), which foresees the entry of zero value in cases where it is not possible to capture certain data.

The remaining disclosures required by the Disclosures Delegated Regulation are set out in appendix D to the annual report. It was not possible to obtain the information required by annex XII to the Disclosures Delegated Regulation. Sava Re will disclose the data from annex XII in subsequent reporting periods when they become available.

13.2.4Relations with suppliers and the procurement policy85

Group companies coordinated the procurement policy and made it more uniform, which involves strategic priorities and principles governing a transparent procurement process. The sustainability objectives of the procurement process are:

•the establishment and maintenance of partnerships with suppliers (which are our existing or potential policyholders); therefore, we prefer to locate suppliers from the local environment;

•the definition of additional criteria for the selection of suppliers that take into account environmental and social aspects, and the definition of criteria to be met by local suppliers.

Internal regulations prescribe the inclusion of an anti-corruption clause in all purchase agreements.86 When ordering, taking over and paying for goods, we follow the four-eyes principle, which ensures a high degree of individual control over the business procurement process. At Sava Re, we assess the

85 GRI 2-6, 204-1.

86 GRI 205-1.

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risk inherent in procurement on a quarterly basis87. In 2023, a new questionnaire was developed and validated in line with the requirements of European standards to verify the suppliers’ sustainability.88 The questionnaire will be sent to existing and new suppliers of Group companies with an expected annual turnover of at least EUR 5,000 including VAT via a proprietary application for completion in 2024. The general terms and conditions of business cooperation, which were renewed in 2023 and generally constitute an integral part of every purchase, also emphasise the concern for the company’s sustainable development. Mechanisms for monitoring suppliers’ sustainability are also included in the updated internal regulations governing the business procurement process in all Group companies. Suppliers’ sustainability was also one of the main topics at the procurement conference, attended by procurement officers of all Group companies.

Group companies’ suppliers are mainly providers of consulting services, IT maintenance and upgrade services, office supplies, small tools, computer hardware and software, and company cars.

All Group companies are required to partner with local suppliers by the very nature of the business and the need to establish long-term partnerships in their own communities. The local market of any Group member is the entire country in which its head office is situated89.

To a lesser extent, some of the purchases are also made outside their home country (in particular for goods and services that cannot be sourced in their home country or are offered at non-competitive prices). In the case of producers or service providers from other countries, business relationships are established through local agents or representatives. Frequently, looking for suppliers in foreign markets is not reasonable because companies can make purchases under better conditions and with less risk with local suppliers.

One of the objectives of the Group’s procurement policy is the collaboration of companies in joint procurement. This most often involves companies registered in the same country. IT solutions are generally purchased and developed at the Group level. Joint procurement optimises the procurement process, reduces costs and mitigates risks in the products or services purchased. At the same time, we facilitate the sharing of expertise, experience and best practices between Group companies.

The Sava Insurance Group ensures a competitive and transparent supplier selection process by sending requests for quotations to a number of potential suppliers and by increasing the responsibility and authority for decision-making regarding the selection of suppliers based on the estimated value of the goods. Special attention is paid to the development of quality criteria, mutual cooperation, creation of synergy and price competitiveness (rebate scales and similar), all of which are considered an appropriate basis on which to assess suppliers.

The Company’s or Group’s procurement policy is also governed by several other internal regulations which set out procedures and instructions. These include the fleet management policy, the rules on procurement, use and maintenance of company vehicles, the rules on the use of information technology assets, and similar.

Sava Re and all Group companies settle their obligations to suppliers within agreed deadlines.

13.2.5Financial assistance received from the government90

Zavarovalnica Sava was reimbursed by the government for the salaries paid to its employees for their short-term absences of up to three days.

87 GRI 205-1.

88 GRI 414-1.

89 GRI 204-01.

90 GRI 201-04.

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Illyria Life (RKS) received financial assistance from the Treasury of the Republic of Kosovo and a government grant to support operations totalling EUR 3,946.47.

13.2.6Definition of other government incentives

In 2023, Sava Re was again granted a partial 30% exemption from the payment of employer’s contributions for employees who reached the age of 60 and the exemption from the payment of the employer’s share of social security contributions on employment contracts concluded for an indefinite period. These refunds totalled EUR 5,944 (2022: EUR 9,326).

Sava Re also set up a collective voluntary supplementary pension insurance scheme funded by the employer and has a contract in place on the accession to the pension company’s pension scheme, registered in the pension scheme register at the Financial Administration of the Republic of Slovenia. Based on these contracts, the Company pays a voluntary supplementary pension insurance premium for those employees who have joined the pension scheme and are thus entitled to a reduced income tax base for the amount of the voluntary supplementary pension insurance premium paid in the tax year for its employees to the pension scheme provider. The total value of this tax relief was EUR 214,326 (2022: EUR 201,720).

Subsidiaries exercise incentives or reliefs in accordance with local legislation (employment of the disabled, inclusion of employees in the pension schemes, etc.).

13.2.7Tax91

The Tax Policy of the Sava Insurance Group was developed and adopted in 2023.

The Group is committed to sustainability-oriented operations in accordance with legislation and its own commitments. The tax policy was adopted to define the implementation of a policy of tax compliance with legal tax frameworks, tax ethics, tax principles and best tax practices in the tax jurisdictions in which the Group operates.

The Group’s tax policy provides a framework for tax governance that ensures that the Group’s conduct in tax matters is guided by clear principles, values and rules that enable each employee and each Group company to make appropriate decisions in compliance with tax laws. Therefore, the fundamental purpose of the policy is to set expectations and responsibilities within the Group to ensure that its tax practices are socially responsible.

The primary objective of the Group’s tax policy is to ensure compliance with the applicable tax regulations in all jurisdictions in which the Group operates, in accordance with the activities carried out in each jurisdiction. This principal objective of respecting and complying with tax rules must be aligned with the principles of corporate governance and the operation of Group companies. The Group’s tax policy promotes responsible tax behaviour, which means taking into account the Group’s business interests and the development of the community in which it is involved, thus ensuring the application of best tax practices.

The tax policy sets out the Group’s tax ethics, tax principles and general rules for tax governance. The basic principle of the Group’s code of ethics is to act honestly, ethically and in accordance with the law, the company’s internal regulations and corporate governance guidelines. In line with this basic principle, which is reflected in all of the Group’s established tax principles:

•we file tax returns and tax accounts diligently and on time, comply with reporting requirements and pay all taxes due on time in accordance with applicable tax regulations;

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144

•we seek to maximise the use of tax exemptions, tax reliefs and tax deductions, avoid double taxation and claim other tax benefits, all within the framework of legally permissible and consistent tax optimisation and planning;

•we aim to prevent and manage tax risks related to the Group’s strategic focus areas. We structure our business models to maximise the Group’s business objectives;

•we are committed to an arm’s length pricing policy for all related party transactions;

•we aim to strengthen our relationship with the tax authorities based on respect for the law, reliability, professionalism, cooperation, reciprocity and good faith, without provoking unnecessary tax disputes that may arise with the tax authorities when defending a corporate interest in the interpretation of the applicable legal provisions;

•we reject all forms of tax evasion and unfair tax practices;

•we aim to be recognised by our stakeholders as a responsible and community-minded organisation, particularly in line with our sustainable development strategy. This extends to our tax philosophy. Taxes provide for public health services and education. They provide for security as well as the construction and maintenance of public infrastructure. Taxes are a tool for progress and development, forging relationships between the wider community and businesses.

The following table shows the amount of taxes and contributions assessed or paid by type and by tax jurisdiction in which the Sava Insurance Group operates.

2023 (EUR)

Tax jurisdiction / type of tax

Slovenia

Croatia

Montenegro

North Macedonia

Kosovo

Serbia

Total

Corporate income tax paid

11,243,747

778,206

530,887

349,506

29,994

12,932,340

Taxes on emoluments paid to natural persons (employer contributions and taxes)

6,886,789

625,145

73,803

132,584

48,501

7,766,822

Taxes and contributions withheld and paid on behalf of employees

17,824,106

782,248

332,151

1,453,580

582,849

1,351,002

22,325,936

Value added tax

6,114,255

189,215

215,596

46,125

1,706,408

271,064

8,542,663

Insurance premium tax

39,762,200

1,839,792

1,576,344

304,433

1,552,878

45,035,647

Fire brigade charge

5,624,925

23,958

27,383

318,714

5,994,980

Financial services tax

64,924

Fee for use of building land

333,954

14,268

10,029

358,251

Other charges

7,380

262,919

10,440

3,910

284,649

Total

87,862,280

3,723,277

3,028,191

2,481,890

2,943,196

3,267,378

103,306,212

2022 (EUR)

Tax jurisdiction / type of tax

Slovenia

Croatia

Montenegro

North Macedonia

Kosovo

Serbia

Total

Corporate income tax paid

17,134,075

340,540

133,326

229,398

121,759

17,959,098

Taxes on emoluments paid to natural persons (employer contributions and taxes)

7,380,457

579,275

59,026

112,485

24,833

8,156,076

Taxes and contributions withheld and paid on behalf of employees

19,787,061

707,956

904,225

1,300,861

429,810

1,138,422

24,268,335

Value added tax

6,057,261

103,427

153,301

53,197

1,506,804

132,679

8,006,669

Insurance premium tax

32,171,006

1,530,713

1,348,363

286,990

1,263,202

36,600,274

Fire brigade charge

3,475,964

23,716

40,473

291,857

3,832,010

Financial services tax

90,511

16,944

107,455

Fee for use of building land

303,328

668

7,240

311,236

Other charges

12,586

205,153

11,390

60,250

289,379

Total

86,412,249

3,150,240

2,874,930

1,891,726

2,453,002

2,748,385

99,530,532

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13.3Social aspect

13.3.1Responsibility to employees92

At the Sava Insurance Group, we are aware of our responsibility to our employees and have made it a fundamental goal of our sustainable development strategy to act in such a way that we are recognised by our stakeholders as a socially responsible and attractive employer in the region.

In section 9 “Human resource management”, we report in detail on matters related to employees or HR affairs.

13.3.2Responsibility to consumers93

To manage the process of providing services, all companies have in place rules, protocols or instructions that have a pivotal role in ensuring quality and, in turn, customer satisfaction: for underwriting, claims settlement, instigation of recourse proceedings and complaints resolution. In accordance with applicable regulations, there is also a description of the procedures for providing information on insurance products or services.

At the Sava Insurance Group, we strive to meet our customers’ expectations with our products and services, and this is reflected in the awards and commendations. Here are some of the most notable:

Sava Infond

Four Sava Infond funds received a total of six awards as the best fund in their category at the Moje Finance magazine awards for the best mutual funds marketed in Slovenia. In addition, Damjan Kovačič received the title “Best-performing Fund Manager in Slovenia” for his excellent management of the Infond Družbeno Odgovorni (Socially Responsible) Fund, an equity sub-fund.

Sava Penzisko Društvo (MKD)

In 2023, the company was awarded the European title of “Small Pension Fund” by Investment & Pensions Europe and the title of “Best Pension Company in North Macedonia 2023” by World Finance.

Zavarovalnica Sava

The SavaFit incentive programme, through which the insurance company strengthens its concern for the health of its policyholders by motivating them to be physically active through discounts on insurance premiums and benefits offered by selected partners, was awarded the silver plaque “Best Innovation of the Podravje Region 2023”.

13.3.3Customer in the centre and digitalisation of operations94

In 2023, we focused on optimising e-commerce customer service and introducing new central services for customer data management. We expanded our existing services to include a centralised consent management service and continued the development of a centralised authorisation management service.

We supported ongoing customer communication campaigns with a communication campaign management solution and an automated e-communication solution, giving us both a better overview

92 GRI 3-3.

93 GRI 3-3.

94 GRI 3-3.

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of overall customer communication and greater control over communication at key moments in the policy and investment lifecycles.

13.3.4Customer communication and information95

13.3.4.1Customer communication and information in pre-contractual disclosures in the distribution of financial products

Important milestones in communicating information to customers were Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) and Regulation (EU) 2020/852 on technical standards (Taxonomy), which regulates the assessment of sustainable investments. The SFDR requires financial market participants and financial advisors offering financial products to publish written policies on the integration of sustainability risks and to ensure the transparency of such integration.

In accordance with the SFDR, the financial service providers of the Sava Insurance Group (Zavarovalnica Sava and Vita, Sava Pokojninska and Sava Infond) provide detailed information on investment decisions and their impact on sustainability in the context of customer communication and information on their websites and in the pre-contractual disclosures of their financial products.

13.3.4.2Customer information about sustainability factors in insurance products

In accordance with adopted regulations, the sustainability factors of the insurance products offered by the financial service providers of the Sava Insurance Group are presented in a comprehensive and transparent manner. This enables financial service providers to provide relevant information to the distributors of their products, who in turn communicate this information to existing and potential customers of the Sava Insurance Group as part of their business activities.

As part of the amendments to Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution, which regulate the inclusion of sustainability factors and sustainability risks and preferences in the requirements for product supervision and governance, and in the business rules and investment advice for investment insurance products, the insurance companies of the Sava Insurance Group in the relevant markets (Slovenia and Croatia) take sustainability factors and objectives into account in the processes of development or approval of an insurance product, determination of its target market, distribution method, governance and supervision. These insurance companies regularly publish documents on their websites detailing the sustainability factors of their products.

13.3.5Compliance96

The Sava Insurance Group is obligated to comply with extensive legal and regulatory requirements as well as voluntary obligations. More than 3,000 employees working in Group companies are obliged to abide by these rules. The compliance function ensures that this commitment is implemented in practice, namely by creating rules, raising awareness, monitoring compliance with the rules and upholding integrity.

13.3.5.1Organisation of the compliance function

Like the Sava Insurance Group, the compliance function is also decentralised. Each company has its own key compliance function holder, and these are overseen by the Sava Insurance Group compliance

95 GRI 3-3, 417-01.

96 GRI 2-27.

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function holder. Roles, responsibilities and minimum standards are defined by the Sava Insurance Group’s compliance policy. Function holders in each company are responsible for monitoring the legal situation, making recommendations for the adoption of relevant measures, identifying and assessing compliance risks, adopting measures to prevent violation of the rules, providing advice to employees, and monitoring existing processes and potential compliance incidents. The Group-level function holder provides recommendations to function holders in subsidiaries, and assists and monitors them in fulfilling their obligations.

13.3.5.2Exchange of information within the Sava Insurance Group

To ensure compliance across the Group and continuous improvement of the compliance system, all compliance function holders normally meet once a year.

External experts are also invited as speakers, and together they discuss topics, such as a comprehensive overview of the compliance management system, international standards and best practices with a focus on the role of compliance function holders and providers, characteristic compliance risk areas, how to perform compliance reviews and fulfil other duties of the compliance function holder, the EU Whistleblower Protection Directive and its effects on a company’s business, other relevant EU and local regulations, and similar.

Each month, compliance function holders in all non-Slovenian subsidiaries report to the Group-level function holder on new or amended regulations that affect the business operations of the relevant company. The list contains the name of the regulation, a brief description of essential changes affecting the company’s business, a list of processes affected by these changes, the time limit for implementing the changes, the persons responsible for implementing the changes and, where relevant, the estimated costs involved.

The reporting system established at the Group level facilitates the respective business function holders in managing risks associated with redesigning the business processes that were introduced due to amended legal regulations.

In 2024, the compliance function will continue to provide guidance and oversight in the implementation of EU sustainability regulations, including the Corporate Sustainability Reporting Directive (CSRD) with the European Sustainability Reporting Standards (ESRS), the Sustainable Finance Disclosure Regulation (SFDR), the Non-Financial Reporting Directive (NFRD), the EU Taxonomy Regulation, and the Corporate Sustainability Due Diligence Directive (CS3D).

13.3.5.3Outsourced transactions

The Sava Insurance Group companies may outsource a function or activity that is critical or important for a company’s business so that it is performed better and/or more efficiently. This entails certain risks, such as dependence on external service providers and similar. Group companies are therefore very careful when outsourcing, taking into account all legal requirements and recommendations by local regulators. The outsourcing policy of the Sava Insurance Group sets out the minimum outsourcing standards for Group and non-Group contracts.

13.3.6Complaint resolution

When handling complaints submitted by policyholders (and other beneficiaries of insurance contracts), individual companies that are insurance or pension companies follow the rules and procedures for resolving complaints that comply with local laws and the guidelines of the European Insurance and Occupational Pensions Authority (EIOPA), whereas the asset management company complies with the guidelines of the European Securities and Markets Authority (ESMA) in addition to the applicable laws and regulations in this area.

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In accordance with the Sava Insurance Group Governance Rules, complaints addressed at Sava Re but relating to subsidiaries’ operations are recorded with Sava Re. After complaints have been examined, they are submitted to subsidiaries for resolution. The Group governance department of Sava Re maintains an internal online register of such complaints. Three complaints were lodged in 2023.

All subsidiaries also have internal rules, prescribed procedures and instructions for monitoring and handling complaints in accordance with applicable laws.

13.3.7Fair business practices97

The values and principles of ethical conduct are defined in the Code of Ethics of the Sava Insurance Group (the code of ethics), which was also adopted by the Group’s subsidiaries. The general principles of the code of ethics are the core values of the Sava Insurance Group, which are binding on all our employees and include, among others, business compliance, protection of reputation, respect for the dignity and integrity of the individual, protection of trade secrets and other confidential information, honest and fair business practices, respect for market rules, professionalism and care for employees, equal information to all shareholders, transparency and integrity of information, avoidance of conflicts of interest, sustainability orientation and respect for human rights. Employees who become aware of violations of the code of ethics or other binding rules must report them to the compliance function holder. No violations of the code of ethics were observed in 2023.

The insurers also comply with the provisions of the adopted Insurance Code to ensure business development, a professional underwriting process and professional conduct. The (re)insurance companies operate in accordance with market principles, market competition based on loyalty and integrity, and insurance economics and business ethics, with the aim of providing customers with high-quality (re)insurance protection.

Sava Re has also signed the Slovenian Corporate Integrity Guidelines, which commits the Company to creating a work environment based on a culture of corporate integrity, zero tolerance for illegal and unethical conduct of its employees, and compliance with legislation, rules and values, as well as on the highest ethical standards.

Sava Re uses the revised Slovenian Corporate Governance Code for Listed Companies, which came into effect on 1 January 2022, as its reference code.

At the end of 2017, Sava Re also adopted a policy on the diversity of the management and supervisory boards of Sava Re, which governs, among other issues, the gender- and age-balance of all board members.98 Sava Re has integrated respect for human rights in its operations in accordance with the applicable legislation and follows the proposed National Action Plan of the Republic of Slovenia on Business and Human Rights.

With the Policy on Ensuring the Inviolability of the Person and Protection of Personal Dignity in the Sava Insurance Group, we publicly declare that ensuring the inviolability and protection of the personal dignity of employees and other persons involved in work and business processes is one of our key priorities, and we strive to provide and maintain a safe workplace in which no one is exposed to violence (in particular sexual violence), harassment (in particular sexual harassment), discrimination and bullying. Every employee working for an employer has the right to equal treatment, dignity and personal integrity in the workplace. The Act on the Procedure for Dealing with Violations of the Rights to Inviolability of the Person and Personal Dignity in the Sava Insurance Group establishes a protocol for identifying and resolving such risks99. In 2023, Sava Re recorded no such cases.

97 GRI 2-15, 2-23, 3-3, 205-1, 205-3.

98 GRI 405-1.

99 GRI 3-3.

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With the adoption of the Slovenian Reporting Persons Protection Act (ZZPri), which entered into force on 22 February 2023, Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law was transposed into the Slovenian law. Sava Re has defined the internal reporting procedure under ZZPri in the Policy for the Establishment of an Internal Reporting Procedure Pursuant to the Act on the Protection of Reporting Persons in the Sava Insurance Group. The policy applies to Sava Re and serves as a reference document for its subsidiaries. Most of the subsidiaries have already integrated the Group’s internal regulations into their operations, while some have done so only partially or in different ways due to different local legislation (e.g. North Macedonia and Montenegro). Sava Re employees were informed of the adoption of the policy and the rules. Both internal regulations were presented to them in a webinar, a recording of which is available to them on the Company’s intranet.

Sava Re follows the principles and guidelines of the rules on the management of conflicts of interest. The rules aim to mitigate the effects of conflicts of interest and manage conflicts of interest that may arise in the performance of the duties and tasks of individuals in the Company by establishing and implementing procedures and measures to be applied when a conflict of interest arises.100

Fraud prevention and detection systems are in place in all Group companies. In this regard, we continuously update the Group’s system and procedures, in particular by raising awareness, building knowledge and complying with standards of ethical conduct.

13.3.8Anti-corruption101

In accordance with the provisions of the Slovenian Corporate Integrity Guidelines, the Sava Insurance Group procurement policy and internal regulations of the Slovenia-based Group members, all contracts establishing legal relations must include an anti-corruption clause, general terms and conditions of business cooperation, and provisions regarding confidential data and protection of personal data.

Sava Re’s rules on the management of conflicts of interest set out the procedures and rules relating to receiving gifts, entertainment and hospitality. A detailed and transparent gift policy reduces the risk of unfounded allegations and the spread of distrust regarding employee integrity in the discharge of their duties.

The Sava Insurance Group did not record any corruption cases in 2023.102

13.3.9Protection of personal data103

At the Sava Insurance Group, we are aware of the wider social implications of the irresponsible handling of personal data, and we take particular account of trends in artificial intelligence or machine learning, smart devices and other modern digital technologies. In line with our commitment to high ethical standards, we focus our attention on this area in close connection with the provision of cyber security and go beyond the minimum requirements of the law. The companies strive to ensure open, transparent and straightforward communication with individuals whose data they process, including through user experience planning.

In 2021, Sava Re set up a support function for privacy and personal data protection and adopted the Privacy and Personal Data Protection Policy of the Sava Insurance Group. In particular, the policy

100 GRI 2-23.

101 GRI 3-3, 205-01.

102 GRI 205-03.

103 GRI 3-3, 205-01.

150

strengthens the role and competencies of data protection officers (DPOs) and integrates privacy as an important concern into all relevant business and support processes.

The Sava Insurance Group companies have in place internal regulations that define the procedures and measures for the protection of personal data and the management of risks that the processing of personal data in business and support processes poses to the rights of individuals. The data are protected through technical and organisational measures designed to ensure their confidentiality, integrity and availability, and risk minimisation mechanisms are built into the processing operations.

Due to the adoption of new legislation in the Republic of Slovenia, the Slovenia-based companies also focused their personal data protection activities in 2023 on adapting to these changes. In 2023, Sava Insurance Group subsidiaries continued to digitalise the management of personal data protection and strengthened cooperation between relevant stakeholders to sustainably manage the privacy of the Group’s employees, customers and business partners.

The Sava Insurance Group did not identify any major incidents in personal data protection in 2023.

13.3.9.1Cyber security104

The Sava Insurance Group pays very close attention to cyber security, for which we continuously strengthen internal system controls with IT and organisational solutions while training and educating our employees in the area of information security.

Information security is part of section 12 “Information technology”.

13.3.10Respect for human rights105

The Sustainable Development Policy of the Sava Insurance Group requires the Group companies to ensure respect for human rights in accordance with international conventions and applicable legislation, in particular:

•in corporate governance, by adopting and implementing rules on the diversity of management and supervisory bodies;

•in human resource management, by adopting and implementing internal rules to ensure the dignity and integrity of the individual and the prevention and elimination of psychosocial risks in the workplace;

•in the procurement of goods and services, by assessing suppliers or contractors using appropriately designed questionnaires, checking their references and requiring contractual commitments from suppliers to respect labour and social rights and fundamental freedoms;

•in non-life underwriting, by adhering to the Sava Insurance Group’s guidelines for responsible non-life underwriting of environmental, social and governance risks;

•by implementing the principles of the UN Global Compact;

•in relation to customers who are individuals, by adopting and implementing internal rules on respect for privacy, the protection of personal data and consumer rights.

13.3.11Contributions to political parties106

In accordance with the adopted code of ethics and the rules on sponsorship and donations, Sava Re and Group subsidiaries do not finance political parties.

104 GRI 3-3.

105 GRI 3-3.

106 GRI 415-01.

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13.4Responsibility to the community

As members of the Sava Insurance Group, we forge strong ties with the community in which we operate and establish partnerships with community stakeholders. We support our communities through projects in which we provide financial and volunteer support to institutions, and we are actively involved in social activities and actions.

Our Group’s business network is extensive, with individual companies in constant contact with their customers and the environment, as they are best placed to identify the needs and potential of their local communities.

Certain members of our Group are the co-founders of the Network for Social Responsibility of Slovenia and members of the Partnership for National Strategy and Social Responsibility.107

Our efforts in the area of corporate social responsibility are also reflected in the awards received by Zavarovalnica Sava:

•the You’ve Got This! (Maš to!) project, dedicated to raising awareness and providing mental health care for young people, was awarded the gold plaque for the best innovation of the Podravje region in 2023 and the bronze plaque for innovation by the Chamber of Commerce and Industry of Slovenia;

•the insurance company also received two awards for excellent ideas and perfect execution of the project for the Tava, thank you for everything! (Tava, hvala za vse!) campaign, namely the silver award from the Slovenian Advertising Festival (SOF) and the bronze WEBSI award.

As the largest Group company, Zavarovalnica Sava carries out the highest number of activities related to socially responsible projects in the Group. These are mostly long-term projects, such as the Call of Loneliness (Klic osamljenosti) and You’ve Got This! (Maš to!) initiatives, which raise awareness about the importance of mental health. In 2023, they also developed the SavaFit incentive programme to encourage their policyholders to be physically active in their free time. To encourage more physical activity, they offer a pay-as-you-go payment scheme and additional benefits from selected partners. The programme was awarded the silver plaque “Best Innovation of the Podravje Region 2023”. It is also used as a platform for charity programmes involving policyholders.

13.4.1Sponsorships and donations by substance108

The Sava Insurance Group takes care and responsibility for the people and the environment in which it operates, thus strengthening its visibility as a sustainable partner. Giving back to the community through sponsorship and donations is governed by rules. Sava Re’s rules are published on its website.

107 GRI 2-28.

108 GRI 3-3, 203-02.

152

Sponsorships and donations by substance

Purpose (EUR)

2023

2022

Index

Humanitarian

47,420

138,292

34.3

Cultural

137,731

172,302

79.9

Sports

2,922,675

3,257,279

89.7

Education, training

67,981

74,690

91.0

Scientific

500

383

130.5

Social security

7,600

7,731

98.3

Disability

2,693

4,357

61.8

Health

40,226

27,673

145.4

Other*

522,829

606,035

86.3

Total

3,749,655

4,288,742

87.4

* Other costs for sponsoring activities other than sport, donations for protection against disasters, and donations for other purposes in the public interest.

At the Group level, we sponsor and support the ABA League. Each company allocates its sponsorships and donations according to its financial plan and the opportunities or needs it sees in the local market.

As the largest member of the Group, Zavarovalnica Sava follows the principle of promoting healthy lifestyles when selecting sponsorship and donation projects. The funding is given to associations and organisations that develop talent and have a positive impact on the environment and the public, including through support for preventive actions.

The most notable sponsorships by Zavarovalnica Sava in 2023:

•sports: main sponsor of Maribor Football Club, sponsor of Croatian Academic Rowing Club Mladost, Koper Handball Club and Maribor Handball Club, main sponsor of the Golden Fox (Zlata Lisica) World Cup, main sponsor and partner of Tennis Slovenia, main sponsor of Nova KBM Branik Volleyball Club, and main sponsor of the Novo Mesto Half Marathon;

•culture: main sponsor of the Ljubljana Festival and sponsor of the Lent Festival, main sponsor of Kino Šiška Centre for Urban Culture, main sponsor of the Slovenian Youth Theatre, and main supporter of Rog Centre Creative Hub;

•care for vulnerable groups: the Committed to Steps (Predani korakom) project in cooperation with the Soča University Rehabilitation Institute, and sponsorship of the Mladi Zmaji Public Institute, which provides mental health support to young people, and other humanitarian organisations.

In 2023, a year marked by numerous natural catastrophes in most countries of the region, in particular widespread flooding and storms, many Group companies donated funds for reconstruction, adapted processes and ensured timely claims payments as a sign of solidarity.

Last year, Group companies also responded to the impact of the wars by providing financial support to facilitate the integration of young people from Ukraine.

In cooperation with the Ljubljana Stock Exchange, Sava Re supported the organisation of the Days of the Slovenian Capital Market, an event aimed at increasing financial literacy among companies and retail investors.

Sava Re also refrained from purchasing business gifts in 2023. We donated the money that would otherwise have been spent on business gifts to organisations suggested and selected by employees. The 3rd Floor Heroes organisation received the largest share of this funding.

153

13.4.2Preventive action projects109

Raising awareness among policyholders and the wider community about the importance of protecting property and general health, and the efforts to do so are an important part of the preventive actions of the Sava Insurance Group companies. Through prevention, we avoid and reduce claims while helping policyholders and the wider community to protect their health and property. To this end, the insurance companies create special funds for such projects in accordance with local legislation.

Resources allocated to prevention

EUR

2023

2022

Index

Zavarovalnica Sava

228,250

305,200

74.8

Sava Osiguranje (MNE)

134,371

381,043

35.3

Sava Neživotno Osiguranje (SRB)

65,580

153,576

42.7

Total funds returned to the community

428,201

839,819

50.9

The three insurers focus their prevention efforts mainly on preventing fire risks and improving road safety. To this end, a network of roadworthiness testing centres is established in Montenegro and North Macedonia.

13.4.3Corporate volunteerism – Heart for the World initiative110

Volunteerism in the form of employee commitment is an important value of the Sava Insurance Group and is united under the common name Heart for the World. To ensure the efficient and transparent implementation of activities, the Group has established a team of coordinators who manage the implementation of activities in their communities according to the interests and wishes of employees and liaise with various philanthropic and environmental organisations in their area. Volunteerism is about acting responsibly towards the environment, people and animals.

Annual employee surveys form the basis for planning activities, and all Group employees contribute many hours of corporate volunteering to organised events. In 2023, various volunteer activities were also carried out throughout the year, ranging from socialising with the elderly and people with special needs, caring for animals, cleaning up the environment, tending lawns and planting trees, to blood donor days, collecting aid for socially disadvantaged groups and similar.

The Heart for the World Working Group also places great importance on raising awareness of pressing environmental and social issues among all employees by organising training sessions and sending out emails on important global days (e.g. Human Rights Day or World Water Day).

In 2023, a team of coordinators in six countries organised 71 events involving around a third of all employees. This amounted to a total of 5,114 hours of volunteering.

13.4.4Commitments to external initiatives111

The Sava Insurance Group is involved in initiatives that promote ethical conduct and sustainable business practices. We comply with the fundamental standard of professional business conduct as laid down by the Insurance Code of the Slovenian Insurance Association. We follow the recommendations of the Ljubljana Stock Exchange for listed companies on disclosure of information and have signed the Slovenian Corporate Integrity Guidelines.

109 GRI 203-02, 413-01.

110 GRI 3-3, 413-01.

111 GRI 2-28.

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Sava Re’s code of reference is the Slovenian Corporate Governance Code for Listed Companies.

13.4.5Membership in associations112

Sava Re is active in several professional associations: Slovenian Insurance Association, Slovenian Directors’ Association, British-Slovenian Chamber of Commerce, Chamber of Commerce of Dolenjska and Bela Krajina, Maritime Law Association of Slovenia, Sors (meeting of insurance and reinsurance companies), Slovenian Institute of Auditors, Slovenian Association of Actuaries, CFA Institute and European Institute of Compliance and Ethics (EISEP).

Since 2021, the Sava Insurance Group has been committed to the UN Global Compact and the UN Principles for Responsible Investment.

As of 2022, Sava Re is also a member of the Slovenian Green Network.

All subsidiaries are members of relevant associations and proactively contribute to the development of the industry and other social actions.

13.5Environmental aspect113

Climate change and related weather events have a profound impact on the global and local (re)insurance industry. Environmental problems bring new and unexpected risks to the insurance sector. The Group is aware that this requires urgent action, both in operational and strategic terms.

13.5.1Waste disposal policy114

Sava Re has a waste separation system in place, which is constantly being improved. The Company also strives to reduce waste. We cannot yet measure the volume of waste by type, as waste is collected for the entire building, which accommodates a number of other legal entities.

At the new office building in Maribor, where six Slovenian companies of the Group are based, municipal waste is collected and disposed of separately according to the categories defined by regulations as waste collected by public waste collection services. Such waste is collected by the public service provider in a manner defined by regulations.

All Group companies are digitalising processes and going paperless to reduce waste.

At the Group level, we separate waste as required by local utility companies and in accordance with regulations. Group companies have widely organised the collection of electronic waste. Most companies have already introduced separate waste collection methods, most commonly used for paper, plastic packaging, biowaste and glass – where this is a systemic possibility.

13.5.2Energy consumption115 and energy efficiency investments

Energy consumption and energy efficiency are environmental and economic concerns.

The Sava Insurance Group remains committed to sustainability also in investing and investment maintenance. The Group is constantly looking for ways to reduce energy consumption, including by

112 GRI 2-28.

113 GRI 3-3.

114 GRI 3-3, 306-02.

115 GRI 302-01.

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investing in new energy efficiency solutions. Investment decisions are also always assessed from an energy efficiency perspective.

The most important investment is the new office building of Zavarovalnica Sava in Maribor, where Sava Infond, Sava Pokojninska, TBS Team 24, ZS Svetovanje and Asistim have also moved their offices. The office building was designed and built in line with the Group’s strategic sustainability guidelines and has an energy rating “A”. It is equipped with a central control system that allows efficient management of modern devices, thus ensuring the efficient use of energy resources. The functional design of space and access, together with the modern IT infrastructure, allows employees to work in a well-organised environment, while the building’s accessible location and ample parking provide an excellent user experience for visitors. An important addition to the new building is a 52.2 kW solar power plant, which contributed around 16% of the green energy in 2023. To ensure and promote sustainable mobility, the site includes charging stations for electric vehicles, a bike shed and a park in the immediate vicinity of the building, which is open to all visitors. An additional 66.6 kW solar power plant is planned for the building in early 2024. The installation of a solar power plant on canopies will increase the share of green energy to around 35% of total electricity consumption.

To reduce greenhouse gas emissions, we installed another 166.6 kW solar power plant in Slovenia to supply green energy to the insurance company’s sales and claims centre.

Group companies are striving to improve the energy efficiency of their business premises while meeting demands to improve the customer experience and working conditions for employees. Investments include, for example, the installation of LED lighting, other more energy-efficient devices and heating and cooling systems for business premises, the implementation of green energy measures, the purchase of hybrid and electric vehicles, investment in charging infrastructure, investment in e-documentation systems, and the use of a central control system at strategic locations aimed at managing energy-intensive devices to continuously optimise energy use.

The vast majority of Zavarovalnica Sava employees have the option of car sharing for business travel, which is particularly useful in urban areas or in larger Slovenian cities.

To achieve energy efficiency, we are implementing a number of measures at the Company level in line with the adopted action plan, such as homeworking, manual energy accounting, employee training on efficient energy use, and measures relating to the Company’s fleet and business travel.

Average fuel consumption is taken into account when purchasing new vehicles for the Group. The type of vehicles purchased also depends on the availability of a network of charging stations in the countries in which we operate.

13.5.3Carbon footprint of the Sava Insurance Group for 2023116

The calculation of the carbon footprint for 2023 includes all companies of the Sava Insurance Group on a consolidated basis.

The carbon footprint calculation includes:

•direct emissions from the use of fossil fuels for space heating and power generators, fuel combustion in vehicles owned or controlled by the company, and fugitive refrigerant gases (scope 1 emissions);

•indirect emissions from the consumption of electricity and district heating (scope 2 emissions);

•indirect emissions from the purchase of paper and water, waste water management, and business travel by means not owned or controlled by the company (scope 3 emissions).

116 GRI 3-3, 305-1, 305-2, 305-3.

156

The carbon footprint of the Sava Insurance Group in 2023 is calculated using the location-based method and amounts to 3,984 tonnes of CO2 equivalent (tCO2e). This means 1.45 t CO2 equivalent per employee or 70.5 kg CO2 equivalent per square metre of office space.

Compared to the reference year 2022, the Sava Insurance Group’s carbon footprint in 2023 was 6% lower, emissions per employee were 9% lower, and emissions per unit area of office space were 4% lower. The main contributors to this reduction were lower emissions from electricity consumption and heating, while emissions from business travel increased.

Scope 1 emissions in 2023 accounted for 1,070 tCO2e (27% of the carbon footprint), scope 2 emissions 2,595 tCO2e (65% of the carbon footprint) and scope 3 emissions 318 tCO2e (8% of the carbon footprint). The largest source of greenhouse gas emissions was electricity consumption (42%), followed by heating (30%) and business travel (27%).

The 2023 carbon footprint calculation is the third calculation at the level of the entire Sava Insurance Group, with the 2022 carbon footprint calculation serving as a baseline or benchmark against which to compare the carbon footprint and the effectiveness of emission reduction measures in the coming years. The Group is continuously working to improve the quality of the data collected on energy consumption and the scope of emission-generating activities. In addition, we are gradually expanding the range of emission sources that Group companies include in their reporting. In 2023, emission sources were added, such as office paper purchases, water purchases and waste water management.

Percentage of emissions

157

Distribution of sources by emission volume in all companies

Greenhouse gas emissions by scope

2023

2022

Index 2023/2022

Number of employees

2,744

2,704

101.5

Floor area of business premises

56,488

59,032

95.7

SCOPE

2023

(tCO2e)

2022

benchmark

(tCO2e)

Index 2023/2022

Direct emissions from activities – scope 1

1,070.66

1,256.96

85.2

1.1

Combustion of fossil fuels for space heating

258.01

359.77

71.71

1.2

Business travel using vehicles owned or controlled by the company

798.75

821.58

97.2

1.3

Combustion of fossil fuels to power generators

0.82

5.45

15.0

1.4

Fugitive refrigerant gases

13.08

70.16

18.6

Indirect emissions – scope 2

2,595.10

2,842.35

91.3

2.1

Electricity consumption (for electrical and electronic equipment, lighting, space heating and cooling)

1,665.11

1,794.69

92.8

2.2

District heating consumption for space heating

929.99

1,047.66

88.88

Indirect emissions – scope 3

318.64

148.01

215.3

3.1

Paper consumption

49.97

3.2

Water consumption

2.48

3.3

Waste water management

2.83

3.4

Business travel using vehicles not owned by the company

263.36

148.01

177.9

3.4.1

Motor vehicles

88.32

76.08

116.09

3.4.2

Aircraft

173.47

70.82

244.9

3.4.3

Public passenger transport – bus and rail

0.74

0.31

238.7

3.4.4

Taxi, shuttle

0.83

0.80

103.7

TOTAL

3,984.4

4,247.32

92.3

The carbon footprint data for 2022 were revised and may differ from the publicly available data in the 2022 annual report. The data for 2023 were verified and cover all locations where Group companies conduct their business operations.

158

13.6Sava Insurance Group sustainability performance indicators

Select Sava Insurance Group sustainability performance indicators

2023

2022

Index 2023/2022

Environmental aspect

CO2 emissions per employee (in tonnes)

1.45

1.60

90.6

Number of claims reported online

67,981

45,288

150.1

Percentage of ESG-integrated investments as at 31 December

16.9%

14.9%

113.4

Social aspect

Percentage of employees involved in annual performance appraisal interviews

47.9%

49.5%

96.7

Women as a percentage of all employees as at 31 December

59.9%

57.9%

103.4

Employee turnover rate

17.1%

16.9%

101.3

Number of injuries in the workplace

88.8

Average hours of training per employee

22.5

24.6

91.5

Heart for the World – corporate volunteering (hours)

5,114

5,439

94.0

Governance aspect

Percentage of women in management positions

27.7%

23.9%

115.9

Percentage of women on Group companies’ supervisory boards

19.7%

21.8%

90.3

Economic value generated (EUR million)

867.6

729.9

118.9

Economic value distributed (EUR million)

827.4

705.2

117.3

Economic value retained (EUR million)

40.1

24.6

163.1

Select Sava Re sustainability performance indicators

2023

2022

Index 2023/2022

Environmental aspect

CO2 emissions per employee (in tonnes)

1.99

1.66

119.9

Annual electricity consumption per employee (kWh/employee)

1,297

1,485

87.34

Social aspect

Percentage of employees involved in annual performance appraisal interviews

86.3%

100%

86.3

Women as a percentage of all employees as at 31 December

63.1%

63.3%

99.7

Employee turnover rate

6.1%

10.5%

58.0

Number of injuries in the workplace

100

Average hours of training per employee

26.8

23.5

114.0

Governance aspect

Percentage of women in management positions

25%

33.3%

Percentage of women on supervisory boards

17%

100

Percentage of independent members on Sava Re’s supervisory board

100%

100

The carbon footprint data for 2022 were revised and may differ from the publicly available data in the 2022 annual report. The data for 2023 were verified.

159

Financial statements with notes

161

STATEMENT OF MANAGEMENT’S RESPONSIBILITY

The management board of Sava Re d.d. hereby approves the financial statements of the Sava Insurance Group and Sava Re for the year ended 31 December 2023, and the accompanying appendices to the financial statements, accounting policies and notes to the financial statements. The management board confirms that the financial statements, including the notes, have been prepared on a going concern basis regarding the operations of the Company and the Group and that they comply with Slovenian law and the International Financial Reporting Standards as adopted by the EU. The financial statements have been prepared using relevant judgements, estimates and assumptions, including actuarial judgements, which apply the methods most suited to the Company and the Group under given circumstances, based on which we can give the below assurances.

The management board members ensure that to the best of their knowledge:

1)the financial statements and the accompanying notes have been drawn up in accordance with the reporting principles adopted by the Company and the Group and give a true and fair view of the assets and liabilities, financial position, profit and loss of the Company and the Group;

2)the business report includes a fair presentation of the development and results of operations of the Company and the Group, and their financial position, including a description of the significant risks and opportunities that Sava Re and the Sava Insurance Group are exposed to.

Furthermore, the management board is responsible for keeping appropriate records that at all times present, in understandable detail, the financial position of the Company and the Group, for adopting appropriate measures to protect assets, and for preventing and detecting fraud and other irregularities.

The tax authorities may, at any time within five years of the end of the year in which the tax was assessed, review the operations of the Company, which could result in additional tax obligations, default interest or penalties related to corporate income tax or other taxes or levies. The Company’s management board is not aware of any circumstances that may give rise to any such significant liability.

Marko Jazbec, Chairman of the Management Board

Polona Pirš Zupančič, Member of the Management Board

Peter Skvarča, Member of the Management Board

David Benedek, Member of the Management Board

Ljubljana, 15 March 2024

162

14Auditor’s report

Slika, ki vsebuje besede besedilo, pismo, posnetek zaslona, pisava

Opis je samodejno ustvarjen

167

$Slika, ki vsebuje besede besedilo, pismo, papir, pisava Opis je samodejno ustvarjen$

171

15Financial statements

The financial statements of the Sava Insurance Group and Sava Re d.d for 2023

15.1Statement of financial position

EUR

Note

Sava Insurance Group

Sava Re

31 December 2023

31 December 2022(restated)

1 January 2022(restated)

31 December 2023

31 December 2022(restated)

1 January 2022(restated)

ASSETS

Intangible assets and goodwill

16.8.1

65,148,831

65,895,292

62,609,877

4,674,935

4,068,384

3,194,031

Property, plant and equipment

16.8.2

59,686,798

62,435,626

56,332,556

2,675,158

2,553,945

2,464,213

Investment property

16.8.5.

24,890,278

22,795,759

14,280,600

7,582,168

7,721,693

7,899,693

Right-of-use assets

16.8.3

8,573,398

7,425,676

7,384,816

277,158

320,124

204,879

Investments in subsidiaries

16.8.6

305,666,793

303,360,793

304,554,991

Investments in associates and joint ventures

16.8.6

23,834,620

21,856,109

20,479,729

19,575,000

Investments in associates accounted for using equity method

16.8.6

23,834,620

21,856,109

20,479,729

Investments in associates measured at cost

16.8.6

19,575,000

Deferred tax assets

16.8.4

6,584,400

17,065

397,297

5,087,420

3,032,250

2,710,122

Financial investments measured at

16.8.7

2,012,532,633

1,776,132,075

1,987,024,393

354,384,196

324,430,975

319,625,036

– Fair value through other comprehensive income

1,276,147,045

1,155,401,907

1,322,371,668

311,285,620

280,840,335

271,786,710

– Amortised cost

76,303,166

64,428,280

62,376,074

5,811,776

3,871,964

5,323,531

– Fair value through profit or loss

660,082,422

556,301,888

602,276,651

37,286,800

39,718,676

42,514,795

Investment contract assets

16.8.8

180,628,137

166,374,119

168,020,989

Insurance contract assets

16.8.9

9,607,288

7,138,340

14,379,062

5,095,344

3,071,631

3,063,438

Reinsurance contract assets

16.8.9

107,481,560

68,133,642

64,246,006

95,762,621

61,224,914

56,068,497

Current tax assets

16.8.17

444,616

3,412,855

330,518

49,594

Trade and other receivables

16.8.17

14,271,358

12,282,973

8,098,004

198,366

213,229

262,226

Non-current assets held for sale

16.8.20

259,649

991,803

770,544

Cash and cash equivalents

16.8.19

50,559,964

93,223,631

88,643,990

12,260,049

23,926,029

28,806,817

Other assets

16.8.18

4,042,606

4,025,283

4,038,117

715,114

699,783

746,045

Total assets

2,568,546,136

2,312,140,248

2,497,036,498

813,954,322

754,248,344

749,174,988

LIABILITIES

Subordinated liabilities

16.8.29

74,987,535

74,924,356

74,863,524

74,987,535

74,924,356

74,863,524

Deferred tax liabilities

16.8.4

3,436,591

2,811,300

17,864,866

Insurance contract liabilities

16.8.9

1,651,022,247

1,484,315,158

1,621,102,825

295,752,723

272,414,051

291,446,906

Reinsurance contract liabilities

16.8.9

1,642,043

1,051,614

1,376,802

446,848

320,044

766,545

Investment contract liabilities

16.8.8

180,437,695

166,197,363

167,844,906

Provisions

16.8.30

8,074,255

7,973,454

8,918,059

419,660

392,640

421,865

Lease liability

16.8.3

8,844,737

7,657,186

7,640,477

280,366

320,490

203,730

Other financial liabilities

16.8.31

737,085

548,576

561,728

Current tax liabilities

16.8.32

9,930,830

1,554,992

2,996,533

6,319,991

45,414

394,752

Other liabilities

16.8.33

43,769,505

33,642,572

40,329,687

4,850,021

4,155,693

6,368,946

Total liabilities

1,982,882,523

1,780,676,571

1,943,499,407

383,057,144

352,572,688

374,466,268

EQUITY

Share capital

16.8.23

71,856,376

Capital reserves

16.8.22

42,702,320

54,239,757

Profit reserves

16.8.23

281,693,666

256,945,591

229,008,079

281,959,459

257,222,058

229,238,622

Treasury shares

16.8.24

-24,938,709

Accumulated other comprehensive income

16.8.25

-28,195,652

-45,138,332

1,511,123

-9,766,315

-14,296,729

-3,159,258

Retained earnings

16.8.27

205,041,879

214,047,218

236,218,747

32,809,209

24,225,388

47,471,932

Net profit or loss for the period

16.8.26

39,702,056

18,712,745

24,737,401

33,367,515

Foreign currency translation reserve

16.8.27

-3,049,094

-3,256,083

-3,244,024

Equity attributable to owners of the controlling company

584,812,842

530,931,126

553,113,912

430,897,178

401,675,656

374,708,720

Non-controlling interests in equity

16.8.28

850,771

532,551

423,179

Total equity

585,663,613

531,463,677

553,537,091

430,897,178

401,675,656

374,708,720

Total liabilities and equity

2,568,546,136

2,312,140,248

2,497,036,498

813,954,322

754,248,344

749,174,988

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

172

15.2Income statement117

EUR

Note

Sava Insurance Group

Sava Re

1–12/2023

1–12/2022

1–12/2023

1–12/2022

(restated)

Insurance revenue

16.8.35

697,562,811

608,987,793

167,804,126

150,760,655

Insurance service expenses

16.8.35

-657,125,518

-537,510,550

-174,490,918

-132,523,250

Insurance service result from insurance contracts issued

40,437,293

71,477,243

-6,686,792

18,237,405

Revenue from reinsurance contracts held

16.8.35

86,112,246

43,335,084

73,904,850

39,440,417

Expenses from reinsurance contracts held

16.8.35

-43,071,777

-38,738,910

-30,235,703

-29,572,834

Net result from reinsurance contracts held

43,040,469

4,596,174

43,669,147

9,867,583

Insurance service result

83,477,762

76,073,417

36,982,355

28,104,988

Interest income

16.8.37

21,119,902

15,874,573

4,735,050

2,688,043

Dividend income

16.8.37

1,099,061

1,317,305

217,967

458,074

Income or expenses from financial investments measured at FVTPL

16.8.37

58,342,472

-72,848,689

1,211,782

-3,103,084

Gains and losses arising from the derecognition of financial investments measured at FVOCI

16.8.37

-821,329

-429,390

-120,448

197,687

Net impairment losses and reversals of impairment losses on financial investments

16.8.37

343,794

350,981

54,426

21,823

Net other investment income or expenses

16.8.37

-1,659,159

2,552,339

-3,754,391

2,977,155

Net investment result

78,424,741

-53,182,881

2,344,386

3,239,698

Finance result from insurance contracts

16.8.16

-62,000,579

52,044,359

736,264

-4,749,017

Finance result from reinsurance contracts

1.8.16

-612,578

370,665

-774,623

266,249

Net insurance finance income or expenses

-62,613,157

52,415,024

-38,359

-4,482,768

Net insurance and finance result

15,811,584

-767,857

2,306,027

-1,243,070

Asset management revenue

19,589,410

17,981,800

Non-attributable operating expenses

16.8.38

-29,432,276

-26,979,168

-13,805,508

-11,803,863

Net impairment losses and reversals of impairment losses on non-financial assets

231,724

79,737

5,353

Finance costs

16.8.29

-3,114,997

-3,021,150

-2,882,998

-2,875,317

Share of profit or loss of investments accounted for using equity method

16.8.6

2,169,860

1,285,731

Net income and expenses from subsidiaries and associates

16.8.39

116,348

994,004

30,755,010

51,728,827

Gains or losses on disposal of discontinued operations

16.8.20

353,684

Net other operating income and expenses

16.8.40

-9,589,746

-7,144,469

234,323

14,978

Profit or loss before tax

79,613,353

58,502,045

53,589,209

63,931,896

Income tax expense

16.8.41

-14,956,182

-11,578,604

-4,114,407

-2,580,945

Net profit or loss for the period

64,657,171

46,923,441

49,474,802

61,350,951

Net profit or loss attributable to non-controlling interests

192,367

227,260

Net profit or loss attributable to owners of the controlling company

16.8.26

64,464,804

46,696,181

49,474,802

61,350,951

Earnings per share (basic and diluted)

16.8.26

4.16

3.01

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

117 GRI 2-6.

173

15.3Statement of other comprehensive income

EUR

Note

Sava Insurance Group

Sava Re

1–12/2023

1–12/2022

1–12/2023

1–12/2022

PROFIT OR LOSS FOR THE PERIOD, NET OF TAX

64,657,171

46,923,441

49,474,802

61,350,951

OTHER COMPREHENSIVE INCOME, NET OF TAX

16.8.25

17,146,991

-45,681,294

4,530,414

-11,137,470

a) Items that will not be reclassified subsequently to profit or loss

818,871

1,252,055

26,439

55,903

Net gains or losses on investments in equity instruments at FVOCI

1,042,213

-1,429,715

Other items that will not be reclassified subsequently to profit or loss

16.8.30

-196,565

2,383,572

27,063

55,903

Tax on items that will not be reclassified subsequently to profit or loss

16.8.41

-26,777

298,198

-624

b) Items that may be reclassified subsequently to profit or loss

16,328,120

-46,933,349

4,503,975

-11,193,373

Finance income or expenses from insurance contracts

16.8.16

-33,063,968

108,200,503

-6,255,975

16,477,039

Finance income or expenses from reinsurance contracts

16.8.16

1,378,743

-5,079,988

1,304,240

-4,949,438

Fair value gain or loss on investments in debt instruments measured at FVTOCI

16.8.7

50,742,502

-160,617,807

9,952,809

-25,259,425

Tax on items that may be reclassified subsequently to profit or loss

16.8.41

-2,935,470

10,576,386

-497,099

2,538,451

Net gains or losses from translation of financial statements

206,313

-12,443

COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX

81,804,162

1,242,147

54,005,216

50,213,481

Comprehensive income, attributable to owners of the controlling company

81,614,473

1,023,481

54,005,216

50,213,481

Comprehensive income, attributable to non-controlling interests

189,689

218,666

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

174

15.4Cash flow statement

Sava Insurance Group

Sava Re

EUR

Note

1–12/2023

1–12/2022

1–12/2023

1–12/2022

Cash flows from operating activities

Items of the income statement

7,726,211

120,318,151

16,384,524

12,491,604

Net profit or loss for the period

16.8.26

64,657,171

46,923,441

49,474,802

61,350,951

Adjustments for:

-56,930,960

73,394,710

-33,090,278

-48,859,347

– Depreciation and amortisation expense

9,990,892

7,008,930

738,774

620,939

– Depreciation of right-of-use assets

16.8.3

1,716,035

2,600,227

82,608

78,843

– Finance expenses

53,158,033

160,356,858

5,903,268

10,366,968

– Finance income

-130,692,979

-102,142,261

-40,894,811

-59,410,161

– Gains or losses on the disposal of property, plant and equipment assets

-855,957

-842,517

-28,323

-75,958

– Gains or losses of investments accounted for using equity method

16.8.6

-2,169,860

-1,285,731

– Gains or losses on the disposal of subsidiaries and associates

16.8.6

-116,348

-994,004

-112,595

-994,004

– Gains or losses on disposal of discontinued operations

46,651

-545,041

– Increase or decrease in provisions

-122,242

-152,014

106,404

22,068

– Net exchange differences

-2,841,367

-2,188,341

-3,000,010

-2,048,987

– Income tax expense

16.8.41

14,956,182

11,578,604

4,114,407

2,580,945

Changes in operating cash flow items

90,618,113

-57,664,482

-11,218,791

-14,548,609

Net change in insurance and reinsurance contracts

100,504,161

-29,988,304

-10,313,260

-14,715,858

Change in other receivables and other assets

-17,184,956

3,906,065

1,586,660

2,173,788

Change in other liabilities

20,055,151

-14,441,431

-2,147,977

-1,242,983

Corporate income tax paid

-12,756,243

-17,140,812

-344,214

-763,556

Net cash from/used in operating activities (a + b)

98,344,324

62,653,669

5,165,733

-2,057,005

Cash flows from investing activities

Cash receipts from investing activities

373,072,106

370,492,199

134,050,429

130,113,034

Interest received classified as investing activities

20,214,734

20,853,312

4,030,654

3,679,026

Cash receipts from dividends and participation in the profit of others

399,271

1,255,293

30,860,382

52,381,099

Proceeds from sale of intangible assets

21,137

Proceeds from sale of property, plant and equipment assets

4,150,446

5,382,570

42,155

107,892

Proceeds from disposal of investment property

482,648

Proceeds from disposal of non-current assets held for sale

885,018

1,055,039

Proceeds from disposal of financial investments

347,422,637

341,442,200

99,117,238

73,945,017

Proceeds from disposal of subsidiaries and other companies

16.8.6

112,596

1,000,000

112,595

1,000,000

Other proceeds from disposal of financial investments

347,310,041

340,442,200

99,004,643

72,945,017

Cash disbursements in investing activities

-486,542,321

-402,286,776

-123,198,731

-106,765,838

Purchase of intangible assets

-4,683,220

-5,515,155

-967,769

-1,120,721

Purchase of property, plant and equipment

-4,885,865

-14,852,976

-363,031

-318,237

Purchase of investment property

-2,612,918

-9,186,766

-10,045

Purchase of financial investments

-474,360,318

-372,731,879

-121,857,886

-105,326,880

Purchase of subsidiaries or other companies

-1,993,500

Other disbursements to acquire financial investments

-472,366,818

-372,731,879

-119,864,386

-105,326,880

Net cash from/used in investing activities (a + b)

-113,470,215

-31,794,577

10,851,698

23,347,196

Cash flows from financing activities

Cash receipts from financing activities

2,633,769

2,210,319

Proceeds from paid-in capital

263,999

10,478

Proceeds from borrowing

2,369,770

2,199,841

Cash disbursements in financing activities

-30,171,545

-28,489,770

-27,683,411

-26,170,979

Interest paid

-3,051,818

-2,919,213

-2,807,331

-2,847,665

Repayments of loans and borrowings

-2,188,659

-2,213,557

Repayments of lease liabilities

-79,765

-76,770

Dividends and other profit participations paid

16.8.27

-24,931,068

-23,357,000

-24,796,315

-23,246,544

Net cash from/used in financing activities (a + b)

-27,537,776

-26,279,451

-27,683,411

-26,170,979

C2.

Closing balance of cash and cash equivalents

50,559,964

93,223,631

12,260,049

23,926,029

Increase or decrease in cash and cash equivalents for the period (Ac + Bc + Cc)

-42,663,667

4,579,641

-11,665,980

-4,880,788

Opening balance of cash and cash equivalents

16.8.19

93,223,631

88,643,990

23,926,029

28,806,817

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

175

15.5Statement of changes in equity for 2023

Sava Insurance Group

EUR

I. Share capital

II. Capital reserves

III. Profit reserves

IV. Accumulated other comprehensive income

V. Retained earnings

VI. Net profit or loss for the period

VII. Foreign currency translation reserve

VIII. Equity attributable to owners of the controlling company

IX. Non-controlling interests in equity

Total

Legal reserves and reserves provided for in the articles of association

Capital redemption reserve

Treasury shares

Other profit reserves

(12 + 13)

10.

11.

12.

13.

14.

Closing balance in previous financial year

71,856,376

42,702,320

12,150,797

24,938,709

-24,938,709

219,856,085

-45,138,332

214,047,218

18,712,745

-3,256,083

530,931,126

532,551

531,463,677

Equity (start of period)

71,856,376

42,702,320

12,150,797

24,938,709

-24,938,709

219,856,085

-45,138,332

214,047,218

18,712,745

-3,256,083

530,931,126

532,551

531,463,677

Comprehensive income for the period, net of tax

16,942,680

64,464,804

206,989

81,614,473

189,689

81,804,162

Net profit or loss for the period

64,464,804

192,367

64,657,171

Other comprehensive income

16,942,680

206,989

17,149,669

-2,678

17,146,991

Dividends paid

-24,795,600

-135,468

-24,931,068

Allocation of net profit to profit reserve

25,347

24,722,728

14,673

-24,762,748

Transfer of profit

18,712,745

-18,712,745

Acquisition and disposal of subsidiary

263,999

Other

-2,937,157

Equity (end of period)

71,856,376

42,702,320

12,176,144

24,938,709

-24,938,709

244,578,813

-28,195,652

205,041,879

39,702,056

-3,049,094

584,812,842

850,771

585,663,613

Sava Re

EUR

I. Share capital

II. Capital reserves

III. Profit reserves

IV. Accumulated other comprehensive income

V. Retained earnings

VI. Net profit or loss for the period

VII. Foreign currency translation reserve

VIII. Equity attributable to owners of the controlling company

IX. Non-controlling interests in equity

Total

Legal reserves and reserves provided for in the articles of association

Capital redemption reserve

Treasury shares

Other profit reserves

(12 + 13)

10.

11.

12.

13.

14.

Closing balance in previous financial year

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

217,296,824

-14,296,729

24,225,388

33,367,515

401,675,656

Equity (start of period)

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

217,296,824

-14,296,729

24,225,388

33,367,515

401,675,656

Comprehensive income for the period, net of tax

4,530,414

49,474,802

54,005,216

Net profit or loss for the period

49,474,802

Other comprehensive income

4,530,414

Dividends paid

-24,796,314

Allocation of net profit to profit reserve

24,737,401

-24,737,401

Transfer of profit

33,367,515

-33,367,515

Other

12,620

Equity (end of period)

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

242,034,225

-9,766,315

32,809,209

24,737,401

430,897,178

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

176

15.6Statement of changes in equity for 2022

Sava Insurance Group

EUR

I. Share capital

II. Capital reserves

III. Profit reserves

IV. Accumulated other comprehensive income

V. Retained earnings

VI. Net profit or loss for the period

VII. Translation differences

VIII. Equity attributable to owners of the controlling company

IX. Non-controlling interests in equity

Total

Legal reserves and reserves provided for in the articles of association

Capital redemption reserve

Treasury shares

Other profit reserves

(13 + 14)

Closing balance in previous financial year

71,856,376

42,702,320

12,150,797

24,938,709

-24,938,709

191,918,573

22,547,759

116,166,406

49,623,843

-3,256,354

503,709,720

367,298

504,077,018

Prior-period restatements

-1,908,279

Impact of transition to IFRS 9

-9,549,903

11,162,972

1,613,069

Impact of transition to IFRS 17

-11,486,736

61,173,806

12,330

49,699,400

55,883

49,755,283

Equity (start of period)

71,856,376

42,702,320

12,150,797

24,938,709

-24,938,709

191,918,573

1,511,120

186,594,905

49,623,843

-3,244,024

553,113,910

423,181

553,537,091

Comprehensive income for the period, net of tax

-46,649,452

988,811

46,696,181

-12,059

1,023,481

218,666

1,242,147

Net profit or loss for the period

46,696,181

227,260

46,923,441

Other comprehensive income

-46,649,452

988,811

-12,059

-45,672,700

-8,594

-45,681,294

Dividends paid

-23,246,544

-110,460

-23,357,004

Allocation of net profit to profit reserve

27,937,512

45,924

-27,983,436

Transfer of profit

49,623,843

-49,623,843

Other

40,279

1,164

41,443

Equity (end of period)

71,856,376

42,702,320

12,150,797

24,938,709

-24,938,709

219,856,085

-45,138,332

214,047,218

18,712,745

-3,256,083

530,931,126

532,551

531,463,677

Sava Re

EUR

I. Share capital

II. Capital reserves

III. Profit reserves

IV. Accumulated other comprehensive income

V. Retained earnings

VI. Net profit or loss for the period

VII. Foreign currency translation reserve

VIII. Equity attributable to owners of the controlling company

IX. Non-controlling interests in equity

Total

Legal reserves and reserves provided for in the articles of association

Capital redemption reserve

Treasury shares

Other profit reserves

(13 + 14)

10.

11.

12.

13.

14.

Closing balance in previous financial year

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

189,313,388

3,716,228

10,633,662

26,420,064

371,166,000

Impact of transition to IFRS 9

-3,270,615

4,387,132

1,116,517

Impact of transition to IFRS 17

-3,604,872

6,031,074

2,426,202

Equity (start of period)

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

189,313,388

-3,159,259

21,051,868

26,420,064

374,708,719

Comprehensive income for the period, net of tax

-11,137,470

61,350,951

50,213,481

Net profit or loss for the period

61,350,951

Other comprehensive income

-11,137,470

Dividends paid

-23,246,544

Allocation of net profit to profit reserve

27,983,436

-27,983,436

Transfer of profit

26,420,064

-26,420,064

Equity (end of period)

71,856,376

54,239,757

14,986,525

24,938,709

-24,938,709

217,296,824

-14,296,729

24,225,388

33,367,515

401,675,656

The notes to the financial statements in sections 16.4 to 16.10 form an integral part of these financial statements and should be read in conjunction with them.

177

16Notes to the financial statements

16.1Basic details

Reporting company

Sava Re d.d. (hereinafter also the Company) is the parent of the Sava Insurance Group (hereinafter also the Group). The Company was established under the Foundations of the Life and Non-Life Insurance System Act, and was entered in the company register kept by the Ljubljana Basic Court, Ljubljana Unit (now Ljubljana District Court), on 10 December 1990. Its legal predecessor, Pozavarovalna Skupnost Sava, was established in 1977.

Business address of the controlling company

Dunajska cesta 56, Ljubljana, Slovenia

Name of reporting entity

Pozavarovalnica Sava, d.d. (Sava Reinsurance Company d.d., Sava Re d.d.)

Legal form of entity

delniška družba (public limited company)

Domicile of entity

Slovenia

Address of entity’s registered office

Slovenia

Country of incorporation

Slovenia

Principal place of business

Slovenia

Description of nature of entity’s operations and principal activities

reinsurance

Name of parent entity

Pozavarovalnica Sava, d.d. (Sava Reinsurance Company d.d., Sava Re d.d.)

Name of ultimate parent of group

Pozavarovalnica Sava, d.d. (Sava Reinsurance Company d.d., Sava Re d.d.)

Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period

no changes in 2023

Description of nature of financial statements

financial statements of the Sava Insurance Group and Sava Re d.d for 2023

Date of end of reporting period

31 December 2023

Period covered by financial statements

1 January 2023 – 31 December 2023

Description of presentation currency

euro

Level of rounding used in financial statements

rounded to the nearest whole number

The Group transacts reinsurance business (13.5% of the business volume), non-life insurance business (62.9% of the business volume), life insurance business (20.4% of the business volume), pension business and asset management (2.5% of the business volume) and other non-insurance business (0.7% of the business volume)118.

The number of staff employed by the Group on the last day of 2023 was 2,744.8 (31 December 2022): 2,704.3 employees). The statistics on employees in regular employment by various criteria are given in section 9 “Human resources management”.

As at 31 December 2023, the Company employed 144.1 people (31 December 2022: 133.3 employees). The statistics on employees in regular employment by various criteria are given in section 9 “Human resources management”.

118 Data for 2023.

178

The bodies of the Company are the general meeting, the supervisory board and the management board.

The Company’s largest shareholders are Slovenian Sovereign Holding (Slovenski državni holding) and the Republic of Slovenia (which is the founder and sole shareholder of Slovenian Sovereign Holding), which together hold 31.6% of the shares. InterCapital Securities Ltd. holds 19.1% of the shares in a fiduciary account. The largest ultimate beneficial owners of the shares registered through the mentioned fiduciary account are Croatia Osiguranje d.d. (14.2%) and Adris Grupa d.d. (4.9%).

The table “Ten largest shareholders and the list of holders of qualified holdings pursuant to the Takeovers Act as at 31 December 2023” (section 3 “Shareholders and share trading”) is followed by an additional note on the share of voting rights in Sava Re (section 3 “Shareholders and share trading”).

It is the responsibility of the Company’s management board to prepare the annual report and authorise it for issue to the supervisory board. The audited annual report is then approved by the Company’s supervisory board. If the annual report is not approved by the supervisory board, or if the management and supervisory boards leave the decision about its approval (authorisation for issue) to the general meeting of shareholders, the general meeting also decides on the approval (authorisation for issue) of the annual report.

The general meeting has the power to amend the annual report after it has been approved by the Company’s management board; however, it must be re-audited by the external auditor within two weeks after its approval by the general meeting.

16.2Business combinations and overview of Group companies119

The following tables show the fair values of the net assets and liabilities of the acquiree ASP d.o.o. acquired in the business combination.

Company acquired in 2023

EUR

ASP

30 September 2023

Intangible assets and goodwill

1,354,199

Property, plant and equipment

12,254

Current tax assets

9,064

Trade and other receivables

132,935

Cash and cash equivalents

53,335

A. Total assets

1,561,788

Deferred tax liabilities

244,200

Other liabilities

67,588

B. Total liabilities

311,788

Fair value of net assets acquired (A - B)

1,250,000

Non-controlling interests in equity

Goodwill

Fair value of investment as at 30 September 2023

1,250,000

EUR

ASP

Acquisition of stake

1,250,000

Net cash and cash equivalents acquired in the business combination

53,335

Net cash relating to the business combination

1,196,665

119 GRI 2-6, 2-2.

179

Having met all suspensive conditions of the sales and purchase agreement of 20 January 2023, Sava Re finalised the acquisition of 100% of the shares of ASP d.o.o. on 18 August 2023. The company is a provider of key IT applications in the Sava Insurance Group.

The described transaction represents a business combination, included in the financial statements using the acquisition method. The first-time consolidation of the company ASP took place on 30 September 2023. On that date, all the assets and liabilities of the company acquired were valued at their fair value. The cost less accumulated depreciation method was used to determine the fair value of property, plant and equipment assets. Other assets and liabilities were included at their carrying amounts as reported in the original financial statements of ASP as at 30 September 2023, as these were a reasonable approximation of fair value.

The goodwill arising on the acquisition of ASP was fully allocated to intangible assets (EUR 1,354,199) and deferred tax liabilities (EUR 244,200) based on the appraised value.

Other changes in 2023

In April 2023, Sava Re finalised the sale of its ownership interest in G2I, an associated company marketing online motor policies. The effect of the sale on the consolidated financial statements was a gain of EUR 112,594.

In August 2023, Sava Re established Vita S Holding d.o.o., based in Skopje, North Macedonia, in which it holds an 80% stake. As at 31 December 2023, the balance of the investment was EUR 1,056,000. The company was established to provide a platform for Sava Re to develop healthcare services in North Macedonia. The date of first-time inclusion of the company in the financial statements is 30 September 2023.

In December, the company SO Poslovno Savjetovanje d.o.o. ceased trading. The company was summarily wound up and struck off the register of companies on 22 December 2023. As from the strike off, the company has not been included in the consolidated financial statements. The exclusion of the company had no impact on the consolidated financial statements.

Changes in 2022

The Company did not make any acquisitions or purchases of other companies in 2022, but S Estate was successfully sold in the first quarter of 2022. Sava Car (MNE) established the vehicle inspection service Sava Car (SRB) in Serbia in August 2022 in order to strengthen its sales channels, and at the end of 2022 Ornatus KC was renamed ASISTIM.

The tables below show individual items of the statement of financial position and the income statement based on the separate financial statements of subsidiaries and associates prepared in accordance with IFRSs, together with the parent company’s share of voting rights.

180

Subsidiaries as at 31 December 2023

EUR

Activity

Country of incorporation

Assets

Liabilities

Equity as at 31 December 2023

Profit or loss for 2023

Total income

Share of voting rights (%)

Zavarovalnica Sava

insurance

Slovenia

1,070,662,541

822,568,735

248,093,806

26,313,921

590,454,064

100.00%

Sava Neživotno Osiguranje (SRB)

insurance

Serbia

36,984,172

24,941,666

12,042,506

1,177,260

43,994,910

100.00%

Illyria

insurance

Kosovo

27,071,632

16,550,901

10,520,731

1,025,462

18,836,128

100.00%

Sava Osiguruvanje (MKD)

insurance

North Macedonia

24,383,956

15,850,119

8,533,837

-40,791

22,129,006

93.86%

Sava Osiguranje (MNE)

insurance

Montenegro

32,096,784

19,774,812

12,321,972

3,585,668

21,627,386

100.00%

Illyria Life

insurance

Kosovo

18,144,263

11,204,276

6,939,987

1,074,443

2,989,118

100.00%

Sava Životno Osiguranje (SRB)

insurance

Serbia

16,083,286

8,693,789

7,389,497

640,302

4,901,309

100.00%

Sava Car (MNE)

technical research and analysis

Montenegro

1,692,500

898,736

793,764

64,878

1,004,399

100.00%

ZM Svetovanje

consulting and marketing of insurances of the person

Slovenia

194,125

86,286

107,839

-24,251

769,117

100.00%

Asistim (former Ornatus KC)

ZS call centre

Slovenia

108,529

50,256

58,273

13,730

611,660

100.00%

Sava Agent

insurance agency

Montenegro

2,195,357

1,842,616

352,741

150,720

899,415

100.00%

Sava Station

technical research and analysis

North Macedonia

383,778

41,260

342,518

116,353

258,370

93.86%

Sava Pokojninska

pension fund

Slovenia

215,013,455

206,735,828

8,277,627

506,936

3,339,857

100.00%

TBS Team 24

organisation of assistance services and customer service

Slovenia

5,986,410

4,455,392

1,531,018

1,516,776

23,041,366

87.50%

Sava Penzisko Društvo

pension fund management

North Macedonia

12,907,901

602,331

12,305,570

2,247,309

5,923,762

100.00%

Sava Infond

fund management activities

Slovenia

11,338,888

1,926,327

9,412,561

4,144,562

13,248,955

100.00%

Vita

insurance

Slovenia

724,798,357

648,173,670

76,624,687

8,980,780

33,121,987

100.00%

Sava Car (SRB)

technical research and analysis

Serbia

52,352

16,036

36,316

-45,646

202,756

100.00%

ASP (SRB)

maintenance services for core IT systems

Serbia

306,636

82,122

224,514

86,564

287,881

100.00%

Vita S Holding (MKD)

North Macedonia

1,307,325

234

1,307,091

-10,941

80.00%

If the new companies had been part of the Group since 1 January 2023, total revenue and net profit for 2023 would have totalled EUR 788,480,228 and EUR 51,591,512, respectively.

181

Subsidiaries as at 31 December 2022

EUR

Activity

Country of incorporation

Assets

Liabilities

Equity as at 31 December 2022

Profit or loss for 2022

Total income

Share of voting rights (%)

Zavarovalnica Sava

insurance

Slovenia

759,592,290

357,916,633

401,675,657

21,235,385

501,357,038

100.00%

Sava Neživotno Osiguranje (SRB)

insurance

Serbia

30,955,215

19,303,907

11,651,308

1,226,162

30,822,465

100.00%

Illyria

insurance

Kosovo

23,469,413

14,036,535

9,432,878

1,157,003

14,820,413

100.00%

Sava Osiguruvanje (MKD)

insurance

North Macedonia

20,637,323

11,624,291

9,013,032

1,724,769

17,561,340

93.86%

Sava Osiguranje (MNE)

insurance

Montenegro

28,827,128

18,913,556

9,913,572

2,115,961

15,087,547

100.00%

Illyria Life

insurance

Kosovo

15,978,290

9,970,436

6,007,854

780,239

2,642,941

100.00%

Sava Životno Osiguranje (SRB)

insurance

Serbia

13,440,297

5,989,804

7,450,493

603,939

3,751,693

100.00%

Sava Car (MNE)

technical research and analysis

Montenegro

1,896,441

941,191

955,250

186,544

1,053,892

100.00%

ZM Svetovanje

consulting and marketing of insurances of the person

Slovenia

231,930

101,383

130,547

-21,870

932,598

100.00%

Asistim (former Ornatus KC)

ZS call centre

Slovenia

95,074

50,530

44,544

24,614

517,040

100.00%

Sava Agent

insurance agency

Montenegro

2,233,523

1,724,474

509,049

139,321

844,453

100.00%

Sava Station

technical research and analysis

North Macedonia

265,543

39,237

226,306

47,739

290,008

93.86%

Sava Pokojninska

pension fund

Slovenia

195,761,299

188,667,015

7,094,284

-621,261

2,748,734

100.00%

TBS Team 24

organisation of assistance services and customer service

Slovenia

4,386,768

3,411,534

975,234

960,992

15,960,076

87.50%

Sava Penzisko Društvo

pension fund management

North Macedonia

11,563,696

402,604

11,161,092

1,964,443

5,162,796

100.00%

SO Poslovno Savjetovanje d.o.o.

business consulting

Croatia

4,917,431

8,374

4,909,057

-7,916

7,315

100.00%

Sava Infond

fund management activities

Slovenia

10,329,678

1,035,019

9,294,659

3,290,258

11,766,747

100.00%

Vita

insurance

Slovenia

639,196,168

561,819,030

77,377,138

11,362,075

29,511,662

100.00%

Sava Car (SRB)

technical research and analysis

Serbia

87,338

5,389

81,949

-18,097

20,238

100.00%

182

Overview of companies with non-controlling interests

EUR

Sava Osiguruvanje

Sava Station

TBS Team 24

Vita S Holding*

2023

2022

2023

2022

2023

2022

2023

Non-controlling interest as % of equity

6.14%

12.50%

20.00%

Proportion of non-controlling interest voting rights, in %

0.92%

12.50%

20.00%

Statement of profit or loss and other comprehensive income

Income

22,129,006

17,561,340

258,370

290,008

23,041,366

15,960,076

Net profit for the year

-40,791

1,724,769

116,353

47,739

1,516,776

960,992

-10,941

- Of non-controlling interest

-2,503

105,845

7,140

2,930

189,597

120,124

-2,188

Other comprehensive income

283,570

285,839

13,919

10,845

49,087

60,208

263,606

- Of non-controlling interest

17,402

17,541

854

666

6,136

7,526

52,721

Total comprehensive income

242,779

2,010,608

130,272

58,584

1,565,863

1,021,200

252,665

- Of non-controlling interest

14,899

123,386

7,994

3,595

195,733

127,650

50,533

Dividends to non-controlling interests

14,630

120,124

110,460

Statement of financial position

Assets

24,383,956

20,637,323

383,778

265,543

5,986,410

4,386,768

1,307,325

Liabilities

15,850,119

11,624,291

41,260

39,237

4,455,392

3,411,534

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Equity

8,533,837

9,013,032

342,518

226,306

1,531,018

975,234

1,307,091

* The company was acquired in 2023.

16.3Consolidation principles

The parent company prepared both separate and consolidated financial statements as at 31 December 2023.

The consolidated financial statements include Sava Re as the parent and all its subsidiaries, i.e. companies in which Sava Re holds, directly or indirectly, more than half of the voting rights and has the power to control their financial and operating policies so as to obtain benefits from their activities.

The consolidated financial statements of the Sava Insurance Group include all companies directly or indirectly controlled by Sava Re, which controls a company if and only if it has all the following elements:

•power over the company (directs the relevant activities that significantly affect the company’s returns),

•exposure, or rights, to variable returns from its involvement with the company, and

•the ability to use its power over the company to affect the amount of its returns.

The Group’s consolidated financial statements also include associate companies in which the members of the Sava Insurance Group (parent and subsidiaries) hold, directly or indirectly, between 20% and 50% of all voting rights. If they hold less than 20%, they can still have significant influence, provided such influence can be demonstrated.

All subsidiaries in the Sava Insurance Group are fully consolidated. The Group does not apply the exemption to exclude any of its companies from full consolidation. Interests in associates and joint ventures are accounted for in the consolidated financial statements using the equity method.

The financial year of the Group is the same as the calendar year.

Subsidiaries are fully consolidated as of the date of obtaining control and are deconsolidated as of the date that such control is lost.

Subsidiaries that manage pension funds (except Slovenia-based Sava Pokojninska Družba) and management companies that manage the funds’ assets are consolidated without the funds as under

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law such fund assets are separate from the assets of the company that manages them. Accordingly, these funds are not included in the consolidated financial statements.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Subsequently, goodwill is measured at cost less any impairment losses. The non-controlling interest is measured at the current proportionate share of the equity interests in the acquiree’s recognised net assets.

When acquiring a non-controlling interest in a subsidiary (when the Group already holds a controlling interest), the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. The Group recognises any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the consideration paid directly in equity, and attributes it to the owners of the parent. The difference between cost and the carrying amount of the non-controlling interest is accounted for in equity under capital reserves.

Profits earned and losses made by subsidiaries are included in the Group’s income statement. Intra-Group transactions (receivables and liabilities, expenses and income between the consolidated companies) have been eliminated.

All companies within the Group apply uniform accounting policies. If the accounting policies of a subsidiary differ from the accounting policies applied by the Group, appropriate adjustments are made to the financial statements of such subsidiary prior to the compilation of the consolidated financial statements to ensure compliance with the accounting policies of the Group.

16.4Significant accounting policies

Significant accounting policies applied in the preparation of the consolidated and separate financial statements are set out below. In 2023, the Group applied the same accounting policies as in 2022. The Group and the Company have applied for the first time the new standards IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments” in the reporting. The impact of the first application is described in more detail in section 16.6 – Transition to the new standards IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments”.

16.4.1 Statement of compliance

The consolidated and separate financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), and interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union. They have also been prepared in accordance with applicable Slovenian legislation (the Companies Act – ZGD-1). The “Sava Insurance Group financial control rules” lay down accounting policies that must be followed by subsidiaries when reporting for consolidation purposes. The “Rules on accounting and accounting policies of Sava Re d.d.” set down in detail the accounting policies of the Company.

Interested parties can obtain information on the financial condition and results of operations of the Sava Insurance Group by consulting the annual report. Annual reports are available on Sava Re’s website and at its registered office.

In selecting and applying accounting policies, as well as in preparing the financial statements, the management board of the parent company aims at providing understandable, relevant, reliable and comparable accounting information.

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The Company’s management board approved the audited financial statements on 15 March 2024.

16.4.2Measurement basis

The financial statements have been prepared based on the going-concern assumption, which is further described in section 16.7.1.5 “Risk assessment and going concern assumption”.

The financial statements have been prepared on the historic cost basis, except for financial assets, including policyholder assets, which are valued on both the fair value and amortised cost basis.

16.4.3Presentation currency, translation of transactions and items

The financial statements are presented in euros (EUR) without cents. For ease of presentation, some figures in the notes to the financial statements are rounded to million euro. The euro is the functional and presentation currency of Sava Re. The financial statements of the subsidiaries that have a functional currency different from the presentation currency are translated into euros as described below. Rounding of values may result in insignificant differences in the table totals.

All balances as at 31 December 2023 whose original value is in a foreign currency have been translated into euro at the rates of the European Central Bank (ECB) reference rate list published by the Bank of Slovenia as at 31 December 2023. Amounts in the income statements have been translated using the average exchange rate. Balances as at 31 December 2022 and 31 December 2023 have been translated at the applicable daily or monthly ECB exchange rate for each currency. If the Bank of Slovenia does not publish the exchange rate for a particular currency, the exchange rate published on Bloomberg is used. Foreign exchange differences arising on settlement of transactions and on translation of monetary assets and liabilities are recognised in the income statement. Exchange rate differences associated with non-monetary items, such as equity securities carried at fair value through profit or loss, are also recognised in the income statement, while exchange rate differences associated with equity securities classified as available for sale are recognised in the fair value reserve. Since equity items in the statement of financial position as at 31 December 2023 are translated using the exchange rates of the ECB on that day and since interim movements are translated using the average exchange rates of the ECB, any differences arising therefrom are disclosed in the equity item translation reserve.

In the consolidated financial statements, exchange rate differences resulting from the translation of a net investment in a foreign subsidiary are recognised in the equity item translation reserve.

In measuring insurance contracts under IFRS 17, an individual group of insurance contracts that generates cash flows in a foreign currency, including the contractual service margin, is treated as a monetary item. The Company and the Group have endorsed the single currency denomination approach, which means that a single currency is determined for the calculation of the contractual service margin based on the prevailing currency of cash flows. The dominant or principal currency for a contract may be determined in the underwriting process or may be determined on the basis of the prevailing cash flows of the contracts included in a group of contracts, for example, portfolios of contracts from specific foreign markets.

16.4.4Use of major accounting estimates, sources of uncertainty

Assumptions and other sources of uncertainty relate to estimates that require management to make complex, subjective and comprehensive judgements. The most important areas that involve significant management judgement are presented below.

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•The source of uncertainty and significant risk in the measurement of insurance and reinsurance contracts is discussed in section 16.4.21.7 “Measurement of (re)insurance contracts issued”:

Estimates of future cash flows are based on deterministic forecasting models.

The adjustment of the expected cash flows for the time value of money and the financial risks associated with those cash flows is calculated using current discount rates determined using a bottom-up approach.

The Group and the Company use deterministic and stochastic models to calculate value at risk and tail value at risk, when calculating risk adjustments for non-financial risk.

•The need for impairment of goodwill is assessed using the accounting policy under section 16.4.7 “Goodwill” and note 16.8.1.

•The method for determining the need for impairment of investments in subsidiaries and associates is set out in accounting policy 16.4.13 “Investments in subsidiaries and associates” and in note 16.8.6.

•Financial investments, investment contract assets and assets held for the benefit of policyholders who bear the investment risk: The classification, recognition, measurement and derecognition, impairment of investments and fair value measurement are based on the accounting policy set out in section 16.4.14 “Financial investments”. Movement in investments and their classification are shown in note 16.8.7, whereas the associated income and expenses are shown in note 16.8.37.

Other areas of management judgement:

•The determination of the fair value of land and buildings for the purpose of impairment testing is disclosed in section 16.4.8.

•The determination of the fair value of investment property for the purpose of impairment testing is disclosed in section 16.4.12, and the fair value of investment property is disclosed in section 16.8.34.

•Intangible assets are tested for impairment at least annually. If there is any indication of impairment, the recoverable amount of the intangible asset is reviewed.

•Deferred tax assets and liabilities are recognised if Group entities plan to realise a profit in their medium-term projections. For details, see section 16.4.11; deferred tax assets and liabilities are presented in note 16.8.4.

•Receivables are impaired in line with the accounting policy set out in section 17.4.16 “Receivables”.

•The actuarial assumptions used in the calculation of employee benefits for severance pay upon retirement and jubilee benefits are described in section 16.4.19 “Other provisions”, and the sensitivity analysis of the assumptions used is presented in note 16.8.30 “Other provisions”.

•The valuation of non-current assets held for sale is set out in section 16.4.10.

16.4.5Cash flow statement

The cash flow statement has been prepared using the indirect method. The cash flow statement has been prepared as the sum of all cash flows of all Group companies less any intra-Group cash flows. Cash flows from operating activities have been prepared based on data from the 2023 statement of financial position and income statement, with appropriate adjustments for items that do not constitute cash flows. Cash flows from financing and investing activities are shown based on actual receipts and disbursements. Items relating to changes in net current assets are shown net.

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16.4.6Intangible assets

Intangible assets, except goodwill, are stated at cost, including any expenses directly attributable to preparing them for their intended use, less accumulated amortisation and any impairment losses. Amortisation is calculated for each item separately, on a straight-line basis. Intangible assets are first amortised upon their availability for use.

Intangible assets include computer software and software-related licences (which typically have a useful life of between 5 and 7 years). In case of recognition of a specific intangible asset (such as a customer list or contractual customer relationships), the useful life is determined for each such asset separately.

Intangible assets are tested for impairment at least annually. If there is any indication of impairment, the recoverable amount of the intangible asset is reviewed. The recoverable amount is the net value in use estimated using future cash flows. Value in use is determined based on management’s assessment.

If the recoverable amount exceeds or is equal to the carrying amount, the asset is not impaired. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

16.4.7Goodwill

Goodwill arises on the acquisition of subsidiaries. In acquisitions, goodwill relates to the excess of the cost of the business combination over the acquirer’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired company. If the excess is negative (a gain on a bargain purchase), it is recognised directly in the income statement. The recoverable amount of the cash-generating unit so calculated is compared against its carrying amount, including goodwill belonging to such unit. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs of disposal and value in use. Goodwill is not amortised.

Method of calculating value in use

Value in use for each cash-generating unit is calculated using the discounted cash flow method (DCF method). The budget projections of each acquired company representing a cash-generating unit and the estimate of the long-term results achievable are used as a starting point. Value in use is determined by reference to free cash flows discounted at an appropriate discount rate.

The discount rate is determined as the cost of equity (COE), using the capital asset pricing model (CAPM). It is based on the interest rate on risk-free securities, equity premium, and insurance business prospects applying the beta factor. Added is a country risk premium and a size premium.

The elements of the discount rate have been taken from:

•The risk-free rate of return is based on the yield to maturity of 30-year German government bonds (source: Bloomberg).

•The equity risk premium has been taken from the publication of KPMG “Equity market risk premium,” Research Summary, December 2023.

•Tax rates included in the discount rate calculation are the applicable tax rates in individual countries where companies operate.

•Beta for individual industries has been calculated with reference to comparable companies of the same industry of MSCI Small Cap Europe (source: Bloomberg).

•The country risk premiums have been calculated as the difference between the yield to maturity of German long-term government bonds and a comparable local bond issued (source: Bloomberg).

•Size premium: CRSP Deciles Study, Duff & Phelps, December 2022.

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The bases for the testing of value in use are prepared in several phases: In phase one, the Company prepares five-year projections of performance results for each company as part of the regular planning process unified Group-wide. These strategic plans are approved by the parent company and confirmed by the relevant governance body. For insurance, pension and mutual fund management companies, it is additionally assessed whether the capital required for an insurance company to operate under local regulations would be fully engaged.

Premium growth and profitability was planned for foreign insurance companies in five-year projections in view of the low insurance penetration rates. Insurance penetration is expected to increase markedly due to the expected convergence of their countries’ macroeconomic indicators towards levels common in western European countries. Western Balkan markets, which have a relatively low penetration rate, are expected to see a faster growth in gross premiums than in expected GDP.

The profitability of pension companies is expected to grow, driven by increased contributions to pension funds as the result of demographic trends and at relatively fixed operating costs.

To estimate the residual value used in the calculation of the estimated value of equity, the calculation considers normalised cash flow in the last year of the forecast made using the Gordon growth model. The valuations used a long-term growth rate (g) of the risk-free rate of return (2.3%) to estimate the residual value beyond the projection period.

A cash-generating unit consists of an individual company. Movement in goodwill is discussed in detail in section 16.8.1.

Goodwill of associate companies is included in their respective carrying amount. Any impairment losses on their goodwill are treated as impairment losses on investments in associate companies.

Section 16.8.1 sets out the main assumptions for cash flow projections with a calculation of value in use.

16.4.8Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost, including cost directly attributable to the acquisition of the asset. Subsequently, the cost model is applied: assets are carried at cost, less accumulated depreciation and any impairment losses.

Items of property, plant and equipment are first depreciated upon their availability for use. Depreciation is calculated for each item separately, on a straight-line basis. Depreciation rates are determined so as to allow the cost of property, plant and equipment assets to be allocated over their estimated useful lives.

Depreciation rates of property, plant and equipment assets

An assessment is made annually to determine whether there is any indication of impairment. If any such indication exists, an estimate of the recoverable amount of the asset is made. The recoverable amount is the higher of the value in use and fair value less costs to sell. If the recoverable amount exceeds or is equal to the carrying amount, the asset is not impaired. Value in use is assessed in terms of a cash-generating unit, with a company as a whole constituting a cash-generating unit.

Depreciation group

Rate

Land

0.0%

Buildings

1.3–2.0%

Transportation means

15.5–20.0%

Computer equipment

33.33%

Office and other furniture

10.0–12.5%

Other equipment

6.7–20.0%

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Gains and losses on the disposal of items of property, plant and equipment, calculated as the difference between sales proceeds and carrying amounts, are included in profit or loss. The costs of property, plant and equipment maintenance and repairs are recognised in profit or loss as incurred.

The cost of major repairs and replacement of part of an item of property, plant and equipment is recognised in the carrying amount of the asset, if it is probable that future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. Replaced parts are derecognised.

Investments in property, plant and equipment assets that increase future economic benefits are recognised in their carrying amount.

16.4.9Right-of-use assets and lease liability

At inception of a contract, an assessment is made whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group reassesses whether a contract is, or contains, a lease only if the terms and conditions of the contract are changed.

At the commencement date of the lease, an asset acquired under a lease is recognised as a right-of-use asset and a lease liability. Short-term leases (of up to 12 months) and low-value leases (the cost of an asset is less than EUR 5000) are exempt from recognition as right-of-use assets and lease liabilities. Short-term and low-value leases are treated by the Group companies as lease expenses, which are recognised in the income statement and classified within operating activities in the cash flow statement.

Right-of-use assets are measured applying a cost model. On initial recognition at the commencement date of the lease, the cost of a right-of-use asset comprises the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date of the lease, any initial direct costs incurred by the lessee, and an estimate of the costs to be incurred by the lessee in dismantling and removing the underlying asset. On subsequent measurement, the initial cost of a right-of-use asset is reduced by any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability.

Right-of-use assets are depreciated on a straight-line basis over the lease term. If, by the end of the lease term, the lease transfers the ownership of the underlying asset to the lessee, or if the value of the right-of-use asset reflects that the lessee will exercise a purchase option, the lessee depreciates the right-of-use asset from the commencement date until the end of the useful life of the underlying asset. Otherwise, the lessee depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee uses the lessee’s incremental borrowing rate. After initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made. Right-of-use assets and lease liability are recognised net of taxes.

The lessee’s incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The incremental borrowing rate is determined based on the yield to maturity of unsecured bonds given the credit rating of Sava

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Re and the maturity profile (1–30 years). To this is added a country risk premium as the difference between the credit rating of each country and that of Sava Re, which already includes the country risk of Slovenia.

The lease term is the non-cancellable period for which a lessee has the right to use an underlying asset. The lease term includes periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that option.

For leases of indefinite duration and leases with an extension option, the lease term is either contractually fixed or estimated based on the Group’s past experience and strategic priorities.

Right-of-use assets and lease liability are presented as two separate line items in the statement of financial position. In the income statement, the depreciation charge is a component of operating expenses or expenses, whereas interest expense is a component of finance costs. In the statement of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities, and cash payments for the interest portion within operating activities.

A lease modification is deemed a separate lease only if it involves the addition of the right to use one or more underlying assets at a price that would apply if the additional asset were leased on a stand-alone basis. The existing liability is remeasured by taking into account the new level of the consideration for the lease, when the new asset is added, the total consideration is spread evenly over all the related underlying assets, taking into account the new lease term, and remeasuring the lease liability using the new discount rate in effect at the time of the modification.

On the other side, an adjustment is made to the right-of-use asset based on the difference between the remeasured liability and the liability before the modification. If the carrying amount of the latter is zero and there is a further reduction in the measurement of the lease liability, any remaining amount of the remeasurement is recognised in profit or loss.

16.4.10Non-current assets held for sale

A non-current asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, its sale must be highly probable, and it must be available for immediate sale in its present condition. There must be a management commitment to sell the asset, and the sale should be completed within one year. Such assets are measured at the lower of the assets’ carrying amount or fair value less costs to sell. Non-current assets are tested for impairment at least annually. If there is any indication of impairment, the recoverable amount of the non-current asset is reviewed.

16.4.11Deferred tax assets and liabilities

Deferred tax assets and liabilities are amounts of income taxes expected to be recoverable or payable, respectively, in future periods depending on taxable temporary differences. Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base.

Deferred tax assets and liabilities are established from:

•temporary non-deductible impairment losses on investments in portfolio securities,

•established allowances for receivables,

•unused tax losses,

•provisions for employees and actuarial gains/losses resulting from their calculation,

•revaluation of investments to fair value,

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•the effect of changes in interest rates on the calculation of insurance and reinsurance liabilities.

Deferred tax liabilities are created for fair value adjustments and on initial recognition of intangible assets (customer lists or contractual relationships with customers) on acquisition of a new company. Deferred tax liabilities have also been created for the comparative year 2022 as a result of the transition to the new accounting standards IFRS 17 and IFRS 9.

Deferred tax assets and liabilities of a Group company are offset only if they relate to income taxes levied by the same taxation authority and the company has a legally enforceable right to set off current tax assets against current tax liabilities. In the consolidated financial statements, deferred tax assets and liabilities are offset depending on the jurisdiction.

A deferred tax asset is recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised.

16.4.12Investment property

Investment property comprises assets not used directly for carrying out business activities but held to earn rent or to realise capital gains at disposal. Investment property is accounted for using the cost model and straight-line depreciation. Investment property is depreciated at the rate of 1.3–2.0%. The basis for calculating the depreciation rate is the estimated useful life. All leases where the Group companies act as lessors are cancellable operating leases. Lease payments (rentals) received are recognised as income on a straight-line basis over the lease term. A cash-generating unit consists of an individual property. An assessment is made annually as to whether there is an indication of impairment of investment property. If any such indication exists, an estimate of the recoverable amount of the asset is made. The recoverable amount is the higher of the value in use and the net selling price less costs to sell. If the recoverable amount exceeds or is equal to the carrying amount, the asset is not impaired.

16.4.13Investments in subsidiaries and associates

Investments in subsidiaries are measured at cost, less any impairment losses. Subsidiaries are entities in which the Company holds more than 50% of voting rights and which the Company controls, i.e. has the power to control their financial and operating policies so as to obtain benefits from their activities. Subsidiaries are included in the consolidated financial statements using the full consolidation method.

Associates are entities in which the Company holds between 20% and 50% of voting rights or over which the Company has significant influence. Associates are accounted for using the equity method.

Impairment

Impairment testing in Group companies and associates is carried out at least on an annual basis. Pursuant to IAS 36, the controlling company, when reviewing whether there are indications that an asset may be impaired, considers external (changes in market or legal environment, interest rates, elements of the discount rate, capitalisation) as well as internal sources of information (business volume, manner of use of asset, actual versus budgeted performance results, decline in expected cash flows and such like).

If impairment is necessary, an impairment test is carried out for each individual investment by calculating the recoverable amount of the cash-generating unit based on the value in use. Cash flow projections used in these calculations are based on the business plans approved by the management for the period until and including 2028. The discount rate used is based on market rates adjusted to

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reflect company-specific risks. The recoverable amount of each cash-generating unit so calculated was compared to its carrying amount.

Main assumptions for cash flow projections with calculations of value in use

Discounted cash flow projections are based on the Group companies’ business plans covering a 5-year period (business plans for individual companies for the period 2024−2028).

Growth in premiums earned by insurance companies reflects the growth expected in their insurance markets, as well as the characteristics of their portfolios (a small share of non-motor business). In all their markets, insurance penetration is relatively low. However, insurance penetration is expected to increase due to the expected convergence of their countries’ macroeconomic indicators towards EU levels. Social inflation is also expected to rise, i.e. claims made against insurance companies are expected to become more frequent and higher. Costs are expected to lag slightly behind premiums owing to expected business process optimisation in subsidiaries. Business process optimisation will thus contribute to the growth in net profits.

Growth in pension companies’ revenues is due to increased contributions to pension funds as a result of demographic trends, at relatively fixed operating costs, which may lead to greater profitability.

The discount rate is determined as the cost of equity (COE), using the capital asset pricing model (CAPM). It is based on the risk-free interest rate and equity premium, as well as prospects for the relevant business. Added is a country risk premium and a size premium.

Assessments as to whether there is any indication of impairment of investments in subsidiaries are made using the same model as for goodwill. See section 16.4.7 “Goodwill” for more information on the assumptions used.

16.4.14Financial investments

Financial investments and financial liabilities are classified, recognised and measured in accordance with IFRS 9 “Financial Instruments”, as further described as follows.

16.4.14.1Classification

In accordance with IFRS 9, the Group and the Company classify financial assets on the basis of both their business models for managing the financial assets and the contractual cash flow characteristics of their financial asset. On initial recognition, a financial asset is classified into one of the following measurement categories:

•at amortised cost (AC),

•at fair value through other comprehensive income (FVOCI), and

•at fair value through profit or loss (FVTPL).

The business model for managing financial assets reflects the management of a group of financial assets to achieve certain objectives. The management of such a group of financial assets is based on:

•the nature of the company’s liabilities backed by an investment portfolio;

•how the performance of a business model and the financial assets held within that business model are evaluated and reported to the key management personnel;

•the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed; and

•how managers of the business are compensated.

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The business model is determined based on a consideration of the main factors mentioned above that influence the purpose of achieving the asset management objectives.

The following business models are defined:

•a business model whose objective is to hold assets in order to collect contractual cash flows (the hold-to-collect model),

•a business model whose objective is to both collect contractual cash flows and sell financial assets (the hold-to-collect-and-sell model), and

•other business models.

For the purpose of classifying financial assets in terms of their contractual cash flow characteristics (the SPPI test), the principal amount represents the fair value of the financial asset at initial recognition. For the purpose of classifying financial assets in terms of their contractual cash flow characteristics (the SPPI test), interest consists of consideration for the time value of money, for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

A financial asset is measured at amortised cost (AC) if both of the following conditions are met:

•the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and

•the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through other comprehensive income (FVOCI) if both of the following conditions are met:

•the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

•the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through profit or loss (FVTPL) if:

•it is a debt instrument and does not fall into one of the above measurement categories (AC/FVOCI);

•it is an equity instrument and is not designated for measurement at fair value through other comprehensive income (FVOCI option);

•it eliminates or significantly reduces an “accounting mismatch”;

•it is a derivative.

Assets measured at amortised cost in accordance with IFRS 9 are deposits with a maturity of more than three months, loans and debt securities classified as hold to collect at the date of transition to IFRS 9 that the Group and the Company will hold to maturity.

Upon adoption of IFRS 9, the Group and the Company classify debt instruments into the hold to collect and sell business model. The classification of an investment in this business model is subject to the SPPI test, which confirms that the contractual cash flows are solely payments of principal and interest.

It follows from the above that the Group and the Company have the majority of their debt securities classified as financial assets measured at fair value through other comprehensive income (FVOCI).

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Under IFRS 9, equity instruments are classified as at fair value through profit or loss, but the option to measure at fair value through other comprehensive income (FVOCI) exists for shares and participations in accordance with the standard. The Group companies have equity instruments classified mainly in the fair value through profit or loss (FVTPL) group.

Other types of investments, such as units in collective investment undertakings, ETFs, alternative funds, etc. are classified as measured at fair value through profit or loss (FVTPL) under IFRS 9.

Classification of financial liabilities

The Group and the Company classify financial liabilities as subsequently measured at amortised cost. The Group and the Company do not have any financial liabilities that are irrevocably designated as at fair value through profit or loss at initial recognition as this results in more relevant information because it eliminates or significantly reduces a measurement or recognition inconsistency (accounting mismatch) that would otherwise arise from measuring assets or liabilities or recognising the related gains and losses on different bases.

16.4.14.2Recognition, measurement and derecognition

Initial recognition

The Group and the Company recognise a financial asset or a financial liability in their statements of financial position when, and only when, the Group and the Company become party to the contractual provisions of the financial instrument. When the Group and the Company first recognise a financial asset, it is classified and measured in accordance with the Group’s and the Company’s accounting policies.

A regular way purchase or sale of a financial asset is recognised and derecognised using trade date accounting.

Except for trade receivables, at initial recognition, the Group and the Company measure a financial asset or financial liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

After initial recognition, the Group and the Company measure a financial asset at:

•amortised cost,

•fair value through other comprehensive income, or

•fair value through profit or loss.

The Group and the Company apply the impairment requirements of the standard to financial assets that are measured at amortised cost and financial assets that are measured at fair value through other comprehensive income.

After initial recognition, the Group and the Company measure a financial liability at:

•amortised cost, or

•fair value through profit or loss.

Amortised cost measurement

Financial assets measured at amortised cost are measured at amortised cost using the effective interest method. They are stated at the principal amount outstanding, plus any unpaid interest and fees, less any impairment. Interest income is calculated using the effective interest method. This is

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calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

a.purchased or originated credit-impaired financial assets. For those financial assets, the Group and the Company apply the credit-adjusted effective interest rate to the amortised cost of the financial asset from initial recognition;

b.financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For these financial assets, the Group and the Company apply the effective interest rate to the amortised cost of the financial asset in subsequent reporting periods.

The effective interest rate is determined at the time of purchase of the investment. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.

When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the derecognition of that financial asset in accordance with the accounting policies, the Group and the Company recalculate the gross carrying amount of the financial asset and recognise a modification gain or loss in profit or loss.

The Group and the Company directly reduce the gross carrying amount of a financial asset when they have no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes a derecognition event.

Derecognition

The Group and the Company derecognise a financial asset when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition in accordance with the Group’s and the Company’s accounting policies. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured at the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss.

The Group and the Company remove a financial liability (or part of a financial liability) from their statements of financial position when, and only when, it is extinguished, i.e. the contractual obligation is discharged, cancelled or expires. The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

16.4.14.3Impairment of financial investments

General approach

The Group and the Company apply the expected credit loss concept under IFRS 9, which is based on the recognition and measurement of an allowance for expected credit losses for financial assets measured at amortised cost or fair value through other comprehensive income (bonds, deposits, loans granted). In the case of a financial asset measured at fair value through other comprehensive income, an allowance for expected credit losses is recognised in other comprehensive income and does not result in a reduction in the carrying amount of the financial asset in the statement of financial position.

The Group and the Company determine the expected credit loss by recognising and measuring a loss allowance for expected credit losses, which is calculated based on the classification into one of three stages:

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Stage 1: for assets for which credit risk has not increased significantly since initial recognition, expected 12-month credit losses are calculated.

Stage 2: for assets for which credit risk has increased significantly since initial recognition, lifetime expected credit losses are calculated.

Stage 3: for assets that are credit-impaired or in default, where the lifetime expected credit loss is calculated and considers the appropriate probability of default as well as expected cash flows stemming from proceeds from sale, etc., but at the net carrying amount (the gross carrying amount less any impairment loss).

At each investment valuation, the Group and the Company perform a classification into stages based on the information obtained on the change in the credit risk of each issuer. In order to assess significant increases in credit risk, the Group and the Company regularly monitor and analyse any changes in external credit ratings obtained from external credit assessment institutions (ECAIs). The first measure of increased credit risk since initial recognition used by the Group and the Company is a three-notch downgrade and reclassification of the investment from investment grade to speculative grade.

In addition, the Group and the Company use an internal model to assess external credit ratings or use internal credit ratings to identify increased credit risk, monitor the zero-volatility spread (Z-spread) of investments and other available qualitative information when an external credit rating is not available.

If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group and the Company measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. For assets for which credit risk has increased significantly since initial recognition, lifetime expected credit losses are calculated.

Measurement of expected credit losses

Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of all cash shortfalls) over the expected life of the financial instrument.

Expected credit losses are determined based on historical data on recoverability, expected macroeconomic trends and certain other factors that indicate the expected solvency of a debtor. The main input parameters for determining credit losses are the probability of default (PD), the loss given default (LGD) and the exposure at default (EAD). The expected credit loss is the product of the expected probability of default, the expected loss given default and the expected exposure at the time of default.

The Company and the Group obtain the PD parameter from Moody’s rating reports, where long-term averages of default rates and transition matrices from initial to final rating over a given period can be obtained. The reports are separate for corporate and government bonds, and the data is updated once a year. The underlying data have been adjusted based on expectations for the economic situation, thus achieving the forward-looking approach required by the standard.

The standard provides no guidance on how to determine the loss given default (LGD) or the recovery rate (RR), which is why the Group and the Company follow established practice and use data provided by credit rating agencies annually calculated based on historical data. Such reports contain a section on corporate and one on government bonds. Due to ease of access and the comprehensive presentation of default rates in reports, the Group’s and the Company’s methodology has focused on the credit rating agency Moody’s, while comparative information can also be obtained from the reports prepared by S&P Global Ratings.

Definition of default

In determining counterparty default risk, the Group and the Company consider criteria such as that at least one of the rating agencies assesses that the issuer or a specific issue of financial instruments is in default (excluding technical default, i.e. default by the borrower) or 30 days past due for bonds and 90 days past due for loans with respect to the payment of principal or interest.

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Write-off

The Group and the Company write off an asset if there is no reasonable expectation that the financial asset will be recovered, in whole or in part. A write-off is treated as a derecognition event.

16.4.14.4Gains and losses

Any gain and loss arising from a change in the fair value of financial assets at fair value through profit or loss are recognised in profit or loss in the period in which it arises.

Dividends are recognised in profit or loss only when:

•the entity’s right to receive payment of the dividend is established;

•it is probable that the economic benefits associated with the dividend will flow to the entity, and

•the amount of the dividend can be measured reliably.

At initial recognition, the Group and the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is neither held for trading nor contingent consideration recognised in other comprehensive income. If an entity makes this election, it recognises in profit or loss dividends from that investment.

A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the financial asset is derecognised, reclassified, through the amortisation process or in order to recognise impairment gains or losses.

The Group and the Company recognise a gain or loss on a financial liability that is designated as at fair value through profit or loss as follows:

•the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income; and

•the remaining amount of change in the fair value of the liability is presented in profit or loss unless the treatment of the effects of changes in the liability’s credit risk may create or enlarge an accounting mismatch in profit or loss.

A gain or loss on a financial asset measured at fair value through other comprehensive income is recognised in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognised or reclassified. When a financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. Interest calculated using the effective interest method is recognised in profit or loss.

16.4.14.5Determination of fair values

The Group and the Company measure all financial instruments at fair value, except for deposits, shares not quoted in any regulated market that do not represent a significant portion of the investment portfolio, loans (assuming that their carrying amount is a reasonable approximation of fair value) and financial instruments measured at amortised cost. The fair value of investment property, and land and buildings used in business operations and the fair value of financial instruments measured at amortised cost are set out in note 16.8.34.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is

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based on the presumption that the transaction to sell the asset or transfer the liability takes place either (i) in the principal market for the asset or liability, or (ii) in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group and the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. Valuation techniques are used that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

On the valuation date, the fair value of a financial investment is established by determining the price in the principal market based on:

•for stock exchanges: the quoted closing price on the stock exchange on the valuation date or on the last trading day of the stock exchange on which the investment is listed;

•for the OTC market: the quoted CBBT closing bid price or, if unavailable, the Bloomberg BVAL bid price, which may not be more than 15 days old.

•the price calculated based on an internal valuation model or yield curve valuation.

For the valuation, the Group and the Company use the closing price on the stock exchange or the published BID bid price for debt investments (according to the defined Bloomberg methodology) as the unadjusted quoted price, while the BVAL bid price calculated on the basis of the internal valuation model or the yield curve valuation do not represent unadjusted quoted prices.

The BVAL bid price (based on the defined Bloomberg methodology) represents a price that is not quoted but calculated based on directly and indirectly observable market inputs. When calculating the price using a valuation model, the Group and the Company first use directly and indirectly observable market inputs. If these are not available, the Group and the Company determine the price of a financial investment using a model with unobservable inputs, as defined in IFRS 13.86 to IFRS 13.90.

To assess the quality of the BVAL rate, the Company uses the BVAL Score, the number of direct observations and the proportion and age of quotes.

Assets and liabilities measured or disclosed at fair value in the financial statements are measured and presented in accordance with the IFRS 13 fair-value hierarchy that categorises the inputs of valuation techniques used to measure fair value into three levels.

Assets and liabilities are classified based primarily on the availability of market information, which is determined by the relative levels of trading identical or similar instruments in the market, with a focus on information that represents actual market activity or binding quotations of brokers or dealers.

Investments measured or disclosed at fair value are presented in accordance with the levels of fair value, which categorises the inputs used to measure fair value into the following three levels of the fair value hierarchy:

•Level 1: financial investments for which fair value is determined based on quoted prices (unadjusted) in active markets for identical financial assets that the Company can access at the measurement date. This level includes the prices of debt investments with CBBT prices and those BVAL prices that are composed exclusively of direct observations with at least 90% binding quotes and where at least 3 binding quotes must not be more than one day old.

•Level 2: financial investments whose fair value is determined using data that are directly or indirectly observable other than quoted prices included within level 1. Pursuant to IFRS 13.82, level 2 data may include:

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•quoted prices for similar financial investments in active markets,

•quoted prices for identical or similar financial investments in markets that are not active,

•inputs other than quoted prices that are observable for financial investments,

•market-corroborated inputs.

This level includes BVAL prices of debt investments that consist of at least 90% direct observations, where market inputs are used for a directly or indirectly identical or similar asset, and where at least 3 quotes must be no more than 15 days old.

•Level 3: financial investments for which observable market data is not available. Fair value is thus determined based on valuation techniques using inputs that are not directly or indirectly observable in the market. The Company classifies securities valued using an internal model that does not take into account level 2 inputs into this level.

This level includes BVAL prices of debt investments that do not meet the criteria for level 1 or level 2 and for which the inputs for the model-based valuation are not readily and objectively determinable and available to the company.

The Group and the Company classify as level-3 investments their investments in alternative funds, such as real-estate funds, infrastructure funds, private debt funds, private equity funds and similar. There are no market prices available for such investments; therefore, valuation based on available market data is not possible.

In accordance with IFRS 13.97 and accounting policies, the Group and the Company categorise within the fair value hierarchy also those financial investments that are not measured at fair value in the statement of financial position but for which the fair value is disclosed.

The policy for determining when transfers between levels of the fair value hierarchy are deemed to have occurred is disclosed and is fully complied with. The policy on the timing of recognising transfers is the same for transfers into the levels and out of the levels. Examples of policies include: (a) the date of the event or change in circumstances that caused the transfer; (b) the beginning of the reporting period; (c) the end of the reporting period. The Group and the Company review quarterly the categorisation of investments into the three levels of the fair value hierarchy. To this end, they apply the rules for determining the fair value set out under note 16.8.34. If the conditions for classification change, financial investments are reclassified into the relevant level.

The following table shows the classification of financial investments according to the inputs used and market activity.

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Determination of fair values

Asset class / principal market

Level 1

Level 2

Level 3

Debt securities

OTC market

•Debt securities measured based on the CBBT price in an active market.

•Debt securities valued at the BVAL price if no CBBT price exists and which have a BVAL price composed exclusively of direct observations, with at least 90% of firm quotes, with at least 3 firm quotes no more than one day old.

•Debt securities measured based on the CBBT price in an inactive market.

•Debt securities valued at the BVAL price if no CBBT price is available and where the BVAL price consists of at least 90% direct observations, with at least 3 quotes no more than 15 days old.

•Debt securities measured using an internal model based on level 2 inputs.

• Debt securities measured using an internal model that does not consider level 2 inputs.

• Debt securities measured using BVAL prices, if no CBBT price is available and the BVAL price does not meet the criteria for level 1 or 2 and for which the inputs for the model-based valuation are not readily and objectively determinable and available to the company.

Stock exchange

•Debt securities measured based on stock exchange prices in an active market.

•Debt securities measured based on stock exchange prices in an inactive market.

•Debt securities measured using an internal model based on level 2 inputs.

•Debt securities measured using an internal model that does not consider level 2 inputs.

Quoted portfolio shares

Stock exchange

•Shares measured based on prices in an active market.

•Shares measured based on prices in an inactive market.

•Shares with unavailable market prices measured using an internal model based on level 2 inputs.

•Shares are measured using an internal model that does not consider level 2 inputs.

Mutual funds

•Mutual funds measured at the quoted unit value on the measurement date.

Alternative funds

•The fair value is determined based on the valuation of individual projects for which discounted cash flow methods are used.

Deposits with a maturity of more than 3 months and loans

•Measured at amortised cost.

16.4.15Investment contract assets and liabilities

Contracts of homogeneous groups are classified as investment contracts if they bear significant financial risk and are accounted for in accordance with IFRS 9. Investment contract assets and liabilities only include the investment contract assets and liabilities of the company Sava Pokojninska, which manages pension funds. Investment contract assets comprise the assets supporting the liability funds “My Life-Cycle Funds” for the transaction of voluntary supplementary pension business. Valuation is described in section 16.4.14 “Financial investments”. Classification and valuation of assets is presented in detail in note 16.8.8. Investment contract liabilities are liabilities arising out of pension insurance business under group and individual plans for voluntary supplementary pension insurance, for which the administrator maintains personal accounts for pension plan members. These are liabilities relating to the voluntary supplementary pension life liability fund for premiums paid, guaranteed returns and additional liabilities to cover the difference between the actual return and the guaranteed return. Investment contract liabilities are presented in note 16.8.8.

Sava Pokojninska initially recognises investment property assets in respect of pension fund business under investment contract assets using the cost model, plus any transaction costs. The following

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measurements are made using the fair value model due to regulatory requirements and the fact that these are pension fund assets. An assessment is made annually as to whether there is an indication of impairment of investment property. If such indications exist, the process of assessing the value is initiated. At least every three years, appraisals are carried out by certified real estate appraisers licensed by the Slovenian Institute of Auditors. The amounts of investment property in investment contract assets are not adjusted for consolidation purposes.

16.4.16Receivables

16.4.16.1Recognition of receivables

Initial recognition of receivables is based on invoices or other credible documents (e.g. interest statement). Receivables comprise receivables from accrued interest receivable, prepayments receivable and other receivables that can be allocated to individual debtors. In the statement of financial position, receivables are stated at amortised cost. Depending on the significance of each type of receivable in the companies’ financial statements, an allowance is recognised for expected credit losses based on the debtor’s expected future solvency in accordance with IFRS 9. Impairment is recognised using a simplified approach where the loss allowance is measured as an amount equal to the lifetime expected credit losses. The Group companies do not recognise impairment losses on current receivables and on receivables that are regularly paid by the debtor.

The Group companies have pledged no receivables as security.

16.4.16.2Receivables write-offs

Write-offs of receivables require appropriate supporting documents, such as a court decision, bankruptcy order or other document evidencing that the company has lost its legal title, or in cases where it is evident that collection is not meaningful due to excessive costs of the proceedings.

16.4.17Other assets

Other assets consist of capitalised short-term accruals and deferrals, namely short-term deferred costs.

16.4.18Cash and cash equivalents

The statement of financial position and cash flow item “cash and cash equivalents” comprises:

•cash, including cash in hand, cash in bank accounts of commercial banks and other financial institutions, and overnight deposits, and

•cash equivalents, including demand deposits and deposits with an original maturity of up to three months.

16.4.19Equity

Equity consists of:

•share capital, i.e. the par value of paid-up ordinary shares expressed in euro;

•capital reserves comprise amounts paid up in excess of the par value of shares;

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•profit reserves comprise reserves provided for in the articles of association, legal reserves, the capital redemption reserve and other profit reserves;

•treasury shares acquired in line with a share repurchase programme published on the Company’s website, at https://www.sava-re.si/en-si/investor-relations/our-share/;

•accumulated other comprehensive income – revaluation of investments, changes in interest rates used to calculate insurance and reinsurance contract liabilities, and actuarial gains and losses on provisions for employees;

•retained earnings;

•net profit or loss for the year;

•foreign currency translation reserve;

•non-controlling interest.

Reserves provided for in the articles of association are used:

•cover the net loss that cannot be covered (in full) out of retained earnings and other profit reserves, or when these two sources of funds are insufficient to cover the net loss in full (an instrument of additional protection of tied-up capital);

•to increase share capital;

•to regulate the dividend policy.

Pursuant to the Companies Act, the Company’s management board has the power to allocate up to half of the net profit to other reserves.

16.4.20Subordinated liabilities

Subordinated liabilities of the Group and the Company represent a long-term liability of the Group and the Company in the form of a subordinated bond to be used for general corporate purposes of the Sava Insurance Group and to optimise its capital structure and are valued at amortised cost. Details are set out in note 16.8.29.

16.4.21Insurance contracts

16.4.21.1Description of products

The Group issues the following types of insurance contracts:

•Non-participating life insurance contracts measured using the general approach, which include:

-fixed and decreasing term life insurance contracts purchased with a single premium or instalments and

-endowment policies.

•Direct participating life insurance contracts comprising:

-Life insurance contracts linked to units of mutual funds or internal funds, in some cases with an interest-rate guarantee, measured using the variable fee approach.

-Hybrid life insurance contracts, part of which is linked to units of mutual funds, measured using the variable fee approach, and part of which is an endowment insurance contract with an interest-rate guarantee, which in some cases is valued separately using the general approach.

•Life insurance contracts with indirect or discretionary participation features, which include:

-Endowment life insurance contracts or whole life insurance contracts with guaranteed sums assured and participation features. The cash flows of these insurance contracts

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depend on the performance of the life insurance portfolio and/or the returns on the underlying items, where the underlying items are not specified in the insurance contract. The Group measures these contracts using the modified general approach.

•Investment contracts with discretionary participation features

-These contracts entitle the policyholder to additional amounts based on the performance of the underlying items. These amounts are at the discretion of the Group and are expected to represent a significant proportion of the distributions. Such contracts are measured using the modified general approach.

•Immediate annuities in accordance with ZPIZ-2, which include:

-annuities with a guaranteed interest rate and, in some cases, a guaranteed annuity payout period, measured using the modified general approach.

•Non-life insurance contracts, which include:

-motor, property, miscellaneous financial loss, liability, marine and aircraft, goods in transit, credit, suretyship, accident and supplementary health insurance, with multi-year accident, credit, suretyship, construction and erection contracts of EU-based companies measured using the general approach and all other contracts measured using the premium allocation approach.

•Reinsurance contracts issued, including:

-quota share, surplus, excess of loss and stop loss reinsurance covers. Reinsurance contracts issued are primarily measured using the general approach, and partly the premium allocation approach.

The Group and the Company also have reinsurance contracts that transfer the assumed risks to reinsurers with the aim of reducing risk. These include quota share, surplus, excess of loss and stop loss reinsurance covers. These contracts are measured using the general approach for reinsurance contracts.

16.4.21.2Classification of insurance contracts

The Group and the Company apply IFRS 17 to:

•insurance contracts issued, including reinsurance contracts issued,

•reinsurance contracts held by the Group and the Company, and

•investment contracts with discretionary participation features.

All references in IFRS 17 to insurance contracts issued also apply to reinsurance contracts issued, to insurance contracts acquired by the Group and the Company in a transfer of insurance contracts or a business combination, and to reinsurance contracts held by the Group and the Company (unless it is specifically stated that a particular section applies only to (re)insurance contracts issued).

A contract is deemed an insurance contract if the issuer accepts significant insurance risk from another party by agreeing to compensate the other party if it is adversely affected by a specified uncertain future event (an insured event).

A contract that transfers significant insurance risk from the Group or the Company to a reinsurance company is a reinsurance contract held by the Group or the Company.

In the following, the Company’s and the Group’s inward reinsurance contracts are referred to as insurance contracts and the outward reinsurance contracts are referred to as reinsurance contracts. They are presented in the same way in the financial statements.

The Group also issues insurance contracts with direct participation features for which, at the inception of cover:

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•the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

•the Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items;

•The Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in the fair value of the underlying items.

An investment contract with discretionary participation features is a financial instrument that provides a particular investor with the contractual right to receive, as a supplement to an amount not subject to the discretion of a Group company, additional amounts:

•that are expected to be a significant portion of the total contractual benefits;

•the timing or amount of which are contractually at the discretion of the issuer; and

•that are contractually based on:

-the returns on a specified pool of contracts or a specified type of contract;

-realised and/or unrealised investment returns on a specified pool of assets held by a Group company; or

-the profit or loss of the Group company issuing the contract.

Insurance risk is significant if, and only if, the insured event could cause the issuer having to pay additional amounts that are significant in any single scenario, excluding scenarios that have no commercial substance (i.e., no discernible effect on the economics of the transaction), even if the insured event is extremely unlikely or if the expected (i.e., probability-weighted) present value of the contingent cash flows is a small proportion of the expected present value of the remaining cash flows from the insurance contract. Underwriting risk is considered significant to the Group and the Company if the Group and the Company bear at least 5% of the additional payouts in the event of an insured event.

The assessment of whether the above conditions and criteria are met for an insurance contract, an insurance contract with direct participation features or an investment contract with discretionary participation features is made on a contract by contract basis at the time the contract is concluded. In doing so, the Group and the Company take into account all their substantive rights and obligations under the contract.

16.4.21.3Combination of contracts and distinct elements of a contract

A set or series of insurance contracts with the same or a related counterparty may achieve, or be designed to achieve, a common commercial effect. In order to report the substance of such contracts, it may be necessary to treat the set or series of contracts as a whole. For example, if the rights or obligations in one contract do nothing other than entirely negate the rights or obligations in another contract entered into at the same time with the same counterparty, the combined effect is that no rights or obligations exist. The Group and the Company have identified some contracts that should be measured together.

An insurance contract may contain, in addition to the insurance component, one or more components that would be within the scope of another standard if they were separate contracts. These components include:

•an investment component,

•a service component,

•embedded derivatives.

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The Group and the Company separate the above components from a host insurance contract if they are distinct from the contract, applying the relevant other IFRSs to the measurement of the separate component.

The Group and the Company have not identified any identifiable derivatives, investment components or service components.

An investment component exists if an insurance contract requires the Group or the Company to repay an amount to a policyholder in all circumstances, regardless of whether an insured event occurs.

An investment component is distinct from a host insurance contract if, and only if, both of the following conditions are met:

•the investment component and the insurance component are not highly interrelated;

•a contract with similar terms and conditions is or could be sold separately in the same market or jurisdiction by the Group or the Company issuing the insurance contract or by third parties. In making this determination, the Company and the Group take into account all information reasonably available in making this determination.

An investment component and an insurance component are highly interrelated if, and only if:

•the company is unable to measure one component without considering the other. If the value of one component varies with the value of the other, the Group and the Company apply IFRS 17 to account for the combined investment and insurance component; or

•the policyholder is unable to benefit from one component unless the other is also present. If the lapse or maturity of one component in a contract causes the lapse or maturity of the other, the Company applies IFRS 17 to account for the combined investment component and insurance component.

The Group and the Company issue contracts with an investment component. Examples include certain life insurance policies that pay a surrender value, annuities with a guaranteed payout period and reinsurance contracts with a sliding-scale or profit commission. The investment and insurance components of such contracts are closely related because the Group and the Company cannot measure the insurance contract without considering the investment component and vice versa. Therefore the investment component is not distinct.

The service component refers to the transfer of goods or services that are not insurance-related and, as such, are not dependent on the occurrence of an insured peril (occurrence of a claim). A service component is distinct if the policyholder can benefit from the good or service either on its own or together with other resources readily available (sold separately or already owned by the policyholder).

A good or service other than an insurance contract service that is promised to the policyholder is not distinct if:

•the cash flows and risks associated with the good or service are highly interrelated with the cash flows and risks associated with the insurance components in the contract; and

•the entity provides a significant service in integrating the good or service with the insurance components.

The Group issues contracts that include derivatives, but these instruments are closely related to the host insurance contract and are therefore measured using IFRS 17. Examples of such derivatives include:

•life insurance contracts with a guaranteed minimum return in the event of the insured’s death: These contracts have an option for payment of a guaranteed amount to the policyholder in the

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event of the insured’s death. As the payment of the guaranteed amount is contingent on an insured event (death) and represents a loss to the contract holder, the guarantee itself meets the definition of an insurance contract. The payment of the guaranteed amount is therefore not distinct and the entire contract is measured using IFRS 17.

•Savings-linked life insurance contracts include a surrender option, where the policyholder is paid a fixed surrender value set at the time the contract is made. This option is closely related to the host insurance contract because the insurance cover ceases on surrender and therefore the contract as a whole is measured using IFRS 17.

•Some direct participation contracts contain an option where the surrender value varies with changes in the underlying items, but the value of the option is closely related to the value of the insurance contract and therefore the whole contract is measured using IFRS 17.

The Group and the Company also consider whether a single insurance contract should be split into multiple insurance components to be treated as separate contracts to reflect the substance of the transaction.

In determining whether the components of an insurance contract should be recognised and measured separately, the Group and the Company consider whether there is interdependence between the different risks covered, whether the components of an insurance contract extinguish independently of each other and whether the components can be priced and sold separately.

When the Group and the Company enter into one legal contract with different insurance components that operate independently of each other, the insurance components are recognised and measured separately using IFRS 17. The Group has identified non-life insurance contracts where the insurance components are distinguishable by homogeneous risk groups if they meet the conditions for distinguishing the components of insurance contracts. The Group has also identified life insurance contracts where the insurance components may be separated according to different insurance and economic risks if the insurance contract as a whole does not present the economic impact in a credible way.

16.4.21.4Level of aggregation of insurance contracts

Portfolios of insurance contracts comprise contracts subject to similar risks and managed together. Contracts within the same product line, as defined for management purposes, are expected to be subject to similar risks and are therefore grouped together in a single portfolio. Where contracts are issued by different Group companies, they are managed separately by each company and are therefore grouped into different portfolios. If the Group and the Company consider that the legal form of insurance contracts does not reflect their economic substance, homogeneous groups of risks arising from those insurance contracts are considered in the construction of portfolios.

Individual portfolios are divided into groups of insurance contracts according to their profitability and the year in which the contract was written. Contracts issued more than one year apart should not be included in the same group of insurance contracts.

Portfolios are categorised by profitability as:

•a group of contracts that are onerous upon initial recognition (unprofitable);

•a group of contracts that, on initial recognition, are highly unlikely to become onerous subsequently, if any; and

•a group of the remaining contracts, if any.

The determination of whether a contract or group of contracts is onerous is based on expectations at the date of initial recognition. The Group determines the appropriate level at which reasonable and

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supportable information is available to assess whether contracts are onerous at initial recognition and whether it is probable that contracts that are not onerous at initial recognition will become onerous subsequently. In the absence of such information, the Group assesses each contract individually.

Insurance contracts are classified into groups of insurance contracts on initial recognition and are not subsequently reassessed.

Reinsurance contracts are divided into segments in the same way as insurance contracts, except that a reinsurance contract cannot be unprofitable (in which case there is a net gain or net loss on initial recognition). In identifying groups of reinsurance contracts, the Group and the Company apply the rule that each reinsurance contract issued or held is a separate portfolio because of the different characteristics of the individual reinsurance contracts.

For contracts that are measured using the premium allocation approach (PAA), the Group and the Company determine that the contracts are not onerous unless facts and circumstances indicate otherwise. If the facts and circumstances indicate that certain contracts are onerous on initial recognition, the Group performs a quantitative assessment. If the assessment indicates that such contracts are onerous, the Group classifies such contracts as onerous and increases the liability for remaining coverage by the amount of the identified loss, which is recognised immediately in profit or loss.

All IFRS 17 measurements are made at the level of groups of insurance contracts.

16.4.21.5Initial recognition

Insurance contracts

The Group recognises a group of insurance contracts it issues from the earliest of the following:

•the beginning of the coverage period of the group of contracts;

•the date when the first payment from a policyholder in the group becomes due; and

•for a group of onerous contracts, when the group becomes onerous.

A group of insurance contracts is recognised upon recognition of the first contract that is part of the group. An insurance contract is included in a group of insurance contracts based on portfolio, annual cohort and profitability when it meets the recognition criteria in paragraph 1 of this section.

Reinsurance contracts

Reinsurance contracts held by the Group and the Company are recognised on the earlier of the following dates:

•the beginning of the coverage period of a group of reinsurance contracts held by the Group or the Company; and

•the date on which the underlying group of onerous insurance contracts is recognised if, on or before that date, a related reinsurance contract from the group of reinsurance contracts held by the Group and the Company has been entered into.

Notwithstanding the above provision, the recognition is delayed for a reinsurance contract that provides proportionate coverage until the date on which any underlying insurance contract is initially recognised if that date is later than the beginning of the coverage period of the reinsurance contract.

Insurance and reinsurance contracts acquired in a transfer of contracts or a business combination are recognised on the date of the transaction.

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16.4.21.6Contract boundary

A group of insurance contracts is measured by including all future cash flows that are within the boundary of the insurance contracts in the group.

In determining which cash flows are within the contractual boundary, the Group and the Company consider the substantive rights and obligations arising under the insurance contracts, laws and regulations.

Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group or the company can compel the policyholder to pay the premiums or in which the Group or the Company have a substantive obligation to provide services to the policyholder under the insurance contract.

Cash flows are within the boundary of a reinsurance contract if the contract holder can require the reinsurer to provide cover and other services or if there is a material obligation on the contract holder to pay a reinsurance premium to the reinsurer.

Liabilities or assets that are outside the boundary of recognised insurance contracts and relate to future contracts are shown separately in the statement of financial position.

In estimating the expected future cash flows, the Group and the Company use their judgement about the future behaviour of policyholders in exercising the options available to them, including the potential for surrender values to be paid.

The Group and the Company assess the contractual boundary at initial recognition and at each subsequent reporting date to incorporate the effect of changes in circumstances on the substantive rights and obligations.

16.4.21.7Measurement of (re)insurance contracts issued

All IFRS 17 measurements are made at the level of groups of insurance contracts.

The basic method of measuring insurance and reinsurance contracts under IFRS 17 is the general measurement model or building block approach (BBA). The standard also permits the use of a simplified measurement approach in some cases called the premium allocation approach (PAA). The standard requires the mandatory use of the variable fee approach (VFA) in the case of a group of insurance contracts with direct participation features and when the application criteria specified in the standard are met. Reinsurance contracts cannot be valued using the variable fee approach. The Group companies use all of the above approaches to value insurance and reinsurance contracts. The Company uses the general measurement model and, to a lesser extent, the premium allocation approach.

A description of the different measurement approaches is given in the following.

16.4.21.7.1Measurement of insurance and reinsurance contracts issued using the BBA and VFA approaches

16.4.21.7.2Initial measurement by BBA and VFA

On initial recognition, a group of insurance contracts is measured as the sum of:

•fulfilment cash flows, which comprise:

-estimates of future cash flows,

-an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows,

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-a risk adjustment for non-financial risk (RA),

•the contractual service margin (CSM).

Estimates of future cash flows

Estimates of expected cash flows represent an explicit, unbiased and probability-weighted estimate of future cash flows adjusted for the time value of money and associated financial risks. They include cash flows attributable to the fulfilment of existing insurance contracts and also expectations about the future behaviour of the insured persons.

Estimates of future cash flows reflect conditions existing at the measurement date, including assumptions at that date about the future.

Estimates of future cash flows are primarily determined using deterministic forecasting models, with stochastic techniques used additionally to model future cash flows for certain groups of contracts. The estimates of future cash flows are used to determine the expected value, or probability-weighted mean of the full range of possible outcomes, considering all reasonable and supportable information available at the reporting date. Potential impacts related to sustainability and climate change are also appropriately considered when estimating future cash flows.

Cash flows within the insurance contract boundary are those that relate directly to the fulfilment of the contract, including cash flows for which the entity has discretion over the amount or timing.

Cash flows within the contract boundary of an insurance contract include:

•premiums and any additional cash flows arising from those premiums,

•claims incurred but not yet settled, whether reported or not, including expected recoveries (subrogation recoveries) and bonuses and commissions paid by the Group or the Company (e.g., no-claim bonuses, sliding-scale commissions and profit commissions),

•payments to (or on behalf of) a policyholder arising from derivatives, such as options and guarantees embedded in the contract, to the extent that such options and guarantees are not separated from the insurance contract,

•directly attributable costs, including:

-an allocation of insurance acquisition cash flows attributable to the portfolio,

-policy administration and maintenance costs,

-claim handling costs,

-an allocation of fixed and variable overheads,

-other costs directly chargeable to the policyholder,

•transaction-based taxes that arise directly from existing insurance contracts.

For contracts with investment activities or direct participation contracts, cash flows also include:

•payments to (or on behalf of) a policyholder that vary depending on returns on underlying items,

•costs incurred for:

-performing investment activity, to the extent the Group performs that activity to enhance benefits from insurance coverage for policyholders,

-providing investment-return service to policyholders of insurance contracts without direct participation features;

-providing investment-related service to policyholders of insurance contracts with direct participation features,

Cash flows within the contract boundary include both fixed and variable administrative expenses that are directly attributable to the fulfilment of insurance contracts. Expenses that cannot be directly

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allocated to an insurance policy are allocated to groups of insurance contracts using methods that are systematic, rational and consistently applied to all expenses that have similar characteristics. Expenses that are not attributable to or not strictly necessary for the fulfilment of insurance contracts are directly recognised in the income statement outside the insurance service result when incurred.

Adjustment to reflect the time value of money and financial risks – discount rates

Estimates of expected cash flows are adjusted for the time value of money and the financial risk associated with those cash flows, using a risk-free interest rate curve plus a liquidity premium to discount future cash flows.

Appropriate discount rates are calculated using the bottom-up approach. A risk-free interest rate in the form of a swap curve plus a liquidity premium is used as the discount rate in estimating future cash flows. The liquidity premium is determined on the basis of yield data for AAA-rated covered bonds and a multiple of the liquidity premium. The multiple of the liquidity premium is determined by taking into account the characteristics of the groups of insurance contracts. Cash flows that vary based on the returns on the contractually defined set of assets are discounted using risk-neutral measurement techniques. Discount interest rates are set at each balance sheet date.

The Company and the Group have chosen to disaggregate finance income and expenses from insurance and reinsurance contracts between the income statement and the statement of other comprehensive income.

Risk adjustment for non-financial risk

The risk adjustment for non-financial risk is the compensation the Group and the Company require for bearing the uncertainty related to the amount and timing of the cash flows that arise from non-financial risk as they fulfil the contractual agreements. The risks covered by the risk adjustment for non-financial risk are insurance risk (including climate change risk) and other non-financial risks such as lapse risk and expense risk.

The risk adjustment for non-financial risk is thus the compensation that the Group and the Company would require to make them indifferent between:

•fulfilling a liability that has a range of possible outcomes arising from non-financial risk, and

•fulfilling a liability that will generate fixed cash flows with the same expected present value as the insurance contracts.

The Group and the Company assess the risk adjustment for non-financial risk using the confidence level technique (VaR and TVaR) to determine the maximum possible loss at a given confidence interval. The Group and the Company take into account a confidence interval of 75% to 85% for VaR and 40% for TVaR.

Changes in the risk adjustment for non-financial risk are fully reflected in the income statement.

Contractual service margin (CSM)

The contractual service margin (CSM) represents the unearned profit arising from insurance contracts that the Group and the Company will recognise as they provide insurance services under these contracts in the future. The contractual service margin is recognised when the net present value of future cash flows is positive (inflows are expected to exceed outflows) and is determined as the excess of cash inflows over cash outflows, less an adjustment for non-financial risk. A contractual service margin is established to prevent the recognition of a profit before it is realised and is released over the life of the insurance contract.

In the case of a transfer of insurance contracts or a business combination, the calculation uses the consideration received or paid at the acquisition date as a proxy for the premiums received.

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Loss component

For identified future losses arising out of insurance contracts, when the net present value of future cash flows is negative (more outflows than inflows are expected), the loss is recognised in the current period. For onerous (non-profitable) groups of contracts, the loss component is shown in the liability for remaining coverage, while the loss is shown immediately in the income statement.

16.4.21.7.3Subsequent measurement

The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of:

•the liability for remaining coverage comprising:

•the fulfilment cash flows relating to future services allocated to a group of insurance contracts at that date;

•the contractual service margin of a group of insurance contracts at that date; and

•the liability for incurred claims, which includes fulfilment cash flows in respect of past services allocated to a group of insurance contracts at that date.

When calculating assets and liabilities under insurance contracts on the balance sheet date, the company uses current estimates of future cash flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in these components affect the following items:

Change in assumptions

Impact

Changes related to future service

Change in CSM

Changes related to current or past service

Change in the insurance service result for the financial year

The effects of the time value of money, financial risk and changes thereof on estimated future cash flows

Change in finance income or expense and change in other comprehensive income

After initial recognition, the contractual service margin for each group of insurance contracts is remeasured on the balance sheet date.

Insurance contracts without direct participation features measured using the BBA

For insurance contracts without direct participation features, the carrying amount of the contractual service margin of a group of contracts on measurement at the reporting date equals the carrying amount at the start of the reporting period adjusted for:

•the effect of any new contracts added to the group;

•interest accreted on the carrying amount of the contractual service margin during the reporting period;

•the changes in the fulfilment cash flows relating to future service, except to the extent that:

-such increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, resulting in a loss; or

-such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage;

•the effect of any currency exchange differences on the contractual service margin; and

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•the amount recognised as insurance revenue due to the transfer of insurance contract services during the period, determined by the allocation of the contractual service margin remaining at the end of the reporting period.

The changes in fulfilment cash flows relating to future service consist of:

•adjustments arising from premiums received in the period relating to future service, and related cash flows, such as insurance acquisition cash flows and premium-based taxes, measured at the discount rates at which the group of contracts is recognised;

•changes in estimates of the present value of the future cash flows in the liability for remaining coverage (experience and assumptions), measured at specified discount rates at the time the contract is recognised;

•differences between the investment component expected to become payable during the period and the investment component that actually becomes payable in the period,

•differences between the policyholder loan expected to become repayable in the period and the policyholder loan that actually becomes repayable during the period, and

•changes in the risk adjustment for non-financial risk that relate to future service.

The amount of the contractual service margin for a group of insurance contracts is recognised in profit or loss in each period to reflect the insurance contract services provided under the group of insurance contracts during that period. The amount is determined by:

•identifying the coverage units in the group. The number of coverage units in a group is the quantity of insurance contract services provided by the contracts in the group, determined by considering for each contract the quantity of the benefits provided under a contract and its expected coverage period,

•allocating the contractual service margin at the end of the period (before recognising any amounts in profit or loss to reflect the insurance contract services provided in the period) equally to each coverage unit provided in the current period and expected to be provided in the future,

•recognising in profit or loss the amount allocated to coverage units provided during the period.

The present value of changes in fulfilment cash flows for the purpose of calculating the contractual service margin is measured using locked-in discount rates at the time of recognition. In some cases, these discount rates are averaged when contracts are recognised over successive reporting periods.

Insurance contracts with direct participation features measured using the VFA

Insurance contracts with direct participation features are insurance contracts that, in addition to providing insurance cover, also provide the policyholder with investment services provided by the Group.

For insurance contracts with direct participation features, the carrying amount of the contractual service margin of a group of contracts at the end of the reporting period equals the carrying amount at the beginning of the reporting period adjusted by the amounts set out below.

•the effect of any new contracts added to the group;

•the change in the amount of the entity’s share of the fair value of the underlying items, except to the extent that:

-the decrease in the amount of the entity’s share of the fair value of the underlying items exceeds the carrying amount of the contractual service margin, giving rise to a loss; or

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-the increase in the amount of the entity’s share of the fair value of the underlying items reverses the amount referred to in the previous paragraph,

•the changes in the fulfilment cash flows relating to future service, except to the extent that:

-such increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, resulting in a loss; or

-such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage,

•the effect of any currency exchange differences arising on the contractual service margin; and

•the amount recognised as insurance revenue because of the transfer of insurance contract services in the period.

16.4.21.7.4Measurement of insurance contracts using the premium allocation approach (PAA)

The majority of non-life business is measured using the premium allocation approach when the coverage period of a group of contracts is less than 12 months or the simplification is expected to be a reasonable approximation of the valuation results under the building block approach.

The criterion in the preceding paragraph is not met if, at the inception of a group of contracts, significant variability is expected in the fulfilment cash flows that would affect the measurement of the liability for remaining coverage during the period until a claim is incurred.

Upon initial recognition, the carrying amount of the liability for remaining coverage is:

•the premiums, if any, received at initial recognition;

•minus any insurance acquisition cash flows at that date, unless the entity elects to recognise the payments as an expense; and

•plus or minus any amount arising from the derecognition of assets or liabilities at that date.

The carrying amount of the liability at the end of each subsequent reporting period is the carrying amount at the beginning of the reporting period:

•plus the premiums received during the period;

•minus any insurance acquisition cash flows; unless the entity chooses to recognise these payments as an expense,

•plus any amounts relating to the amortisation of insurance acquisition cash flows recognised as an expense in the reporting period, unless the entity chooses to recognise these payments as an expense, and

•minus the amount recognised as insurance revenue for providing coverage during that period.

If, at any time during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, to the extent that the fulfilment cash flows exceed the carrying amount, the Group and the Company recognise a loss in profit or loss and increase the liability for remaining coverage.

If the PAA is used, the Group and the Company make no adjustments for the time value of money and the effect of financial risk, as the period between the premium due date and the provision of insurance services is expected to be no more than one year.

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16.4.21.7.5Measurement of the liability for incurred claims

Liability for incurred claims represents the expected cash flows for claims and related costs that have already been incurred and have not yet been paid. The liability for incurred claims includes claims incurred but not yet reported (IBNR) and claims reported but not yet settled (RBNS). Even when the liability for remaining coverage is measured using the PAA, the liabilities for claims incurred are valued using the general measurement approach (BBA) and the future cash flows are adjusted for the time value of money and the effect of financial risk.

16.4.21.8Measurement of reinsurance contracts held by the Group and the Company

The valuation methods for reinsurance contracts held by the Group and the Company (referred to in this section as reinsurance contracts) are the same as for insurance contracts, using consistent assumptions in the valuation of insurance and reinsurance contracts covering those insurance contracts, to the extent possible. In this case, the future cash flows in the valuation of reinsurance contracts are increased by a cash flow representing the effect of the reinsurer default risk, including the effects of collateral and litigation losses.

The risk adjustment for non-financial risk for reinsurance contracts represents the amount of risk being transferred from the insurer to the reinsurer.

In the valuation of reinsurance contracts, the unearned profit represented by the contractual service margin is replaced by the net gain or loss on the purchase of reinsurance. The net gain or loss on the initial recognition of reinsurance contracts is measured at:

•the fulfilment cash flows,

•the amount derecognised at that date of any asset or liability previously recognised for cash flows related to the group of reinsurance contracts,

•any cash flows arising from reinsurance contracts in a group of reinsurance contracts at that date,

•income recognised in the income statement as a result of the recognition of the reinsurance loss-recovery (LR) component of the asset for remaining coverage which mitigates the creation of a loss component for the liability for remaining coverage on the gross part.

If the net cost of purchasing reinsurance coverage relates to events that occurred before the purchase of the group of reinsurance contracts, the Group and the Company recognise this cost immediately as an expense in profit or loss.

The contractual service margin at the end of each reporting period for a group of reinsurance contracts is determined as the contractual service margin at the beginning of the reporting period, adjusted for:

•the effect of any new reinsurance contracts added to the group of reinsurance contracts,

•accrued interest on the amount of the CSM,

•income recognised in the income statement as a result of the recognition of the reinsurance loss-recovery (LR) component of the asset for remaining coverage,

•any reversals of the loss-recovery component to the extent that those reversals are not part of the change in fulfilment cash flows of a group of reinsurance contracts,

•changes in fulfilment cash flows for the remaining coverage, unless the change relates to a change in cash flows that do not change the CSM of the insurance contracts or, in the case of the PAA on direct business, affect the creation of a loss component of the liability for remaining coverage,

•the effect of foreign exchange differences on the CSM,

•the amount recognised in profit or loss because of services received in the period, determined by the allocation of the contractual service margin remaining at the end of the reporting period (before any allocation) over the current and remaining coverage period of the group of reinsurance contracts.

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Changes in fulfilment cash flows resulting from changes in the reinsurer's default risk are unrelated to future service and consequently do not adjust the CSM.

The Group and the Company adjust the contractual service margin of a group of reinsurance contracts and, consequently, recognise revenue when they recognise an onerous group of insurance contracts underlying the reinsurance contracts or when they add onerous insurance contracts underlying the reinsurance contracts to the group (this is the so-called loss-recovery component of an asset for remaining coverage of a group of reinsurance contracts). This adjustment is made only if the reinsurance contract has already been written at the time the loss component of the liability for remaining coverage on the onerous insurance contracts is recognised.

The amount of this adjustment is equal to the product of the recognised loss on the gross business and the share of the claims covered by that reinsurance contract on the insurance contracts from which that loss arises.

The Group and the Company establish (or adjust) a loss-recovery component of the asset for remaining coverage for a group of reinsurance contracts depicting the recovery of losses recognised in accordance with the above paragraphs. The loss-recovery component determines the amounts that are recognised in profit or loss as reversals of recoveries of losses from reinsurance contracts and are consequently excluded from the premiums paid to the reinsurer.

The loss-recovery component is adjusted to reflect changes in the loss component of an onerous group of underlying insurance contracts. The carrying amount of the loss-recovery component must not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the Company expects to recover from the group of reinsurance contracts.

The PAA approach may also be used to measure reinsurance contracts if:

•the Company reasonably expects that such simplification would result in a measurement of the liability for remaining coverage for the group of reinsurance contracts that is not materially different from the measurement under the BBA approach, or

•the coverage period of each contract in the group of reinsurance contracts is one year or less.

The criterion in the first bullet point above is not met if, at the inception of a group of reinsurance contracts, the Group and the Company expect significant variability in the fulfilment cash flows that would affect the measurement of the liability for remaining coverage during the period before a claim is incurred.

If the PAA approach is used, the carrying amount of the asset is adjusted for the remaining coverage in the event that a loss recovery component is created.

16.4.21.9Presentation of insurance and reinsurance contracts

Insurance revenue comprises the provision of services, during the reporting period, arising from a group of insurance contracts, specifically for an amount that reflects the consideration to which the Group and the Company expect to be entitled in exchange for the services provided. Insurance service expenses represent incurred claims, expenses and other expenses related to insurance services incurred in the reporting period. Neither insurance revenue nor insurance service expenses include an investment component.

The total amount of insurance revenue for each group of insurance contracts is equal to the premiums paid, adjusted for a financing effect and excluding any investment components.

The allocation of insurance revenue by period is determined by the amount of insurance services provided during the reporting period, which includes:

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•the expected insurance service expenses for each reporting period, net of any adjustment for non-financial risk and amounts allocated to the loss component of the liability for remaining coverage;

•the risk adjustment for non-financial risk, excluding any amounts allocated to the loss component of the liability for remaining coverage;

•the contractual service margin;

•amounts related to income tax that are specifically chargeable to the policyholder;

•amounts related to policy acquisition costs.

When the Group and the Company provide insurance services during a period, they reduce the liability for the remaining coverage and recognise insurance revenue during the period. The reduction in the liability for remaining coverage does not include changes that are not related to the provision of insurance services, such as:

•changes resulting from cash inflows from premiums received;

•changes that relate to investment components in the period,

•amounts relating to transaction-based taxes collected on behalf of third parties;

•finance income or expenses from insurance contracts,

•acquisition costs,

•derecognition of liabilities transferred to a third party;

•changes in the loss component of the liability for remaining coverage.

Consequently, insurance revenue for the period can also be analysed as the sum total of the changes in the liability for remaining coverage during the period that relates to services for which the Group and the Company expect to receive consideration. Those changes are:

•insurance service expenses incurred during the period (measured at the amounts expected at the beginning of the period), excluding:

-amounts allocated to the loss component of the liability for remaining coverage;

-repayments of investment components,

-amounts relating to transaction-based taxes collected on behalf of third parties (such as premium taxes, value added taxes and goods and services taxes);

-policy acquisition expenses; and

-the amount related to the risk adjustment for non-financial risk;

•the change in the risk adjustment for non-financial risk, excluding:

-changes included in finance income or expenses from insurance contracts;

-changes that adjust the contractual service margin because they relate to future service; and

-amounts allocated to the loss component of the liability for remaining coverage;

•the amount of the contractual service margin recognised in profit or loss;

•other amounts, if any, for example, experience adjustments for premium receipts other than those that relate to future service.

Insurance revenue related to insurance acquisition cash flows are determined by allocating the portion of the premiums that relate to recovering those cash flows to each reporting period in a systematic way on the basis of the passage of time. The same amount is recognised as insurance service expenses.

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If the simplified premium allocation approach (PAA) is used to measure liabilities for future coverage, the insurance revenue is the amount of the expected premiums, excluding any investment component relating to the reporting period. Premiums are allocated by period evenly over the duration of the cover or, in the case of unevenly spread risk, over the expected period of incurrence of the insurance service expense (decrease in the amount of insurance cover for credit insurance, increase in the amount of insurance cover for construction and erection insurance and reinsurance contracts).

Finance income or expenses from insurance and reinsurance contracts comprise:

•the effect of the time value of money and changes in the time value of money; and

•the effect of financial risk and changes in financial risk.

For all its groups of insurance contracts without direct participation features, the companies allocate finance income and expense between profit or loss and the statement of other comprehensive income (OCI). The companies include in profit or loss an amount determined by a systematic allocation of the expected total finance income or expenses from insurance contracts over the duration of the group of insurance contracts. A systematic allocation is an allocation of the total expected finance income or expenses of a group of insurance contracts over the duration of the group that:

•is based on characteristics of the contracts, without reference to factors that do not affect the cash flows expected to arise under the contracts,

•results in the amounts recognised in other comprehensive income over the duration of the group of contracts totalling zero. The cumulative amount recognised in other comprehensive income at any date is the difference between the carrying amount of the group of contracts and the amount that the group would be measured at when applying the systematic allocation.

For groups of insurance contracts without direct participation features for which changes in assumptions that relate to financial risk do not have a substantial effect on the amounts paid to the policyholder, the systematic allocation is determined using the discount rates at the date of initial recognition of the group of insurance contracts, or at the date of loss in the case of the PAA approach.

For groups of insurance contracts without direct participation features for which changes in assumptions that relate to financial risk have a substantial effect on the amounts paid to the policyholders:

•a systematic allocation for the finance income or expenses arising from the estimates of future cash flows is determined by using a rate that allocates the remaining diluted expected financial income or expense over the remaining term of the group of contracts at constant rates;

•a systematic allocation for the finance income or expenses arising from the risk adjustment for non-financial risk, is determined using an allocation consistent with that used for the allocation for the finance income or expenses arising from the future cash flows;

•a systematic allocation for the finance income or expenses arising from the contractual service margin is determined:

-for insurance contracts without direct participation features, using discount rates determined at the date of initial recognition of the group of insurance contracts; and

-for insurance contracts with direct participation features, using an allocation consistent with that used for the allocation for the finance income or expenses arising from the future cash flows.

For groups of insurance contracts with direct participation features for which the company holds the underlying items, the company disaggregates insurance finance income or expenses between the statement of profit or loss and other comprehensive income for the period to include in profit or loss an amount that eliminates accounting mismatches with income or expenses included in profit or loss

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on the underlying items held (the financial expenses or income from insurance contracts included in profit or loss exactly matches the income or expense included in profit or loss for the underlying items, resulting in the net of the separately presented items being nil). The company includes in other comprehensive income the difference between the finance income or expenses from insurance contracts measured on the basis set out above and the total insurance finance income or expenses for the period.

16.4.22Other provisions

Employee benefits include severance pay upon retirement and jubilee benefits. Provisions for employee benefits are the net present value of the Group’s future liabilities proportionate to the years of service in the Group (the projected unit credit method). Pursuant to IAS 19 “Employee benefits” actuarial gains and losses arising on re-measurement of net liabilities for severance pay upon retirement are recognised in other comprehensive income.

These provisions are calculated based on personal data of employees: date of birth, date of commencement of employment in the Group, anticipated retirement and salary. For each Group company, the amounts of severance pay upon retirement and jubilee benefits are in accordance with local legislations, employment contracts and other applicable regulations. Expected pay-outs also include tax liabilities where payments exceed statutory non-taxable amounts.

The probability of an employee staying with the Group includes both the probability of death and the probability of termination of employment relationship. Assumptions relating to future increases in salaries, severance pay upon retirement and jubilee benefits, as well as those relating to employee turnover depend on developments in individual markets and individual Group companies. The same term structure of risk-free interest rates is used for discounting as that in the capital adequacy calculation under Solvency II.

16.4.23Other financial liabilities

Other financial liabilities mainly include unpaid dividends payable from previous years and current interest and loan liabilities.

16.4.24Current tax liabilities

Current tax liabilities are recognised at the amount of the current tax liability for the financial year not yet paid.

16.4.25Other liabilities

Liabilities are initially recognised at amounts recorded in the relevant documents. Subsequently, they are increased or decreased in line with documents, and reduced through payments.

Other liabilities include amounts due to employees and suppliers and other current liabilities (accrued expenses).

16.4.26Investment income and expenses

The Company discloses investment income and expenses by type of income and expense:

•income from dividends and participating interests,

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•interest income and expenses,

•income or expenses from financial investments measured at FVTPL,

•gains and losses arising from the derecognition of financial investments measured at FVOCI

•exchange differences arising on financial investments, and

•other finance income and expenses (including income and expenses from investment property).

16.4.27Other operating income and expenses

Other operating income includes income:

•from foreign exchange gains, excluding foreign exchange gains on (re)insurance contracts and investment transactions,

•from the sale of fixed assets,

•from the sale of green cards (international motor insurance certificates),

•from claims settled on behalf of other Group companies,

•from sales by non-insurance companies (including asset management, such as entry and exit fee income),

•from other services.

This income is recognised in the income statement at the time services are completed or invoices issued.

Revenue is measured based on the consideration to which the Group and Company are expected to be entitled under their contracts with customers. Amounts collected on behalf of third parties are excluded.

Revenue is recognised when the customer has taken control of the goods or has received the benefits from the services rendered. Sales revenue does not include any charges paid upon purchase or sale. It is included in “other income” in the income statement and relates either to the pensions and asset management or the “other” operating segments. This revenue is not multi-year in nature, is recognised on an accrual basis in the financial year and presented under note 16.8.40.

Other operating expenses include:

•allowances for other receivables,

•impairment losses on property, plant and equipment and intangible assets.

•non-attributable expenses and

•other expenses.

Other expenses are recognised in the income statement at the time the service is rendered.

16.4.28Income tax expense

Income tax expense for the year comprises current and deferred tax. Current income tax is presented in the income statement, except for the portion relating to the items presented in equity; deferred tax for these items is also presented in equity. Current tax is payable on the taxable profit for the year using the tax rates enacted by the date of the statement of financial position, as well as on any adjustments to tax liabilities of prior periods. Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The deferred tax amount is based on the expected manner of recovery or settlement of the carrying

219

amount of assets and liabilities, using the tax rates effective on the date of the statement of financial position. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Group income tax expense has been determined in accordance with the requirements of each member’s local legislation.

16.4.29Information about reportable operating segments

Operating segments as disclosed and monitored were determined based on the different activities carried out in the Group. Segments were formed through the aggregation of operations of companies that generate revenue and expenses, including revenue and expenses arising from intra-group transactions, based on similar services provided by companies (features of insurance products, market networks, and the circumstances in which companies operate).

The operating segments are reinsurance (reinsurance business), non-life (non-life insurance business, broken down into EU and non-EU), life (life insurance business, broken down into EU and non-EU), pensions and asset management (pension insurance business in Slovenia and North Macedonia, and fund management) and the “other” segment (assistance services associated with motor, homeowners and health insurance business). In the following, more detail is provided on how the companies are included in operating segments.

The performance of these segments is monitored using a variety of indicators, with IFRS net profit being a common performance indicator for all segments. The management board monitors performance by segment to the level of insurance and reinsurance service results, net investment income and aggregated business results, amounts of assets, equity and insurance and reinsurance contract liabilities on a quarterly basis.

The operations of the Sava Insurance Group are organised into the following operating segments: reinsurance, non-life (insurance), life (insurance), pensions and asset management, and the “other” segment. The non-life and life segments are further subdivided geographically into EU and non-EU.

The following companies are included in the individual operating segments:

•reinsurance: Sava Re (non-Group business);

•non-life, EU: Zavarovalnica Sava (the Slovenian and Croatian part of non-life insurance business), Vita (non-life insurance business);

•non-life, non-EU: Sava Neživotno Osiguranje (SRB), Illyria (RKS), Sava Osiguranje (MNE), Sava Osiguruvanje (MKD), Sava Car (MNE), Sava Agent (MNE), Sava Station (MKD), Sava Car (SRB);

•life, EU: Zavarovalnica Sava (the Slovenian and Croatian part of life insurance business), Vita (life insurance business), ZS Svetovanje (SVN), ASISTIM (SVN);

•life, non-EU: Sava Životno Osiguranje (SRB), Illyria Life (RKS);

•pensions and asset management: Sava Pokojninska (SVN), Sava Penzisko Društvo (MKD), Sava Infond (SVN);

•other: TBS Team 24 (SVN), ASP (SRB) and Vita S Holding (MKD); DCB (SVN) and G2I (GBR) using the equity method. This operating segment also includes expenses on subordinate debt. The company S Estate was sold on 1 March 2022 and G2I (GBR) in mid-2023. Since then, they are no longer included in the consolidated statements.

The following reallocations were made in the consolidated income statement:

•The effects of reinsurance (retrocessions) relating to business with subsidiaries (Sava Re, as the parent company, reinsures the major part of the subsidiaries’ business) are transferred

220

from the reinsurance segment to other operating segments. In the segment reporting information, income and expenses from reinsurance ceded are allocated to the segments from which they originate. The same applies to finance expenses and recoveries from reinsurance contracts.

•Operating expenses of the reinsurance segment are reduced by the portion of expenses attributable to the administration of the Sava Insurance Group. Sava Re operates as a virtual holding company; hence, a part of its expenses relates to the administration of the Group. Such expenses relating to the reinsurance segment are allocated to other segments based on each subsidiary’s revenue. Operating expenses associated with reinsurance business within the Group are also reallocated to other segments. In this way, 75.6% of operating expenses were allocated to the segments in 2023 (2022: 74.7%). In addition, there were reallocations of operating expenses of the company TBS Team 24 (SVN) associated with the companies conducting business in the Slovenian or international non-life segments from the “other” segment to these two segments.

•Investment income and expenses are reallocated from the reinsurance segment to the non-life insurance and life insurance segments using the key for the allocation of liabilities for incurred claims and liabilities for remaining coverage.

•Subordinated debt expenses are shown under the “other” segment.

•The proceeds from the sale of S Estate (RKS) and G2I have been included in the “other” segment.

The following reclassifications were made in the consolidated statement of financial position:

•Goodwill was attributed to the segment where it arose.

•The balance of financial investments is transferred from the reinsurance segment to the non-life and life segments using the key for the allocation of liabilities for incurred claims and liabilities for remaining coverage.

•Reinsurance contract assets and liabilities are reallocated to other segments in the same way as described in the first paragraph (point) of the description of reallocations in the income statement.

•Subordinated liabilities are shown in the “other” segment.

221

Statement of financial position items by operating segment as at 31 December 2023

EUR

Reinsurance

Non-life, EU

Non-life, non-EU

Life, EU

Life, non-EU

Pensions and asset management

Other

Total

31 December 2023

ASSETS

Intangible assets and goodwill

4,674,935

13,627,701

9,325,953

4,428,761

233,499

28,757,254

4,100,728

65,148,831

Property, plant and equipment

2,675,158

38,886,005

11,321,042

5,249,059

1,060,243

417,230

78,061

59,686,798

Investment property

7,582,167

11,730,934

5,544,277

32,900

24,890,278

Right-of-use assets

209,205

3,915,031

3,133,713

1,116,305

154,707

44,437

8,573,398

Investments in associates and joint ventures

23,834,620

Investments in associates accounted for using equity method

23,834,620

Deferred tax assets

5,087,419

3,548,166

-1,299,657

-751,528

6,584,400

Financial investments measured at

237,893,483

535,119,866

89,686,313

1,066,267,612

30,860,472

52,704,887

2,012,532,633

Fair value through other comprehensive income

210,351,892

460,487,600

63,847,713

492,306,747

18,524,902

30,628,191

1,276,147,045

Amortised cost

2,344,960

4,409,489

21,772,816

20,466,505

12,300,659

15,008,737

76,303,166

Fair value through profit or loss

25,196,630

70,222,777

4,065,785

553,494,360

34,911

7,067,959

660,082,422

Investment contract assets

180,628,137

Insurance contract assets

4,966,239

3,686,689

16,211

753,959

184,190

9,607,288

Reinsurance contract assets

24,595,405

77,665,255

4,949,262

271,639

107,481,560

Current tax assets

435,426

1,683

7,507

444,616

Trade and other receivables

123,348

3,389,546

5,599,934

563,570

573,186

1,199,140

2,822,634

14,271,358

Non-current assets held for sale

191,021

68,628

259,649

Cash and cash equivalents

8,284,753

17,871,533

4,004,142

14,774,669

753,814

2,670,941

2,200,112

50,559,964

Other assets

715,114

1,235,294

419,561

394,674

41,483

763,264

473,216

4,042,606

Total assets

296,807,225

710,867,041

134,504,462

1,092,553,491

33,863,277

266,433,762

33,516,878

2,568,546,136

LIABILITIES

Subordinated liabilities

74,987,535

Deferred tax liabilities

54,689

578,579

86,516

696,551

1,784,777

235,479

3,436,591

Insurance contract liabilities

163,562,295

463,154,147

64,660,233

917,651,804

17,396,207

24,597,561

1,651,022,247

Reinsurance contract liabilities

287,726

103,984

942,342

307,990

1,642,043

Investment contract liabilities

180,437,695

Provisions

419,660

5,619,443

308,683

1,186,602

16,617

462,626

60,624

8,074,255

Lease liability

210,798

4,096,675

3,212,030

1,116,412

156,186

52,636

8,844,737

Other financial liabilities

7,154

728,545

1,386

737,085

Current tax liabilities

6,319,991

116,825

670,658

2,363,508

27,152

276,482

156,214

9,930,830

Other liabilities

4,718,067

22,980,315

5,664,583

3,154,137

1,374,904

1,739,401

4,138,098

43,769,505

Total liabilities

175,518,538

496,133,232

76,765,653

925,866,969

19,669,003

209,351,177

79,577,950

1,982,882,523

Total equity

585,663,613

Total liabilities and equity

2,568,546,136

222

Statement of financial position items by operating segment as at 31 December 2022

EUR

Reinsurance

Non-life, EU

Non-life, non-EU

Life, EU

Life, non-EU

Pensions and asset management

Other

Total

31 December 2022

ASSETS

Intangible assets and goodwill

4,068,385

16,900,619

9,245,044

2,874,285

118,787

29,879,226

2,808,946

65,895,292

Property, plant and equipment

2,553,946

40,929,091

12,634,139

4,872,184

1,058,434

340,235

47,597

62,435,626

Investment property

7,721,692

11,839,443

3,200,383

34,241

22,795,759

Right-of-use assets

248,062

4,551,855

2,256,173

221,030

24,397

121,639

2,520

7,425,676

Investments in associates and joint ventures

21,856,109

Investments in associates accounted for using equity method

21,856,109

Deferred tax assets

-203,681

220,746

17,065

Financial investments measured at

223,493,038

456,926,123

78,380,246

950,571,091

25,289,938

41,471,640

1,776,132,075

Fair value through other comprehensive income

194,080,958

384,326,920

57,536,477

481,149,244

16,691,460

21,616,848

1,155,401,907

Amortised cost

1,963,606

2,166,142

17,023,580

21,168,516

8,615,831

13,490,605

64,428,280

Fair value through profit or loss

27,448,474

70,433,062

3,820,188

448,253,331

-17,354

6,364,187

556,301,888

Investment contract assets

166,374,119

Insurance contract assets

2,945,467

3,959,721

136,537

13,293

83,322

7,138,340

Reinsurance contract assets

22,018,612

43,582,758

2,291,047

241,224

68,133,642

Current tax assets

49,594

3,302,945

342,733

-284,100

1,683

3,412,855

Trade and other receivables

-113,541

3,758,200

2,806,668

2,023,980

609,725

972,915

2,225,026

12,282,973

Non-current assets held for sale

380,282

160,636

450,885

991,803

Cash and cash equivalents

11,655,827

40,864,333

4,424,791

26,894,444

1,884,243

7,001,632

498,361

93,223,631

Other assets

699,783

1,336,963

510,869

289,128

36,029

588,623

563,888

4,025,283

Total assets

275,340,865

628,128,653

116,389,266

987,971,545

29,106,558

247,200,914

28,002,447

2,312,140,248

LIABILITIES

Subordinated liabilities

74,924,356

Deferred tax liabilities

-3,032,251

-1,554,331

336,866

4,342,765

342,266

2,375,985

2,811,300

Insurance contract liabilities

168,897,801

405,704,423

55,550,665

819,181,500

14,335,729

20,645,040

1,484,315,158

Reinsurance contract liabilities

111,680

79,071

518,136

342,728

1,051,614

Investment contract liabilities

166,197,363

Provisions

392,640

5,489,589

240,037

1,155,805

11,838

625,968

57,577

7,973,454

Lease liability

246,929

4,738,721

2,283,198

221,029

28,680

131,014

7,615

7,657,186

Other financial liabilities

-6

547,997

585

548,576

Current tax liabilities

45,414

842,323

448,202

26,762

159,258

33,033

1,554,992

Other liabilities

1,054,118

20,889,215

3,046,611

2,855,696

1,076,482

1,407,138

3,313,309

33,642,572

Total liabilities

167,716,331

435,346,682

63,365,833

828,547,725

15,822,342

191,541,766

78,335,890

1,780,676,571

Total equity

531,463,677

Total liabilities and equity

2,312,140,248

223

Income statement items by operating segment for 2023

EUR

Reinsurance

Non-life, EU

Non-life, non-EU

Life, EU

Life, non-EU

Pensions and asset management

Other

Total

2023

Insurance revenue

104,029,407

436,996,472

89,711,654

59,872,919

6,530,594

421,765

697,562,811

Insurance service expenses

-81,494,383

-445,956,710

-83,631,610

-40,909,530

-4,820,572

-312,713

-657,125,518

– Claims incurred

-71,430,181

-324,341,925

-52,147,491

-15,502,210

-1,966,927

-85,420

-465,474,154

– Operating expenses

-10,318,051

-118,758,015

-31,575,713

-25,752,177

-3,047,991

-113,073

-189,565,020

– Unprofitable contracts

253,849

-2,856,770

91,594

344,857

194,346

-114,220

-2,086,344

Result before reinsurance

-8,960,238

6,080,044

18,963,389

1,710,022

22,535,024

109,052

40,437,293

Reinsurance service result

906,976

41,486,560

885,641

-238,707

43,040,469

Insurance service result

23,442,000

32,526,322

6,965,685

18,724,682

1,710,022

109,052

83,477,762

Net investment result

5,521,148

7,882,690

3,094,209

9,103,691

955,738

1,365,801

27,923,277

Finance result from insurance contracts

-5,210,202

-3,070,764

-629,162

-3,302,541

-400,071

-691,457

-13,304,198

Net foreign exchange gains/losses

1,270,540

-79,847

-8,803

-1,520

14,640

-2,505

1,192,505

Finance result

1,581,486

4,732,079

2,456,244

5,799,629

570,307

671,839

15,811,584

Income from non-insurance activities

19,589,410

5,806,493

25,395,903

Other expenses

-3,693,151

-16,349,800

-6,237,092

-5,161,413

-492,069

-13,370,630

-5,710,391

-51,014,545

Income from investments in subsidiaries and associates

3,754

2,282,455

2,286,209

Net other operating income or expenses

-631,045

4,411,830

2,603,285

-507,641

-20,696

516,535

-2,715,827

3,656,441

Profit or loss before tax

20,699,290

25,324,185

5,788,122

18,855,257

1,767,563

7,516,206

-337,270

79,613,354

Income tax expense

-14,956,182

Net profit or loss for the period

64,657,172

224

Income statement items by operating segment for 2022

EUR

Reinsurance

Non-life, EU

Non-life, non-EU

Life, EU

Life, non-EU

Pensions and asset management

Other

Total

2022

Insurance revenue

92,799,955

380,796,268

73,586,592

56,462,308

5,033,876

308,794

608,987,793

Insurance service expenses

-70,317,410

-360,568,520

-64,961,945

-37,129,913

-4,389,039

-143,723

-537,510,550

– Claims incurred

-61,697,514

-255,758,019

-37,837,257

-11,447,246

-1,503,214

-66,524

-368,309,774

– Operating expenses

-8,703,623

-102,624,831

-27,103,703

-23,970,652

-2,532,069

-96,158

-165,031,036

– Unprofitable contracts

83,727

-2,185,670

-20,985

-1,712,015

-353,756

18,959

-4,169,740

Result before reinsurance

20,227,748

8,624,647

19,332,395

644,837

22,482,545

165,071

71,477,243

Reinsurance service result

168,828

7,537,611

-2,620,139

-490,126

4,596,174

Insurance service result

22,651,373

27,765,359

6,004,508

18,842,269

644,837

165,071

76,073,417

Net investment result

1,545,065

-562,285

1,962,550

3,709,640

750,448

-869,358

6,536,061

Finance result from insurance contracts

-4,386,386

-930,698

-378,489

-2,974,900

-267,571

-202,813

-9,140,857

Net foreign exchange gains/losses

1,942,705

-28,341

-22,079

-15,257

-25,577

-14,512

1,836,939

Finance result

-898,616

-1,521,324

1,561,983

719,483

457,300

-1,086,683

-767,857

Income from non-insurance activities

3,212

17,978,588

3,422,717

21,404,517

Other expenses

-2,908,447

-14,842,893

-5,742,288

-5,092,506

-418,355

-11,881,741

-3,496,453

-44,382,684

Income from investments in subsidiaries and associates

2,279,735

Net other operating income or expenses

-474,542

3,661,593

4,117,895

-622,602

385,306

-306,868

-2,865,865

3,894,917

Profit or loss before tax

18,369,768

15,062,734

5,945,310

13,846,644

1,069,088

4,868,367

-659,866

58,502,045

Income tax expense

-11,578,604

Net profit or loss for the period

46,923,441

225

Inter-segment business – inter-segment consolidation eliminations

EUR

Reinsurance

Non-life

Life

Pensions

Other

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Insurance service result before reinsurance

29,221,815

4,245,142

346,830

90,102

-233,171

-923,311

Net result from reinsurance contracts held

-32,466,249

-5,409,109

341,809

86,137

Net investment income/expenses

-72,248

-63,801

-289,315

-82,232

-39,951

Net insurance finance income or expenses

1,073,695

832,641

-1,157,607

-883,906

776,640

-2,514,324

Other operating income and expenses

-30,661,000

-50,822,064

1,226,967

2,045,152

-1,336,470

-1,224,152

703,688

522,560

-1,601,219

-1,447,894

Cost of intangible and property, plant and equipment assets by operating segment

EUR

Reinsurance

Non-life insurance

Life insurance

Pensions

Other

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Investments in intangible assets

973,700

1,118,179

1,892,653

4,278,034

367,356

249,925

97,047

275,363

1,357,106

8,537

4,687,862

5,930,038

Investments in property, plant and equipment

424,457

605,833

3,390,832

11,707,585

770,292

2,489,402

251,666

14,736

54,136

35,419

4,891,383

14,852,975

226

16.5Standards and interpretations issued but not yet effective, and new standards and interpretations

The accounting policies adopted by the Group and the Company in preparing their financial statements are consistent with those of the previous financial year, except for the following new or amended IFRSs adopted for annual periods beginning on or after 1 January 2023. The impact of the adoption of IFRS 17 and IFRS 9 is described in section 16.6 “Transition to the new standards IFRS 17 and IFRS 9”.

New and amended IFRS Accounting Standards that are effective for the current year

In the current year, the Group and the Company have applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and adopted by the EU that are mandatorily effective for reporting period that begins on or after 1 January 2023. The adoption of these amendments has not had any material impact to the financial statements of the Group or the Company, except for the impact of the new standard IFRS 17 “Insurance Contracts”. For more information on the impact of this standard on the performance of the Group and the Company, refer to section 16.6 “Transition to the new standards IFRS 17 and IFRS 9”

New standard IFRS 17 “Insurance Contracts”, including the June 2020 and December 2021 amendments to IFRS 17

•IFRS 17 “Insurance Contracts” issued by IASB on 18 May 2017. The new standard requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 “Insurance Contracts” and related interpretations while applied. Amendments to IFRS 17 “Insurance Contracts” issued by IASB on 25 June 2020 defer the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023. Additionally, the amendments issued on 25 June 2020 introduce simplifications and clarifications of some requirements in the Standard and provide additional reliefs when applying IFRS 17 for the first time.

•Amendments to IFRS 17 “Insurance contracts” – Initial Application of IFRS 17 and IFRS 9 – Comparative Information issued by IASB on 9 December 2021. It is a narrow-scope amendment to the transition requirements of IFRS 17 for entities that first apply IFRS 17 and IFRS 9 at the same time.

Amendments to IAS 1 “Presentation of Financial Statements” – Disclosure of Accounting Policies

Disclosure of Accounting Policies issued by IASB on 12 February 2021. The amendments require entities to disclose their material information on accounting policies rather than their significant accounting policies. They provide guidance and examples to help preparers decide which accounting policies to disclose in their financial statements.

Amendments to IAS 8 – Definition of Accounting Estimates

Definition of Accounting Estimates issued by IASB on 12 February 2021. The amendments focus on accounting estimates and provide guidance on how to distinguish between accounting policies and accounting estimates.

Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction

Amendments to IAS 12 “Income Taxes” – Deferred Tax related to Assets and Liabilities arising from a Single Transaction issued by IASB on 6 May 2021. According to amendments, the initial recognition

227

exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities.

Amendments to IAS 12 – International Tax Reform — Pillar Two Model Rules

Amendments to IAS 12 “Income Taxes” – International Tax Reform — Pillar Two Model Rules issued by IASB on 23 May 2023. The amendments introduced a temporary exception to the accounting for deferred taxes arising from jurisdictions implementing the global tax rules and disclosure requirements about company’s exposure to income taxes arising from the reform, particularly before legislation implementing the rules is in effect.

The exception in the amendments to IAS 12 for an entity not to recognise and disclose information about deferred tax assets and liabilities under the IASB’s Pillar 2 relating to income taxes applies immediately after the amendments are issued and retrospectively in accordance with IAS 8. The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023.

At Group level, a task force has been set up in 2023 to implement the new tax legislation120. The task force has been set up to study the changes and will be responsible for their implementation. As the legislation introduces significant changes, we estimate that it will have an impact on the Group’s operations, but it is not yet possible to quantify the impact on individual items in the financial statements.

New and revised IFRS Accounting Standards in issue and adopted by the EU but not yet effective

At the date of authorisation of these financial statements, the Group and the Company have not applied the following revised IFRS Accounting Standards that have been issued by IASB and adopted by EU but are not yet effective:

Amendments to IFRS 16 “Leases” – Lease Liability in a Sale and Leaseback

Lease Liability in a Sale and Leaseback (effective for annual periods beginning on or after 1 January 2024). Amendments to IFRS 16 require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease.

New standards and amendments to the existing standards issued by the IASB but not yet adopted by the EU

At present, IFRSs as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except for the following new standards and amendments to the existing standards, which were not adopted by the EU as at the date of this report:

Amendments to IAS 1 “Presentation of Financial Statements”

Classification of Liabilities as Current or Non-Current with Covenants (effective date determined by IASB: 1 January 2024). The amendments clarify how conditions with which an entity must comply within 12 months after the reporting period affect the classification of a liability.

Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: notes

Supplier Finance Arrangements issued by IASB on 25 May 2023 (effective date determined by IASB: 1 January 2024). Amendments add disclosure requirements and “signposts” within existing disclosure

120 In Slovenia, the Minimum Tax Act was adopted at the end of 2023 under the IASB’s Pillar 2.

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requirements to provide qualitative and quantitative information about supplier finance arrangements.

Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates”

Lack of Exchangeability issued by IASB on 15 August 2023 (effective date determined by IASB: 1 January 2025). Amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not.

IFRS 14 “Regulatory Deferral Accounts”

Effective for annual accounting periods beginning on or after 1 January 2016. The European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard. This standard is intended to allow entities that are first-time adopters of IFRS, and that currently recognise regulatory deferral accounts in accordance with their previous GAAP, to continue to do so upon transition to IFRS.

Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. The effective date has been deferred indefinitely until the research project on the equity method has been concluded. The amendments address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business.

The Group and the Company do not expect that the adoption of the above new standards and amendments to the existing standards during the period of initial application will have a material impact on the financial statements of the Group or the Company.

Hedge accounting for a portfolio of financial assets and liabilities the principles of which have not been adopted by the EU remains unregulated.

Management assesses that the application of hedge accounting to a portfolio of financial assets or liabilities pursuant to IAS 39 “Financial Instruments: Recognition and Measurement” will not have had a significant impact the financial statements of the Group and the Company, if it had been applied at the balance sheet date.

16.6Transition to the new standards IFRS 17 “Insurance Contracts” and IFRS 9 “Financial Instruments”

On 25 June 2020, the International Accounting Standards Board (Board) issued the final version of the accounting standard for insurance contracts IFRS 17. When IFRS 17 was finalised, the effective date was deferred by two years, from 1 January 2021 to 1 January 2023. The Board also decided to align the effective date of IFRS 9 with that of IFRS 17 for insurance companies. As a result of the deferral of the effective date of IFRS 17, the beginning of the comparative period has also been deferred by two years, from 1 January 2020 to 1 January 2022. IFRS 4 allowed the use of local accounting practices for insurance contracts in the consolidated financial statements. With IFRS 17, the Board has introduced, for the first time, common accounting guidance for insurance contracts. The Group and the Company have applied IFRS 17 for the first time for the purpose of preparing the financial statements for the 2023 financial year and the comparative information for 2022, taking into account the transitional provision in IFRS 17.C3(a).

At the same time, IFRS 9 “Financial Instruments”, which supersedes IAS 39, entered into force for the Group and the Company on 1 January 2023. For IFRS 9, the date of the first application was set as 1

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January 2018, but the Group and the Company exercised the option to temporarily exempt the implementation of the standard until 1 January 2023.

The Group and the Company have not preliminarily adopted any other standard, interpretation or amendment that has been issued but has not yet entered into force.

The adoption of IFRS 17 and IFRS 9 has a significant impact on the consolidated and separate financial statements. The effect of the transition to the new standards is recognised in retained earnings. The adoption of IFRS 17 and IFRS 9 has also led to significant changes in other equity items, notably the accumulated other comprehensive income, which is the fair value reserve under IAS 39.

The following illustrates the main impact of the adoption of IFRS 9 and IFRS 17 by comparing the restated statement of financial position of the Group and of the Company as at 1 January 2022 with the audited statement of financial position of the Group and the Company as at 31 December 2021.

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Impact of transition to IFRS 17 and IFRS 9

Sava Insurance Group

EUR

31 December 2021(published)(1)

IFRS 17 restatement effect(2)

IFRS 9 restatement effect(3)

Transition impact(4 = 2 + 3)

Other restatements and reallocations(5)

1 January 2022(restated)(6 = 1 + 4 + 5)

ASSETS

Intangible assets and goodwill

67,306,775

-4,696,898

62,609,877

Deferred acquisition costs

4,697,567

-4,697,567

Other intangible assets and goodwill

62,609,208

669

62,609,877

Property, plant and equipment

56,337,174

-4,618

56,332,556

Investment property

14,281,192

-592

14,280,600

Right-of-use assets

7,386,426

-1,610

7,384,816

Investments in associates accounted for using equity method

20,479,729

Deferred tax assets

5,487,403

7,935,939

1,005,913

8,941,852

14,429,255

Financial investments

1,990,128,035

-9,610,337

6,506,695

-3,103,642

1,987,024,393

Insurance contract assets

172,836,349

-4,815,360

168,020,989

Reinsurance contract assets

14,379,062

Reinsurance contract assets

57,767,056

6,478,950

64,246,006

Receivables

149,610,352

-141,512,348

8,098,004

Receivables arising out of primary insurance business

128,544,723

-128,544,723

Receivables arising out of reinsurance and co-insurance business

9,077,165

-9,077,165

Trade and other receivables

11,988,464

-3,890,460

8,098,004

Current tax liabilities

330,518

Non-current assets held for sale

770,544

Cash and cash equivalents

88,647,678

-3,688

88,643,990

Other assets

4,380,387

-342,270

4,038,117

Deferred acquisition costs

22,572,741

-22,572,741

Total assets

2,658,322,359

-154,766,510

7,512,608

-147,253,903

2,511,068,456

LIABILITIES

Subordinated liabilities

74,863,524

Deferred tax liabilities

11,387,395

12,678,415

5,922,735

18,601,150

1,908,279

31,896,824

Insurance contract liabilities

1,761,683,455

-140,580,630

1,621,102,825

Reinsurance contract liabilities

1,376,802

Investment contract liabilities

172,660,266

-4,815,360

167,844,906

Provisions

9,018,106

-100,047

8,918,059

Lease liability

7,224,138

416,339

7,640,477

Liabilities

52,363,619

-51,778,695

-23,196

-51,801,891

561,728

Liabilities from primary insurance business

41,669,619

-41,669,619

Liabilities from reinsurance and co-insurance business

10,109,076

-10,109,076

Other operating and financial liabilities

584,924

-23,196

561,728

Current tax liabilities

3,004,684

-8,151

2,996,533

Other liabilities

62,040,155

-21,710,467

40,329,687

Total liabilities

2,154,245,342

-204,521,794

5,899,539

-198,622,255

1,908,279

1,957,531,366

EQUITY

Share capital

71,856,376

Capital reserves

42,702,320

Profit reserves

229,008,079

Treasury shares

-24,938,709

Accumulated other comprehensive income

22,547,759

-11,486,736

-9,549,903

-21,036,639

1,511,120

Retained earnings

116,166,406

61,173,806

11,162,972

72,336,778

-1,908,279

186,594,905

Net profit or loss for the period

49,623,843

Foreign currency translation reserve

-3,256,354

12,330

-3,244,024

Equity attributable to owners of the controlling company

503,709,720

49,699,400

1,613,069

51,312,469

-1,908,279

553,113,910

Non-controlling interests in equity

367,298

55,883

423,181

Total equity

504,077,018

49,755,283

1,613,069

51,368,352

-1,908,279

553,537,091

Total liabilities and equity

2,658,322,359

-154,766,511

7,512,608

-147,253,903

2,511,068,456

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Sava Re

EUR

31 December 2021(published)(1)

IFRS 17 restatement effect(2)

IFRS 9 restatement effect(3)

Total restatement effect(4 = 2 + 3)

1 January 2022(restated)(5 = 1 + 4)

ASSETS

Intangible assets and goodwill

3,194,031

Property, plant and equipment

2,464,213

Investment property

7,899,693

Right-of-use assets

204,879

Investments in associates accounted for using equity method

304,554,991

Investments in subsidiaries

19,575,000

Deferred tax assets

3,688,957

2,774,231

-73,544

2,700,688

6,389,645

Financial investments

327,784,595

-9,610,337

1,450,778

-8,159,558

319,625,037

Investment contract assets

Insurance contract assets

3,063,438

Reinsurance contract assets

48,486,444

7,582,052

56,068,497

Receivables

79,803,172

-79,540,948

262,226

Receivables arising out of primary insurance business

74,410,185

-74,410,185

Receivables arising out of reinsurance and co-insurance business

5,125,596

-5,125,596

Trade and other receivables

267,390

-5,166

262,226

Current tax assets

Non-current assets held for sale

Cash and cash equivalents

28,806,817

Other assets

746,809

-764

746,043

Deferred acquisition costs

4,869,156

-4,869,156

Total assets

832,078,758

-80,600,719

1,376,471

-79,224,248

752,854,509

LIABILITIES

Subordinated liabilities

74,863,524

Deferred tax liabilities

76,227

3,343,343

259,954

3,603,297

3,679,523

Insurance contract liabilities

331,812,724

-40,365,818

291,446,906

Reinsurance contract liabilities

766,545

Investment contract liabilities

Provisions

421,865

Lease liability

203,730

Liabilities

46,148,843

-46,148,843

Liabilities from primary insurance business

39,556,034

-39,556,034

Liabilities from reinsurance and co-insurance business

6,592,809

-6,592,809

Current tax liabilities

394,752

Other liabilities

6,991,093

-622,148

6,368,945

Total liabilities

460,912,758

-83,026,921

259,954

-82,766,967

378,145,790

EQUITY

Share capital

71,856,376

Capital reserves

54,239,757

Profit reserves

229,238,622

Treasury shares

-24,938,709

Accumulated other comprehensive income

3,716,228

-3,604,872

-3,270,615

-6,875,487

-3,159,259

Retained earnings

10,633,662

6,031,074

4,387,132

10,418,206

21,051,868

Net profit or loss for the period

26,420,064

Foreign currency translation reserve

Equity attributable to owners of the controlling company

371,166,000

2,426,202

1,116,517

3,542,719

374,708,719

Non-controlling interests in equity

Total equity

371,166,000

2,426,202

1,116,517

3,542,719

374,708,719

Total liabilities and equity

832,078,758

-80,600,719

1,376,471

-79,224,248

752,854,509

In the following, we describe the most significant changes in the statement of financial position of the Group and the Company:

•A decrease in long-term deferred acquisition costs and insurance and reinsurance receivables and liabilities, which have been reclassified to insurance and reinsurance contract assets.

•Technical provisions have been replaced by the items insurance and reinsurance contract assets. The valuation of insurance and reinsurance contract assets is mainly affected by:

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a.the use of the best estimate of assumptions instead of a conservative estimate of assumptions (positive impact);

b.discounting all of the Group’s liabilities using a risk-free interest rate plus a liquidity premium (positive effect);

c.recognition of expected future profits for portfolios valued using the BBA and VFA approaches in the CSM (negative effect).

•The change in the amount of investments is due to the transition to IFRS 17, in particular to the reclassification of deposits from cedants and part of the investment contract assets, and to the change in the valuation model for equity investments.

•Deferred taxes are accounted for and calculated based on the afore-mentioned changes.

•Other restatements and allocations represent the correction of an incorrectly accounted deferred tax liability on the allocation of the purchase price from the 2019 acquisition of Sava Penzisko Društvo (MKD).

•The effects of the afore-mentioned changes are reflected in the changes in Group and Company equity.

Presentation of the transition impact on accumulated other comprehensive income and retained earnings

EUR

Group

Sava Re

Accumulated other comprehensive income

Closing balance as at 31 December 2021 (audited)

22,547,759

3,716,228

Reclassification of debt instruments from available-for-sale to amortised cost

-14,081,754

-4,277,279

Recognition of expected credit losses under IFRS 9 for debt financial assets at FVOCI

2,000,157

239,484

Deferred tax relating to the application of IFRS 9

2,531,694

767,180

Recognition of changes in interest rates in insurance and reinsurance contracts

-15,428,942

-4,450,459

Deferred tax relating to the application of IFRS 17

3,942,206

845,587

Opening balance under the new standards (1 January 2022)

1,511,120

-3,159,259

Retained earnings of previous years

Closing balance as at 31 December 2021 (audited)

116,166,406

10,633,662

Impact of initial application of IFRS 17

74,482,491

7,445,770

Deferred tax relating to the application of IFRS 17

-13,308,685

-1,414,696

Recognition of ECL under IFRS 9, including those measured at FVOCI

13,964,533

5,487,813

Deferred tax relating to the application of IFRS 9

-2,801,561

-1,100,681

Opening balance under the new standards (1 January 2022)

188,503,184

21,051,868

Prior-period restatements*

-1,908,279

Opening balance under new standards, including prior-period restatements (1 January 2022)

186,594,905

21,051,868

* Adjustment to calculated deferred tax on the acquisition of Sava Penzisko (2019).

EUR

Group

Sava Re

Total change in equity (net of tax) resulting from adoption of new standards

Accumulated other comprehensive income

-9,549,903

-3,270,615

Retained earnings of previous years

11,162,972

4,387,132

Total change in equity resulting from adoption of IFRS 9

1,613,069

1,116,517

Accumulated other comprehensive income on insurance and reinsurance contracts

-11,486,736

-3,604,872

Retained earnings of previous years

61,173,806

6,031,074

Foreign currency translation reserve

12,330

Non-controlling interests in equity

55,883

Total change in equity resulting from adoption of IFRS 17

49,755,283

2,426,202

16.6.1Transition to IFRS 17 “Insurance Contracts”

The Group and the Company have performed an assessment of each group of contracts to determine the possible transitional approaches provided by the standard. As required, a fully retrospective approach has been adopted, unless this was considered impracticable for the group of contracts under

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consideration. In all other cases, either the modified retrospective approach or the fair value approach has been adopted instead.

Full retrospective approach

At the transition date of 1 January 2022, the Group and the Company:

•identified, recognised and measured each group of insurance contracts, as if IFRS 17 had always applied,

•identified, recognised and measured all assets for insurance acquisition cash flows, as if IFRS 17 had always applied,

•derecognised any existing balances that would not exist had IFRS 17 always applied and

•recognised any resulting net difference in equity.

Contracts measured under the modified retrospective approach

The Group assessed historical information available and determined that all reasonable and supportable information necessary for applying the full retrospective approach were not available for all groups of insurance contracts issued before the transition date. The Group elected to apply the modified retrospective approach for some groups of contracts, depending on the entity in the Group, its portfolios, years of initial recognition of a group of contracts and the measurement method, which was intended to achieve the closest possible outcome to the full retrospective application maximising the use of available information.

The Group and the Company applied modifications in the following areas:

•estimation of expected future cash flows and risk adjustment for non-financial risk as at the date of initial recognition,

•determination of the CSM for direct participating contracts and other insurance contracts,

•determination of finance income or expenses from insurance contracts,

Expected cash flows

The Group and the Company estimated the cash flows at the date of initial recognition by estimating these cash flows at the date of transition, adjusted by actual cash flows that were known to have occurred between then and the date of initial recognition. These also included cash flows from contracts that had ceased to exist by the date of transition.

Discount rates

In case of business without direct participation features the Group and the Company had reasonable and supportable information to determine discount rates according to IFRS 17 requirements from 31 December 2003 on. For incurred claims before 31 December 2003, discount rates as at 31 December 2003 were used. On the other hand, in case of business with direct participation features (VFA method) only discount rates from 31 December 2021 were used, in accordance with the requirements of the standard.

Risk adjustment for non-financial risk

The Group estimated the amount of risk adjustment for non-financial risk at the date of transition. The cash flows for past risk adjustment releases were estimated by assuming that these releases are proportionate to coverage units for a given period. Specifically, past risk adjustment releases for a given period were estimated by multiplying the coverage unit for the given period with the ratio between the risk adjustment release and the expected coverage unit of the first projection period following the transition date. This has been performed on the level of a group of contracts.

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Insurance acquisition cash flows

The Group and the Company allocated the insurance acquisition cash flows that occurred during the period from the initial recognition date until the transition date using a systematic and rational allocation method between groups of insurance contracts recognised until the transition date. No insurance acquisition cash flows were allocated to groups that are expected to be recognised after the transition date according to accepted methodology for IFRS 17 measurement.

CSM and loss component

For the business without direct participation features, the CSM at transition date was determined by first estimating the CSM at initial recognition and then decreasing this amount according to the share of service provided during the period until transition (i.e., in the same way as in case of the full retrospective approach).

If there was a loss component estimated at the date of initial recognition, then the Group and the Company determined the amounts allocated to the loss component before the date of transition using a systematic basis of allocation in the same way as in the case of the full retrospective approach.

In the case of VFA, the Group calculated the CSM or loss component at a transition date as a result of the total underlying items value minus present value of future cash flows minus/plus adjustments for amounts charged and paid to policyholder before transition, the release for risk adjustment for non-financial risk and insurance acquisition cash flows paid before the transition. If such amount results in CSM, it is adjusted for an amount of the contractual service margin that relates to services provided before that date. If a loss component is calculated, it is adjusted to nil and LRC excluding loss component is increased by the same amount at a transition date.

For groups of contracts, measured under PAA, a modified retrospective approach was applied, because LRC was estimated at a transition date. In case of onerous groups of contracts measured under PAA, LRC was adjusted for a loss component, estimated at a transition date.

Reinsurance contracts held

For a group of reinsurance contracts held that was purchased before or at the same time the underlying insurance contracts were issued, the Group determines the loss-recovery component of the asset for remaining coverage at the transition by multiplying the loss component of the liability for remaining coverage for the underlying insurance contracts at the transition date with the percentage of claims for the group of underlying onerous insurance contracts that the Group expects to recover from the group of reinsurance contracts held.

Where the Group and the Company did not have reasonable and supportable information to determine the loss-recovery component of the asset for remaining coverage, the Group and the Company did not identify such loss-recovery component.

Insurance revenue

For those groups of contracts for which coverage has expired at the transition date, there is no revenue recognised after the date of transition, except in case of experience adjustments due to subsequent payments or refunds of premiums or change in premium receivables. If there is still coverage remaining after the date of transition, revenue for such groups is recognised.

For groups of contracts, other than direct participating contracts, that were determined to be onerous at the date of transition, the loss component was estimated at the transition date.

For direct participating contracts with remaining coverage that at transition date were determined to have been onerous on initial recognition, the Group does not track any loss component. Revenue is recognised in the same way as for other non-onerous groups of contracts. Subsequent increase in the Group’s share of the fair value of the underlying items will create a CSM, which would then be allocated to the period and included in the determination of the period’s revenue.

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Finance income or expenses from insurance contracts

The Group and the Company have elected a disaggregated presentation of finance income or expenses from insurance contracts for all portfolios. The cumulative amount recognised in OCI at the date of transition was estimated as:

•In case of BBA, OCI was calculated in the same way as in case of full retrospective method.

•For those direct participating contracts for which the Group holds the underlying items and are measured applying VFA, the opening cumulative amount of OCI at transition date was set to correspond to the amount of the underlying items at transition date.

•For non-life insurance and reinsurance contracts issued, accounted applying the PAA, the cumulative amount of OCI in case of LIC was calculated as a difference in LIC applying current and locked-in discount rate at the date of transition.

Accounting estimates made in interim financial statements

The Group and the Company chose the annual reporting accounting policy choice therefore interim financial statement do not influence the determination of CSM or loss component at the transition date.

Contracts measured applying the fair value approach

The Group concluded that reasonable and supportable information for application of the modified retrospective approach was not available for all insurance contracts issued before the date of transition, depending on the entity in the Group, and therefore applied the fair value approach for those contracts. Also, the Company applied the fair value approach for some reinsurance contracts issued, covering underlying contracts in the Group. The Group and the Company used reasonable and supportable information available at the transition date to:

•identify groups of insurance contracts,

•determine whether an insurance contract meets the definition of an insurance contract with direct participation features,

•identify discretionary cash flows for insurance contracts without direct participation features.

Level of aggregation

The Group included contracts into groups of contracts issued within one year apart.

Measurement at the transition date

In applying the fair value approach at the transition date, the CSM or loss component of the LRC was estimated as the difference between the fair value and the fulfilment cash flows of the group of contracts as of that date. In determining fair value, the requirements of IFRS 13 Fair Value Measurement were followed, except for that standard’s requirement in relation to demand features (that fair value cannot be less than the amount repayable on demand). This is because it would contradict the IFRS 17 requirement to incorporate cash flows on a probability-weighted basis.

Discount rates

The Group used discount rates as at the date of transition for fair value approach.

Insurance acquisition cash flows

The Group included all insurance acquisition cash flows paid before the transition in the measurement of the groups of insurance contracts recognised at the transition date, except for the contracts that already ceased before transition date. Consequently, no assets for insurance acquisition cash flows at

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the transition date were recognized. Additionally, it was assumed that all acquisition costs were already amortised until the transition date due to lack of reasonable and supportable information.

Finance income or expenses from insurance contracts

The Group and the Company chose to disaggregate the presentation of finance income or expenses from insurance contracts and determined the cumulative amount recognised in OCI as follows:

•for those direct participating contracts for which the Group holds the underlying items and are measured applying VFA, the opening cumulative amount of OCI at transition date was set to correspond to the amount of the underlying items at transition date, and

•nil for all other contracts.

Reinsurance contracts held

For a group of reinsurance contracts held the Group determines the loss-recovery component of the asset for remaining coverage at transition by multiplying the loss component of the liability for remaining coverage for the underlying insurance contracts at the transition date with the percentage of claims for the group of underlying onerous insurance contracts that the Group expects to recover from the group of reinsurance contracts held.

Acquired insurance contracts

The Group chose to classify as a liability for incurred claims the liability for settlement of claims incurred before a group of insurance contracts was acquired in a portfolio transfer or a business combination within the scope of IFRS 3 Business Combinations.

The effect of groups of insurance contracts measured at the transition date applying the modified retrospective approach or the fair value approach on the contractual service margin and insurance revenue in subsequent periods is shown in note 16.8.10 Movement in liabilities for remaining coverage (LRC) and liabilities for incurred claims (LIC) – insurance contracts issued and note 16.8.12 Movement in individual components of insurance contracts.

16.6.2Transition to IFRS 9 “Financial Instruments”

The Group and the Company adopted IFRS 9 from 1 January 2023 and have prepared comparative financial statements for the 2022 financial year. The Group and the Company have used the “classification overlay approach” described below to prepare comparative data for 2022.

At the date of initial application, the Group and the Company:

•assessed whether a financial asset meets the conditions for classification, considering the selected business model and contractual cash flow characteristics, based on the facts and circumstances existing at that date. The resulting classification was applied retrospectively irrespective of the entity’s business model in prior reporting periods;

•designated all financial assets that are measured at fair value through profit or loss;

•designated investments in equity instruments as measured at fair value through other comprehensive income;

•designated financial liabilities measured at fair value through profit or loss;

•assessed whether a financial asset is in a low credit risk category.

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Such assessment or designation was made on the basis of the facts and circumstances existing at the date of initial application. That classification was applied retrospectively.

Under IAS 39, the Group and the Company classified most of their financial assets in the form of debt securities as available for sale (AFS). These financial assets have been classified in accordance with IFRS 9 into one of the following groups: at fair value through other comprehensive income or at fair value through profit or loss. Under IFRS 9, the Group and the Company may classify debt securities in the fair value through other comprehensive income (FVOCI) measurement category provided that the contractual cash flows are solely repayment of principal and interest (pass the SPPI test).

Most of the equity instruments that were classified as available for sale (AFS) under IAS 39 are classified as at fair value through profit or loss (FVTPL), while there is an option to designate shares and participations at fair value through other comprehensive income (FVOCI) under the standard. Other types of investments, such as units in collective investment undertakings, ETFs, alternative funds, etc. which were classified as available-for-sale (AFS) under IAS 39, were reclassified to the fair value through profit or loss (FVTPL) measurement category.

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Reclassification of financial investments and presentation of the effect on the Sava Insurance Group

39 MRS

Subsequent measurement

IFRS 9

Financial assets (EUR)

Category

Amount

Reclassification

ECL

Other

Amount

Category

Deposit and CD

18,561,698

-343,151

18,218,547

Loans granted*

126,161

Loans granted

1,548,376

-29,833

1,518,543

Cedants

9,610,337

Total LR/AC

29,846,572

-372,983

19,737,091

HTM financial investments

HTM

40,023,124

-40,023,124

– Reclassified to debt investments at AC

HTM

-40,023,124

-56,343

Debt instruments at AC (from HTM)

40,023,124

-56,343

39,966,781

Effect of IFRS 17 (Financial Contracts)

-3,349,096

ECL effect in Group

-26,048

Total HTM/AC

HTM

40,023,124

-82,391

36,591,638

AFS financial investments

1,368,432,673

-1,368,432,673

– Reclassified to debt investments at FVOCI

-1,233,810,051

-1,844,004

1,844,004

– Reclassified to debt investments at FVTPL

-7,502,546

– Reclassified to equity investments at FVTPL

-105,745,268

– Reclassified to equity investments at FVOCI (option)

-21,374,809

Total AFS

AFS

1,368,432,673

-1,368,432,674

-1,844,004

1,844,004

Debt instruments at FVOCI (from AFS)

1,233,810,051

FVOCI

Equity instruments at FVOCI (option) (from AFS)

21,374,809

FVOCI

Effect of IFRS 17 (Financial Contracts)

6,304,614

FVOCI

Total FVOCI

1,255,184,860

1,261,489,474

FVOCI

Equity instruments at FVTPL (from AFS)

105,745,268

FVTPL

Effect of change in model valuation

1,858,910

FVTPL

Effect of IFRS 17 (Financial Contracts)

2,314,904

FVTPL

Debt instruments at FVTPL (from FVOCI)

7,502,546

FVTPL

Financial assets at FVTPL (designated)

34,386,074

-34,386,074

FVTPL

Financial assets at FVTPL (mandatory)

34,386,074

FVTPL

Total FVPL/FVTPL

34,386,074

113,247,814

151,807,703

FVTPL

Total financial investments under IAS 39

1,472,688,443

-2,299,379

1,844,004

1,469,625,906

Assets held for the benefit of policyholders who bear the investment risk

Investments in deposits at amortised cost

2,008,600

-38,593

1,970,007

HTM financial investments

HTM

4,078,892

-4,078,892

239

* The value refers to loans that are treated as liabilities after the transition to IFRS 17.

Expected credit losses (ECL)

EUR

Balance of impairment allowance under IAS 39

Reclassification

ECL under IFRS 9 as at 1 January 2022

Loans and credits granted from LR / Loans, credits granted at AC

411,576

HTM debt securities under IAS 39 / AC debt instruments under MSRP 9

83,943

AFS debt securities under IAS 39 / FVOCI debt instruments under MSRP 9

439,496

2,000,158

2,439,654

Total

439,496

2,495,677

2,935,173

39 MRS

Subsequent measurement

IFRS 9

Financial assets (EUR)

Category

Amount

Reclassification

ECL

Other

Amount

Category

Reclassified to debt investments at AC

HTM

-4,078,892

-1,551

Debt instruments at AC (from HTM)

4,078,892

-1,551

4,077,341

Total HTM/AC

HTM

4,078,892

-1,551

4,077,341

AFS financial investments

62,859,271

-62,859,271

– Reclassified to debt investments at FVOCI

-60,882,191

-156,154

156,154

– Reclassified to equity investments at FVTPL

-1,977,080

Total AFS

AFS

62,859,271

-62,859,271

-156,154

156,154

Debt instruments at FVOCI (from AFS)

60,882,191

FVOCI

Equity instruments at FVOCI (from AFS)

1,977,080

Total FVOCI

62,859,271

FVOCI

Financial assets at FVTPL (designated)

448,492,829

-448,492,829

FVTPL

Financial assets at FVTPL (mandatory)

448,492,829

448,491,870

FVTPL

Total FVPL/FVTPL

448,492,829

448,491,870

FVTPL

Total assets held for the benefit of policyholders who bear the inv. risk

517,439,592

-196,298

156,154

517,398,488

Total financial investments under IFRS 9

1,990,128,035

-2,495,677

2,000,158

1,987,024,394

Cash and cash equivalents

88,647,678

88,643,990

Total cash and cash equivalents

28,806,817

Total financial assets

2,018,934,852

-2,495,677

2,000,158

2,015,831,211

HTM financial liabilities

HTM_L

-74,863,524

74,863,524

Reclassified to: AC financial liabilities

74,863,524

AC financial liabilities (from HTM)

-74,863,524

AC_L

Total HTM_l/AC_L

HTM_L

-74,863,524

AC_L

Total financial liabilities

-74,863,524

240

Reclassification of financial investments and presentation of impact on Sava Re

Financial assets (EUR)

39 MRS

Reclassification

Subsequent measurement

IFRS 9

Category

Amount

ECL

Other

Amount

Category

Deposits from cedants

9,610,337

Loans granted

2,572,973

-49,419

2,523,554

Total LR/AC

12,183,310

-49,419

2,523,554

HTM financial investments

HTM

2,816,979

-2,816,979

– Reclassified to debt investments at AC

HTM

-2,816,979

-17,001

Debt instruments at AC (from HTM)

2,816,979

-17,001

2,799,977

Total HTM/AC

HTM

2,816,979

-17,001

2,799,977

AFS financial investments

303,501,261

-303,501,261

– Reclassified to debt investments at FVOCI

-271,786,710

-239,484

239,484

– Reclassified to equity investments at FVTPL

-31,714,551

Total AFS

AFS

303,501,261

-303,501,261

-239,484

239,484

Debt instruments at FVOCI (from AFS)

271,786,710

FVOCI

Total FVOCI

271,786,710

FVOCI

Equity instruments at FVTPL (from AFS)

31,714,551

FVTPL

Effect of change in model valuation

1,517,200

FVTPL

Financial assets at FVTPL (designated)

FVTPL

9,283,045

-9,283,045

FVTPL

Financial assets at FVTPL (mandatory)

FVTPL

9,283,045

FVTPL

Total FVPL/FVTPL

FVTPL

9,283,045

31,714,551

42,514,796

FVTPL

Total financial investments

327,784,595

-305,905

239,484

319,625,038

Cash and cash equivalents

28,806,817

Total cash and cash equivalents

28,806,817

Total financial assets

356,591,412

-305,905

239,484

348,431,855

HTM financial liabilities

HTM_L

-74,863,524

74,863,524

– Reclassified to financial liabilities at AC

74,863,524

AC financial liabilities (from HTM)

-74,863,524

AC_L

Total HTM_l/AC_L

HTM_L

-74,863,524

AC_L

Total financial liabilities

-74,863,524

Expected credit losses (ECL)

EUR

Balance of impairment allowance under IAS 39

Reclassification

ECL under IFRS 9 as at 1 January 2022

Loans and credits granted from LR / loans and credits granted at AC

49,419

HTM debt securities under IAS 39 / AC debt instruments under MSRP 9

17,001

AFS debt securities under IAS 39 / FVOCI debt instruments under MSRP 9

439,496

239,484

678,981

Total

439,496

305,905

745,401

241

Equity instruments classified as FVOCI

The Group has elected to designate certain equity securities to be measured at fair value through other comprehensive income (FVOCI). These instruments are not held for trading, and at initial recognition the Group has made an irrevocable election to designate them to this category.

The cumulative gains and losses recognised in accumulated other comprehensive income are reclassified to retained earnings on disposal of such instruments.

The Group has elected to reclassify to other comprehensive income the changes in the fair value of equity securities held for the long term for strategic purposes. These investments are not expected to be sold in the short to medium term. Previously, these investments were classified as available for sale. As a result, assets with a fair value of EUR 21,374,809 were reclassified from available-for-sale financial assets to financial assets at FVOCI. As a result of the reversal of the permanent impairment of available-for-sale equity investments, EUR 735,670 of the fair value reserve was reclassified to retained earnings on 1 January 2022.

For a detailed overview of securities classified as FVOCI, see section 16.8.7, table “Equity securities classified as FVOCI”.

16.7Risk management121

The main risk categories that the Group is exposed to are:

•insolvency risk,

•underwriting risks (non-life underwriting risks, life underwriting risks, health underwriting risks),

•financial risks (market risks, liquidity risks, credit risks, risk of failure to realise interest-rate guarantees),

•operational risk, and

•strategic risk.

The following table shows a summary of risks in 2023.

Risk profile of Sava Insurance Group and Sava Re

Risks

Summary of risks in 2023

Risk described in section

Insolvency risk

The Group and the Company ensure an adequate level of excess capital. During 2023, the Group’s capital adequacy in accordance with the Solvency II standard formula remained within the target capital range as defined in the risk strategy and well above regulatory requirements. Throughout 2023, Sava Re’s capital adequacy was consistently assessed to be above the optimal level of the solvency ratio as defined in the risk strategy and significantly above regulatory requirements.

16.7.2

Underwriting risks

In terms of capital requirements, the Group’s most significant risks include non-life, life, and health underwriting risks. These risks are managed appropriately and remain at similar levels to last year. In non-life insurance business, the premium and reserve risk decreased slightly and the catastrophe risk increased slightly. The risk of claims inflation continues to be a concern for non-life insurance business. Sava Re is mainly exposed to non-life underwriting risks, which remained unchanged compared to 2022.

16.7.3

Financial risks

The Group and the Company ensure the appropriate management of financial risks. Exposure to these risks is actively monitored and managed, and appropriate diversification of the investment portfolio and management of assets and liabilities is ensured. Financial risks did not increase further in 2023 compared to 2022. The investment policy

16.7.4

121 GRI 3-3.

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Risks

Summary of risks in 2023

Risk described in section

was adapted to the changed circumstances. The Group and the Company maintain a sufficient level of highly liquid investments.

Operational risks

The Group and the Company actively manage operational risks by continuously improving the internal control environment and processes. Operational risks increased slightly compared to the previous year, mainly due to a slight increase in risks related to data privacy and security and operational risks related to the adoption of the new accounting standard IFRS 17.

16.7.5.

Strategic risks

Strategic risks are an important risk category for the Group and Sava Re due to the uncertain geopolitical environment and the associated unpredictability. The risks are at a similar level compared to last year. The strategic risks section also discusses sustainability risk and climate change risk. The Group and the Company strive to limit the risks sufficiently and to respond and adapt effectively to changes in the environment.

16.7.6

The following is an overview of risks in terms of the potential volatility of business results and the resulting impact on the financial statements of the Group and the Company. Sensitivity analyses are included for each risk group, showing the impact on profit or loss and accumulated other comprehensive income (AOCI).

The potential impact of an extreme internal or external risk materialising and its impact on the Group’s and the Company’s solvency position will be addressed in the Solvency and Financial Condition Report of the Sava Insurance Group for 2023, which will be posted on the Sava Re website on 17 May 2024, and in the Solvency and Financial Condition Report of Sava Re d.d. for 2023, which will be posted on the Company’s website on 5 April 2024.

16.7.1Key challenges and associated risks

16.7.1.1Geopolitical uncertainty and the macroeconomic environment

The uncertain geopolitical situation continued in 2023. The war between Russia and Ukraine continued, and later in the year the military conflict between Israel and Hamas began. The Sava Insurance Group and Sava Re reviewed their exposures at the outbreak of the military conflict and found that there were no material exposures in the region. Tensions between China and Taiwan intensified in 2023. Increasing cooperation between Russia, Iran and North Korea also poses a threat to global stability. Mounting trade restrictions on the strategic positioning of imports and exports of key minerals and rare metals could lead to high price volatility and congestion in supply chains in the future. These frictions also affect the free movement of goods and international trade. Elections will be held in no fewer than 40 countries around the world next year, and the results and changes in the ruling political parties could further influence the geopolitical situation.

From a stock market perspective, 2023 was a good year for equities and bonds, outperforming expectations. The US economy proved resilient, avoiding a recession despite high interest rate hikes and even achieving better-than-expected economic growth of 2.9% in the third quarter122. In Europe, there was no GDP growth123, while Slovenia achieved 1.6% GDP growth in 2023, and the other countries where the Group is present had slightly higher growth124. At the same time, strong deflation was observed in 2023. In the eurozone, the US and other developed countries, inflation is falling as a result of central banks’ rather restrictive monetary policies. The downturn heralds the likely end of interest rate hikes. Forecasts for 2024 currently point to a further decline in inflation. Corporate bond

122 https://tradingeconomics.com/united-states/gdp-growth-annual

123 https://tradingeconomics.com/euro-area/gdp-growth-annual

124 Source: UMAR, Economic Mirror, No. 1/2024, IMF, World Economic Outlook, October 2023, www.statista.com.

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spreads have narrowed in 2023, and companies are expected to start refinancing and issuing new debt at lower costs in 2024. Uncertainty about economic growth in Europe is relatively high.

The Group and the Company monitor potential systemic risks with a view to taking timely action. They reduce their exposure to such risks by, among other things, ensuring adequate diversification of the investment portfolio and a sufficient percentage of highly liquid assets to meet extraordinary liquidity needs. The impact of individual scenarios and events is also considered as part of the own risk and solvency assessment (ORSA). The basis for conducting the 2024 ORSA (which was reported to the regulator in March 2024) is the business plan of Sava Re and the Sava Insurance Group for 2024 confirmed in December 2023, and the financial projections for 2025 and 2026. The capital adequacy projections in the 2024 ORSA confirmed that, over the entire strategy period, the solvency position was compliant with both statutory provisions and the Group’s and the Company’s internal rules, ensuring continuous and adequate liquidity. Scenario analyses showed that both the Sava Insurance Group and Sava Re have a robust solvency ratio resilient to various adverse scenarios as the solvency remains well above the regulatory level even if a scenario materialises.

16.7.1.2Challenges for the insurance industry

Claims inflation

The impacts of claims inflation were diminishing in 2023. The risk of a decline in the profitability of the non-life insurance business due to claims inflation in motor and property insurance was regularly monitored and the impact analysed. The necessary measures have been taken to maintain an appropriate level of profitability in the insurance business, in particular through repeated adjustments to premium rates. On the other hand, the assets and liabilities of (re)insurance contracts have been adjusted to take account of future inflation. The impact of claims inflation was also monitored on a quarterly basis through the periodic risk reports.

Zavarovalnica Sava maintained its profitability through rate increases, largely offsetting the effect of the increase in average claims. At the end of the year, no significant additional upward pressure on prices from claims inflation was observed in Slovenia.

In the non-EU companies, a significant impact of claims inflation was seen somewhat later, in the first half of 2023, while no major impact was seen in the second half of the year. The Sava Insurance Group continues to monitor and analyse the impact on its subsidiaries and is taking the necessary measures to mitigate it.

Claims inflation was also reflected in the reinsurance markets, where we saw an increase in sums insured in 2023, with an increase in retentions. In both the domestic and international reinsurance markets, other factors (including increased loss frequency in some markets, macroeconomic conditions, geopolitical conflicts and the prevailing hard market) influenced the renewal of reinsurance treaties in 2023, further tightening conditions and thus making the renewal of reinsurance protection more challenging. Despite the difficult environment, the Group obtained adequate reinsurance protection in 2023.

In the renewal of its accepted business in 2023, Sava Re continued to focus on appropriate portfolio diversification and adjustments to the pricing and terms of reinsurance treaties (war risk exclusions, sanctions clauses, specific exclusions and limits of cover). It also continued its efforts to reduce the discrepancies between reinsurance accepted and retrocessional cover.

In the period ahead, trends in the renewal of reinsurance programmes at 1 January 2024 suggest a gradual stabilisation of the market, which will have a moderating effect on rates and expectations in the reinsurance markets.

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Natural catastrophes in 2023

During the summer months, Slovenia and certain other countries in which the Group has a presence were hit by a wave of storms and floods that caused significant property damage. The gross claims resulting from these events totalled EUR 88.3 million in 2023. Taking into account reinsurance protection, the impact of these events on the Group’s profit was EUR 27.4 million. Zavarovalnica Sava had the largest impact on profit (EUR 26.4 million).

As expected, these events have had an impact on the renewal of reinsurance protection, in particular on the price of reinsurance, changes to individual reinsurance programmes, the willingness of partners to renew shares and also the willingness of the reinsurance markets to renew a particular type of reinsurance protection. All this resulted in an increased risk of obtaining adequate reinsurance protection, to which Sava Re responded by securing adequate reinsurance protection for the next financial year.

16.7.1.3Climate change and transition to sustainable business

Climate change is a significant sustainability risk for the Sava Insurance Group and Sava Re, as it has a direct and indirect impact on their business activities, and monitoring and managing this risk is crucial for the Group’s long-term performance. Climate change is a serious risk for society and the economy, and for the business of insurance and reinsurance companies.

The Group monitors climate risk, including physical and transition risks. Physical risks are those that arise from the physical effects of climate change. Transition risks are those that arise from the transition to a low-carbon and climate-resilient economy.

Given its activity, physical risks are extremely important for the Group, and the harmful effects of global warming on natural and human systems are already visible today. The Group and the Company consider the risk of an increase in the severity and frequency of extreme weather events and natural catastrophes due to climate change to be a key physical risk. Without further international action on climate change, average global temperatures will continue to rise, potentially increasing underwriting risk through greater loss unpredictability or exposure to natural catastrophes. Monitoring the development of such events will therefore be very important in the future.

Also significant for the Group is transition risk, which relates to potential material negative impact on the value of investments and other significant effects on its business operations.

Transition and physical risks are, and will continue to be, extremely important for the Group’s companies, so they are subject to constant Group-level monitoring. Climate risk was also analysed (qualitatively and quantitatively) in the ORSA.

There is a high level of awareness within the Group that there are many challenges and risks associated with the Group’s transition to sustainable business. Monitoring and reporting on risks related to sustainable development and social responsibility has been established. There is also a strong focus on effective and meaningful implementation of sustainability legislation.

16.7.1.4Cyber risk

Cyber risks were among the key operational risks in 2023. Monitoring and managing these risks will become increasingly important for the Sava Insurance Group. The realisation of cyber risks can lead to a complete disruption of operations and high financial losses, while also affecting the Group’s reputation. Therefore, additional risk mitigation measures are being planned and implemented at Group level, in addition to those already in place. These include the establishment of an information security team, the development of a cyber incident response plan, the integration of a multifactor user authentication system and the establishment of a database protection system. Major cyber risks identified include ransomware, malware, social engineering, data breaches and theft, and denial of

245

service. Security threats and incidents are also regularly monitored through the Security Operations Centre (SOC).

In 2023, the Sava Insurance Group has taken an active approach to planning activities to comply with the new DORA125 regulation for all companies in the Group. The legislation, which comes into force on 17 January 2025, sets new network and information security requirements for financial institutions. Activities will be led at Group level by a formally established project team and include ICT risk management, ICT incident reporting, digital operational resilience testing, third-party ICT risk management and the establishment of information sharing processes.

16.7.1.5Risk assessment and the going-concern assumption

Despite the challenging environment, the Sava Insurance Group exceeded its planned profit for 2023. The impact of events (mainly catastrophe claims and claims inflation) on the solvency ratio was also monitored quarterly throughout 2023, at both Group and company level. Estimates show that their solvency ratios in 2023 were significantly above the regulatory requirement and in line with internal criteria. For both the Sava Insurance Group and Sava Re, risks are continuously identified, monitored, analysed and managed, and the necessary decisions and adjustments are made.

A possible deterioration of the macroeconomic and geopolitical situation may have an adverse impact on the assets and liabilities of the Sava Insurance Group and Sava Re also in 2024.This may have a direct or indirect impact on the Group’s and the Company’s business. The solvency of the Sava Insurance Group and Sava Re may also be affected, but it is not expected to be compromised given their strong capitalisation. Liquidity risk is well managed in both the Group and Sava Re, and no significant increase in liquidity risk is expected over the next 12 months. For Sava Re, the going concern assumption continues to apply, based on the expected cash flow from the core business and the composition of the investment portfolio, which can provide sufficient liquidity for a prolonged period of stress.

16.7.2Capital adequacy and capital management in the Sava Insurance Group and Sava Re

At the Group and Sava Re level, the standard formula is used to calculate the capital requirements in accordance with the Solvency II legislation. The solvency capital requirement (SCR) is fully calculated once a year, whereas the eligible own funds supporting the Group’s solvency requirements are assessed quarterly and the solvency position is assessed during the year. Thus, on a quarterly basis, the solvency position is shown as an interval within which the solvency ratio is estimated to lie in the relevant quarter. Capital adequacy as at 31 December 2022 was assessed under the previous accounting standards (IFRS 4), whereas the assessment as at 31 December 2023 was based on IFRS 17. This had no significant impact on the solvency ratio.

The Group’s estimated solvency position as at 31 December 2023 shows that the Group is well capitalised, with an expected solvency ratio of between 188% and 194% (31 December 2022: 183%). The Group’s eligible own funds to cover the solvency capital requirement (SCR) amounted to EUR 566.0 million at 31 December 2022 and are estimated to have been higher at year-end, mainly due to the strong performance in 2023 and the positive change in the accumulated other comprehensive income. The Group’s solvency capital requirement (SCR) was EUR 310.1 million as at 31 December 2022 and is estimated to have increased in 2023, mainly as a result of an increase in non-life and health underwriting risk and a lower adjustment to the SCR for the loss absorbency of deferred taxes.

The assessments carried out indicate that the Group’s solvency as at 31 December 2023 remains at a high level, well above the regulatory requirement.

125 Digital Operational Resilience Act.

246

At the Sava Insurance Group level, in addition to ensuring regulatory capital adequacy, it is important to manage capital in such a way that it meets the requirements of credit rating agencies for “A” ratings, and that the Group remains solvent and is able to meet its obligations even if stress scenarios materialise. To this end, the risk strategy of the Sava Insurance Group for 2023–2027, which defines the Group’s risk appetite, defines the levels of required solvency ratios, as listed below.

Solvency ratio levels of the Group in line with internal rules defined by the risk strategy

Overcapitalisation> 250%

Acceptable capitalisation 210%–250%

Optimal capitalisation170%–210%

Suboptimal capitalisation150%–170%

Warning capital level100%–150%

Additional engagement or return of capital

Seeking ways to restructure capital use

No action required

Potential capital restructuring

Measures to safeguard Group solvency

247

The estimated solvency ratio of the Sava Insurance Group at the end of 2023 is therefore also in line with the internal criteria and is at the level of optimal capitalisation, as shown in the following graph. The graph shows the Group’s solvency ratio ranges by quarter compared to the lower and upper limits of the optimal level of the solvency ratio under internal criteria.

Capital adequacy of the Sava Insurance Group as at 31 December 2022 and in 2023

The Company’s solvency position as at 31 December 2023 shows that it is well capitalised, with a solvency ratio of 289% (31 December 2022: 266%). The amount of own funds eligible to cover the solvency capital requirement (SCR) as at 31 December 2023 was EUR 653.2 million (31 December 2022: EUR 569.2 million). The increase is mainly due to the strong operating performance in 2023 and the increase in the value of participations. The Company’s solvency capital requirement as at 31 December 2023 was EUR 225.9 million (31 December 2022: EUR 213.8 million) and increased mainly due to the increase in market risks.

Throughout 2023, the Company’s capital adequacy was consistently assessed to be have been above the lower bound of the solvency ratio defined in the risk strategy (more than 200%) and significantly above regulatory requirements.

The following graph shows the solvency ratio ranges of the Company in 2023, the audited solvency ratio as at 31 December 2023 and the compliance with the required lower bound of the solvency ratio according to the internal criteria.

248

Capital adequacy of Save Re as at 31 December 2022 and 31 December 2023

Based on the preceding charts, the Company believes that insolvency risk is low. The scenarios conducted under ORSA 2024 also demonstrated the robustness of the Group’s and the Company’s solvency position.

The annual calculation of capital adequacy will be discussed in more detail in the Solvency and Financial Condition Report of the Sava Insurance Group and the Solvency and Financial Condition Report of Sava Re d.d.

16.7.3Underwriting risks

The Group and the Company are exposed to non-life, life and health underwriting risks. Accepted life reinsurance business of non-Group cedants, including accident reinsurance business, is classified as health underwriting risk. Due to its one-year duration and according to the nature of its coverage, this life reinsurance business is comparable to accepted accident reinsurance business.

First, we present underwriting risks arising out of non-life business. This is followed by risks arising out of life and health insurance business.

16.7.3.1Non-life underwriting risks

The Group’s exposure to non-life underwriting risk, measured by the volume of consolidated gross non-life premiums, is shown in the graph below.

249

Gross premiums written by class of insurance (non-life insurance)

The breakdown of the Group’s gross non-life premiums did not change significantly in 2023.

The Group’s largest premium volume is generated in Slovenia and the Adriatic region, where its direct insurance subsidiaries operate; exposure to Slovenia is predominant. Premiums are higher in 2023, and the share of the largest classes of insurance increased further in 2023. The Company’s other exposures are relatively well diversified globally.

The Group’s exposure to non-life measured by net (re)insurance contract liabilities is disclosed in note 16.8.9 “Insurance and reinsurance contract assets and liabilities”.

As the Group as a whole has an adequate retrocession programme in place, it is not significantly exposed to the risk of a sharp increase in net claims, even in the event of catastrophe losses. More likely is an increase in net claims due to a mass of small adverse developments (an increase in claims or expenses or decrease in premiums) that would affect the net combined ratio.

The Company’s exposure to non-life underwriting risk, measured by the volume of gross non-life premiums, is shown in the following graph, by class of insurance.

250

Gross premiums of Sava Re by class of insurance (non-life reinsurance)

The breakdown of the Company’s gross non-life (re)insurance premiums did not change significantly in 2023.

The Company’s exposure to non-life underwriting risk measured by net (re)insurance contract liabilities is disclosed in note 16.8.9 “Insurance and reinsurance contract assets and liabilities”.

The Group and the Company manage non-life underwriting risks by:

•established underwriting processes, comprising procedures and an authorisation system for the underwriting of (re)insurance contracts with higher sums insured, and a process for the underwriting of (re)insurance contracts in accordance with internal underwriting guidelines for facultative underwriting for high exposures;

•underwriting limits;

•geographical diversification;

•an appropriate actuarial pricing policy applied in product design and controlling; and

•an appropriate reinsurance programme.

The following sections describe risk management in more detail for each of the non-life underwriting risks.

Premium risk

The Group’s and the Company’s premium risk is assessed as moderate and slightly decreased compared to 2022. Uncertainties include claims inflation, which is somewhat lower in 2023 than in 2022 but remains high, and the increased frequency and severity of natural catastrophes. In the future, it will remain necessary to closely review the adequacy of the assumptions used and to react swiftly by adjusting premium rates to ensure that the Group achieves its planned results.

Most accepted non-life (re)insurance contracts are renewed annually. This allows insurers to adjust conditions and rates on an ongoing basis to reflect any adverse developments in the claims experience of entire classes of business and major policyholders. In response to rising inflation, the Group has

251

already taken steps to increase premium rates for motor and property insurance. Due to deteriorating macroeconomic conditions and the increased severity of natural catastrophes in recent years, reinsurance premium rates increased further in 2023, which has been beneficial for the management of premium risk in reinsurance underwriting.

The Group mitigates price risk by conducting detailed market analyses, monitoring the business environment (media, competitors, customers) and regulatory requirements, and monitoring historical claims trends (for the entire insurance market) and projections. In the case of obligatory proportional reinsurance treaties, Sava Re follows the fortune of its ceding companies, while with non-proportional and facultative contracts, the decision on assuming a risk is on Sava Re. It follows from the foregoing that in order to manage this risk, it is essential to review the practices of existing and future ceding companies and to analyse developments by market and class of insurance. Consequently, coverage may only be granted by following internal underwriting guidelines, and performance must be consistent with the target combined ratios, based on available information, prices set and other relevant contractual provisions. The suitability of pricing is verified through modelling and other detailed profitability reviews.

Another underwriting process risk is PML error, the inaccurate assessment of the probable maximum loss (PML). In order to mitigate this risk, the Group has in place guidelines for PML assessment, requirements that PML assessments are a team exercise, and ensures that the reinsurance programme covers PML error.

The Group mitigates claims risk through in-depth assessments of underwriting process risk, by restricting the authorisations in the underwriting process, and by developing IT support that allows an accurate overview of claims accumulation. For accepted reinsurance, this risk, too, can be managed by means of special clauses in proportional reinsurance contracts, which limit the reinsurer’s share of unexpected claims, and by not accepting unlimited layers under non-proportional contracts. Also central to reducing this risk is the annual testing of the appropriateness of reinsurance protection using a variety of stress tests and scenarios, and setting appropriate retentions. Retention levels and reinsurance protection for individual risks remained similar to the previous year in 2023.

Risk of insufficient insurance contract liabilities

The risk that the Group or the Company has insufficient insurance contract liabilities is assessed as medium and is slightly lower compared to 2022, as the level of insurance contract liabilities for all major portfolios has already been appropriately adjusted in 2022 for past and expected future inflation. Compared to the previous year, the inflation outlook for 2023 has also moderated somewhat. The risk is managed through the measures described below.

Insurance contract liabilities may be inadequate due to inaccurate actuarial estimates or unexpected adverse claims developments. This may be the result of new types of losses that are not excluded in cedants’ insurance conditions and for which no insurance contract liabilities have yet been established, which is common in liability insurance, but may also be due to changes in court practice. All the lessons learned from claims experience are then used to determine insurance contract liabilities in the future.

The adjustment of the assumptions for setting insurance contract liabilities in 2023 was affected by the change in the forecast of the expected future claims inflation and the higher severity of natural catastrophes, whereas the run-off analyses of the liability for incurred claims previously set show positive results in 2022 (below).

Based on records and understanding of the process of calculating the insurance contract liabilities, potential risks are identified and described, such as the risks relating to:

•data availability and accuracy,

•adequacy of methods and assumptions used,

•calculation errors,

252

•process support in the IT system and tools.

Controls are put in place for the mitigation of each identified risk. These controls ensure data quality and mitigate the risks associated with the calculation of insurance contract liabilities. The design and operational effectiveness of the controls are reviewed at least annually and whenever there is a significant change in the process or in the methods and models used to calculate insurance contract liabilities.

Such controls include:

•the reconciliation of technical items with the Company’s accounting records,

•peer review of actuarial methods and assumptions,

•defined change management controls for IT tools used in the process,

•actuarial review and approval of the level of insurance contract liabilities.

The process by which insurance contract liabilities are calculated is subject to periodic approval. Where substantial changes have been made to the process, the methodology or models used in the calculation of insurance contract liabilities, a validation is carried out in accordance with the reporting schedule.

Back-testing of adequacy of insurance contract liabilities in 2023

The Group establishes the liability for remaining coverage separately for each group of insurance contracts. In addition to the basic amount of liability for remaining coverage, Group companies establish a loss component if a contract is unprofitable (described in the accounting policies for insurance contracts).

The adequacy of the level of the liability for incurred claims is assessed using run-off analysis. This can only be applied to past years – the further back in time, the more precise the results. As the liabilities for incurred claims are calculated using consistent actuarial methods, we can conclude from historical differences between originally estimated and subsequently established liabilities at various balance sheet dates that the liabilities as at 31 December 2023 are adequate.

The Group companies record and analyse data on liabilities for incurred claims by accident year. The following tables show, for each accident year represented by a column, the development of the estimated ultimate claims (gross, net) of each accident year in relation to the subsequent claims development. The values in the tables, except for the last row, are not discounted.

The data in the following tables are only presented from the transition to the new accounting standard onwards, because the data are insufficient for previous years because of the application of the premium allocation approach on a large part of the non-life portfolio and the fair value transition on certain parts of the portfolio measured using the general measurement model.

All amounts included in the following tables whose original value is in a foreign currency have been translated into euro at the rates of the European Central Bank (ECB) reference rate list published by the Bank of Slovenia as at 31 December of the relevant year. On the other hand, all cash flow amounts included in the tables below that are originally denominated in foreign currencies have been translated into euro using the average exchange rate for the year.

The actual claims development by accident year shows that the run-off of gross and net liabilities is predominantly positive. On the basis of the above, it can be concluded that the level of both the gross and net liabilities for incurred claims as at 31 December 2023 for accident years up to and including 2023 is adequate to cover the expected ultimate liabilities.

253

Development of estimated ultimate non-life claims of the Sava Insurance Group

(EUR thousand)

Year ended 31 December

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Total

Estimates of cumulative gross claims

At end of accident year

500,689,696

617,042,478

Re-estimated as of 1 year later

230,203,088

448,781,487

Re-estimated as of 2 years later

145,496,372

213,530,184

Re-estimated as of 3 years later

113,899,060

136,746,105

Re-estimated as of 4 years later

57,209,581

109,242,100

Re-estimated as of 5 years later

36,001,013

53,606,089

Re-estimated as of 6 years later

25,915,715

36,125,255

Re-estimated as of 7 years later

18,097,114

25,247,364

Re-estimated as of 8 years later

8,460,995

16,303,107

Re-estimated as of 9 years later

8,155,280

Cumulative gross claims paid by reporting date

2,116,604

7,737,146

9,236,733

14,941,662

44,423,306

73,878,548

90,140,998

148,658,528

354,986,526

333,324,882

Gross liabilities for accident years 2014–2023

6,038,677

8,565,961

16,010,631

21,183,593

9,182,783

35,363,552

46,605,108

64,871,656

93,794,961

283,717,596

585,334,517

Gross liabilities for prior accident years

50,274,000

Effect of discounting

-54,982,307

Gross liabilities for incurred claims included in the statement of financial position

580,626,209

254

Development of estimated ultimate non-life claims of Sava Re

(EUR thousand)

Year ended 31 December

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Total

Estimates of cumulative gross claims

At end of accident year

169,061,145

212,673,761

Re-estimated as of 1 year later

146,929,663

147,952,242

Re-estimated as of 2 years later

139,395,365

142,244,502

Re-estimated as of 3 years later

87,849,200

133,882,140

Re-estimated as of 4 years later

46,513,996

83,888,748

Re-estimated as of 5 years later

22,627,306

44,500,791

Re-estimated as of 6 years later

15,006,426

23,307,159

Re-estimated as of 7 years later

11,049,935

16,680,787

Re-estimated as of 8 years later

4,304,617

10,490,659

Re-estimated as of 9 years later

4,427,627

Cumulative gross claims paid by reporting date

1,886,243

6,148,395

8,877,032

13,232,488

44,681,445

70,342,897

109,453,203

102,773,167

91,756,916

48,891,504

Gross liabilities for accident years 2014–2023

2,541,384

4,342,263

7,803,755

10,074,671

-180,653

13,545,851

24,428,937

39,471,335

56,195,326

163,782,257

322,005,126

Gross liabilities for prior accident years

30,363,197

Effect of discounting

-24,923,864

Gross liabilities for incurred claims included in the statement of financial position

327,444,460

255

Development of estimated ultimate insurance and reinsurance claims of the Sava Insurance Group

(EUR thousand)

Year ended 31 December

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Total

Estimates of cumulative net claims

At end of accident year

451,674,080

511,082,147

Re-estimated as of 1 year later

201,176,093

399,223,599

Re-estimated as of 2 years later

127,707,372

196,059,983

Re-estimated as of 3 years later

108,871,233

117,790,838

Re-estimated as of 4 years later

52,841,279

103,146,740

Re-estimated as of 5 years later

31,937,374

49,572,590

Re-estimated as of 6 years later

23,707,304

31,558,767

Re-estimated as of 7 years later

16,774,637

20,988,946

Re-estimated as of 8 years later

8,093,105

14,851,180

Re-estimated as of 9 years later

7,719,231

Cumulative net claims paid by reporting date

2,066,574

6,894,765

8,475,047

13,550,319

40,807,862

68,501,220

75,495,582

139,686,636

312,693,928

297,719,286

Net liabilities for accident years 2014–2023

5,652,657

7,956,415

12,513,899

18,008,448

8,764,728

34,645,521

42,295,256

56,373,347

86,529,671

213,362,861

486,102,803

Net liabilities for prior accident years

35,369,838

Effect of discounting

-51,268,299

Net liabilities for incurred claims included in the statement of financial position

470,204,342

256

Development of estimated ultimate insurance and reinsurance claims of Sava Re

(EUR thousand)

Year ended 31 December

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Total

Estimates of cumulative net claims

At end of accident year

132,617,573

127,557,006

Re-estimated as of 1 year later

121,436,721

113,579,157

Re-estimated as of 2 years later

124,993,433

126,385,345

Re-estimated as of 3 years later

83,429,967

118,347,871

Re-estimated as of 4 years later

42,960,816

78,306,760

Re-estimated as of 5 years later

19,811,338

40,806,960

Re-estimated as of 6 years later

13,240,849

19,901,084

Re-estimated as of 7 years later

10,178,062

12,767,671

Re-estimated as of 8 years later

4,050,048

9,491,264

Re-estimated as of 9 years later

4,103,058

Cumulative net claims paid by reporting date

1,882,142

5,362,550

8,318,561

12,307,466

41,102,498

65,035,220

97,504,951

96,635,426

62,726,195

25,672,840

Net liabilities for accident years 2014–2023

2,220,916

4,128,714

4,449,110

7,593,618

-295,538

13,271,539

20,842,920

29,749,918

50,852,962

101,884,167

234,698,327

Net liabilities for prior accident years

15,778,780

Effect of discounting

-21,643,141

Net liabilities for incurred claims included in the statement of financial position

228,833,966

257

Lapse risk

The lapse risk in 2023 for both Sava Re and the Group is assessed as low and comparable to the previous year.

It is estimated that lapse risk is less important for the Group, as the vast majority of non-life insurance policies is written for one year and cannot be terminated early without the insurer’s consent (except in case of premium default or if the subject-matter of the insurance policy is no longer owned by the policyholder or has been destroyed due to a loss event). The majority of accepted reinsurance contracts is also written for a period of one year. This risk is mitigated primarily by maintaining good relationships with policyholders and cedants and by closely analysing market conditions.

Catastrophe risk

We assess the Group’s catastrophe risk in 2023 to be moderate and (given the size of the insurance portfolios) slightly higher than in the previous year because of the increasing severity of natural catastrophes. We also rate the same risk for Sava Re as moderate.

The Group manages catastrophe risk by means of a well-designed underwriting process, by controlling risk concentration for products covering larger complexes against natural catastrophes and fire, by geographical diversification, and by adequate retrocession protection against natural and man-made catastrophes. In managing these risks, due consideration is given to the fact that maximum net aggregate losses in any one year are affected by both the maximum net claim arising from a single catastrophe event and the frequency of such events.

An appropriate reinsurance programme is important for managing the underwriting risk to which the Group is exposed. The Group uses retrocession treaties to ensure adequate risk diversification. The reinsurance programme is set up to reduce exposure to potential single large losses or the effect of a large number of single losses arising from the same loss event. The Group considers its reinsurance programme (including proportional and non-proportional reinsurance) to be appropriate in view of the risks to which it is exposed. Net retention limits set by the Group are only rarely applied. The Group also concludes co-insurance and reciprocal contracts with other reinsurers to further disperse risks.

We consider natural catastrophe risk to be the most significant catastrophe risk to which non-life insurance is exposed. Sava Re has the highest exposure to natural catastrophes in Slovenia, whereas exposures elsewhere are relatively well-diversified globally.

The table below shows the Company’s gross natural catastrophe exposures for 10 countries with the highest exposures as at 31 December 2023 and 31 December 2022.

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The largest gross exposure of Sava Re to natural catastrophes by country (EUR thousand)126

Country

31 December 2023

Country

31 December 2022

Slovenia

472,942,000

Slovenia

492,219,081

China

48,183,550

China

52,183,589

Greece

36,075,000

Croatia

38,643,718

Taiwan

32,530,091

India

34,664,109

Vietnam

30,842,603

Greece

32,579,445

Germany

30,300,050

Philippines

32,408,102

India

30,298,091

Taiwan

31,840,502

Austria

29,726,240

Romania

31,686,845

Serbia

29,543,248

Vietnam

30,226,968

Romania

28,616,100

Turkey

29,791,873

Total

769,056,973

Total

806,244,233

Exposure to Slovenia decreased by EUR 19.3 million compared to the previous year, with no other major changes compared to the previous year. Countries with the highest gross exposure in 2023 also include Germany, Austria and Serbia.

At the Group level, as shown in the table above, exposure to natural catastrophes is higher in regions where the Group companies write non-life insurance. Thus, the largest gross aggregate exposure to natural catastrophes is concentrated in Slovenia, and the Group has a reinsurance programme to cover catastrophe risks (detailed below), thereby transferring a portion of the risk to reinsurers. The following table shows the gross aggregate exposure in Slovenia by peril.

Gross aggregate exposure to individual natural catastrophes by country (sums insured)

EUR thousand127

2023

2022

Flood

15,060,648

12,891,510

Earthquake

18,566,047

15,159,157

Storm and hail

56,534,206

53,163,175

The Group’s primary insurance business and separately accepted non-Group reinsurance business is protected against natural catastrophes based on non-proportional catastrophe excess-of-loss coverages for own account. Even prior to the operation of the non-proportional protection, the portfolio of earthquake (re)insurance business of the Group’s cedants is protected by a quota share retrocession treaty. This means that if a major event occurs, the Group will suffer a loss equal, at most, to the amount of the priority of the catastrophe excess-of-loss cover plus a reinstatement premium. In this way, the maximum net exposure of a portfolio to a catastrophe event is limited by the retention up to the capacity of the reinsurance cover. If the Group makes additional use of the coverage, it is subject to provisions concerning reinstatements, meaning that it needs to purchase protection for the remaining period of cover. This is a common instrument available in the international reinsurance market at a price that is usually lower than the original cover due to the shorter coverage period.

Sensitivity analysis for non-life underwriting risks

For non-life insurance, we have assumed a change in the gross claims ratio and restated the impact on profit or loss and AOCI128. The effects shown in the following tables are net of income tax. The calculation of effects for the Sava Insurance Group and Sava Re are shown separately.

126 For exposure, in countries where modelled exposure data is available, PML assumptions (250 year events) are used, but where this data is not available, the sum insured is used as the maximum exposure.

127 The data compiled are as at 30 June of each year.

128 Effect on accumulated other comprehensive income.

259

Sensitivity analysis as at 31 December 2023

Sava Insurance Group

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net129

Gross

Net

Gross loss ratio

+10%

-62,157,036

-52,020,629

-79,090

-83,065

Gross loss ratio

-10%

55,574,989

45,515,666

79,171

83,145

Sensitivity analysis as at 31 December 2022

Sava Insurance Group

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net

Gross

Net

Gross loss ratio

+10%

-49,199,635

-44,681,935

465,357

392,791

Gross loss ratio

-10%

44,819,055

40,311,208

-465,357

-392,791

Most of the effect of a change in the gross loss ratio is reflected in the income statement, while the direct effect of this type of sensitivity analysis on equity is small. The effect on profit or loss as at 31 December 2023 is higher than as at 31 December 2022 as a result of portfolio growth.

Sensitivity analysis as at 31 December 2023

Sava Re

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net

Gross

Net

Gross loss ratio

+10%

-21,261,342

-12,615,739

39,956

34,039

Gross loss ratio

-10%

21,064,541

12,418,939

-39,956

-34,039

Sensitivity analysis as at 31 December 2022

Sava Re

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net

Gross

Net

Gross loss ratio

+10%

-16,687,588

-12,807,618

361,530

289,911

Gross loss ratio

-10%

16,472,585

12,592,616

-361,530

-289,911

Most of the effect of a change in the gross loss ratio is reflected in the income statement, the direct effect of this type of sensitivity analysis on AOCI is small. The effect as at 31 December 2023 on profit or loss has remained at the same level as at 31 December 2022.

Assessed risk exposure in 2023 compared to 2022

The Group’s non-life underwriting risk is assessed as moderate. In 2023, the premium risk remains at a similar level to 2022, while the reserve risk slightly decreased in 2023 and the catastrophe risk slightly increased compared to 2022. We believe that the risks to which the Sava Insurance Group and Sava Re are exposed are adequately managed.

According to our assessment, the likelihood that the non-life underwriting risk would seriously compromise the Group’s or the Company’s financial stability is estimated as low.

16.7.3.2Life underwriting risk

The main life underwriting risks relevant for Sava Re and the Group are the mortality risk, life expense risk and lapse risk (which includes terminations due to surrenders, changes to paid-up status and defaults).

The Group is moderately exposed to life underwriting risk. The Group’s main exposure to life underwriting risk is in the EU. The following chart shows the structure of the Group’s gross life insurance premiums by class of business.

129 The effect on profit or loss is shown before reinsurance (gross) and after reinsurance (net).

260

Gross premiums by class of insurance (life insurance)

The Company’s exposure to life underwriting risk is low. In 2023, gross reinsurance premiums for traditional life insurance amounted to EUR 1,242 thousand (2022: EUR 1,202 thousand) and gross unit-linked life insurance premiums were EUR 86 thousand (2022: EUR 95 thousand).

The Group’s and the Company’s exposure to life underwriting risk measured by net (re)insurance contract liabilities is disclosed in note 16.8.9 “Insurance and reinsurance contract assets and liabilities”.

Life underwriting risks are also managed by periodically monitoring the life portfolio composition, exposures, premium payment patterns, lapse rates and expenses incurred, as well as by analysing the appropriateness of the modelling of the expected mortality and morbidity, and lapse rates. The information so obtained allows for timely action in the case of adverse developments in these indicators.

The Group additionally manages life underwriting risk by strictly following underwriting and risk assessment procedures. These specify the criteria and terms of approving risk acceptance. At given premium rates, risk assumption depends on the age at entry and the requested sum insured. The Group accepts a risk if the health of the insured, as a measure of the quality of the risk, meets the criteria set out in the medical underwriting table. An additional factor in the assumption of risks is lifestyle, including leisure activities and occupation. The Group has in place an appropriate reinsurance programme in order to limit the impact of underwriting risk (death and additional risks); covers are generally on a proportional basis. The retention of insurance companies does not exceed EUR 100,000.

There is no significant concentration of life underwriting risk at the Group level, as the portfolio is well-diversified in terms of the age of the insured persons, the remaining period of insurance, exposures (of sums insured and sums at risk), and premium payment schedule. The portfolio is also diversified in terms of the percentage of policies lapsed in a period, expenses, and mortality and morbidity rates by product.

261

Sensitivity analysis for life underwriting risks

For life insurance, we have assumed a change in the assumptions for mortality rates, morbidity and disability rates, longevity rates, expenses and lapse rates. The change in assumptions for longevity rates also takes into account the annuities of Sava Pokojninska Družba. We have restated the effect on profit or loss and AOCI128. The effects shown in the following tables are net of income tax.

Sensitivity analysis as at 31 December 2023

Sava Insurance Group

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net

Gross

Net

Mortality rates

+10%

-240,381

-4,544

-5,063

Mortality rates

-10%

158,663

21,676

22,541

Morbidity and disability rates

+10%

-49,745

425,013

425,011

Morbidity and disability rates

-10%

32,577

-425,531

-425,529

Longevity rates

+10%

152,901

-38,642

Longevity rates

-10%

-179,618

42,602

Expenses

+10%

-568,313

538,662

Expenses

-10%

355,294

-585,923

Lapse rates

+10%

147,704

-1,663,994

-1,693,872

Lapse rates

-10%

-173,660

1,902,940

1,936,301

Sensitivity analysis as at 31 December 2022

Sava Insurance Group

EUR

Profit or loss

AOCI

Change in assumptions

Gross

Net

Gross

Net

Mortality rates

+10%

-300,785

116,185

114,888

Mortality rates

-10%

221,403

-128,136

-126,826

Morbidity and disability rates

+10%

-56,640

483,965

483,962

Morbidity and disability rates

-10%

41,754

-484,263

-484,260

Longevity rates

+10%

209,636

-75,813

Longevity rates

-10%

-218,430

57,039

Expenses

+10%

-432,469

724,327

Expenses

-10%

285,202

-712,643

Lapse rates

+10%

63,757

-1,619,506

-1,663,104

Lapse rates

-10%

-85,636

1,835,820

1,884,046

Based on the sensitivity analysis performed, it can be concluded that the sensitivities performed do not have a material impact on profit or loss. The direct effect on AOCI as at 31 December 2023 is greatest for the change in the lapse rate.

Assessed risk exposure in 2023 compared to 2022

We estimate the Group’s life underwriting risk as moderate and well managed, remaining at a similar level to 2022.

16.7.3.3Health underwriting risk

Most of the exposure to health underwriting risk relates to accident insurance classified as NSLT health insurance, but the exposure to SLT health insurance is very small.

NSLT health underwriting risks are, inherently, very similar to non-life underwriting risks and are therefore discussed in greater detail in section 16.7.3.1 “Non-life underwriting risks”. The Group

262

manages NSLT-health underwriting risks through similar techniques, i.e. by means of a well-designed underwriting process, control of risk concentration for accident and health insurance products, and adequate reinsurance protection.

SLT health underwriting risks are very similar in nature to life underwriting risks, and are therefore managed by the Group using similar techniques. These are discussed in more detail in section 16.7.3.2 “Life underwriting risks”. These insurances were taken into account in our sensitivity analysis for life underwriting risks.

Assessed risk exposure in 2023 compared to 2022

We consider the Group’s and the Company’s exposure to health underwriting risk in 2023 small and comparable to 2022.

16.7.4Financial risks130

The Company’s financial operations expose it to financial risks arising from its investment portfolio, including market, liquidity and credit risks.

The value of the investment portfolio includes the following balance sheet items: financial investments, investment property, investments in associates and subsidiaries, and cash and cash equivalents. As at 31 December 2023, the carrying amount of this investment portfolio stood at EUR 2,111.8 million (31 December 2022: EUR 1,914.0 million).

A more detailed presentation of the portfolio’s carrying amount is shown in the following table, separately for the investment portfolio supporting non-life and traditional life insurance liabilities (investments other than investments supporting direct participating contracts) and the investment portfolio supporting unit-linked life insurance liabilities (investments supporting direct participating contracts).

Value and composition of the investment portfolio in terms of financial risk assumption as at 31 December 2023

Sava Insurance Group

EUR

Investments other than investments supporting direct participating contracts

Investments supporting direct participating contracts

Total

Deposits and CDs

25,616,171

Government bonds

819,083,092

32,439,945

851,523,037

Corporate bonds

457,727,881

20,560,202

478,288,083

Shares (excluding strategic shares)

21,754,273

Mutual funds

18,564,549

544,804,326

563,368,876

Bond and money market

13,293,605

47,248,244

60,541,849

Mixed

113,793,106

Equity funds

5,270,945

383,762,976

389,033,921

Infrastructure funds

57,339,858

Real estate funds

13,888,193

Loans granted and other investments

754,140

Financial investments

1,414,728,158

597,804,473

2,012,532,631

Financial investments in associates

23,834,620

Investment property

24,890,276

Cash and cash equivalents

39,829,039

10,730,924

50,559,963

Investment portfolio

1,503,282,093

608,535,398

2,111,817,490

130 With regard to financial risks, we disclose other financial risks in addition to the financial risks identified in IFRS 7.

263

Value and composition of the investment portfolio in terms of financial risk assumption as at 31 December 2022

Sava Insurance Group

EUR

Investments other than investments supporting direct participating contracts

Investments supporting direct participating contracts

Total

Deposits and CDs

18,848,260

Government bonds

734,273,049

30,417,030

764,690,079

Corporate bonds

420,528,608

20,369,770

440,898,378

Shares (excluding strategic shares)

24,883,922

Mutual funds

22,157,732

433,105,447

455,263,179

Bond and money market

14,095,023

43,558,846

57,653,869

Mixed

92,506,399

Equity funds

8,062,709

297,040,201

305,102,910

Infrastructure funds

53,856,376

Real estate funds

16,497,061

Loans granted and other investments

1,194,821

Financial investments

1,292,239,830

483,892,247

1,776,132,077

Financial investments in associates

21,856,109

Investment property

22,795,760

Cash and cash equivalents

78,339,699

14,883,930

93,223,629

Investment portfolio

1,415,231,398

498,776,177

1,914,007,575

As at 31 December 2023, the Company’s investment portfolio totalled EUR 699.5 million (31 December 2022: EUR 679.0 million), with an increase of EUR 20.5 million compared to the end of 2022, as explained in section 8.2.3 “Financial position” of this annual report.

Value and composition of the investment portfolio in terms of financial risk assumption

Sava Re

Type of investment

31 December 2023

As % of total31 December 2023

31 December 2022

As % of total31 December 2022

Absolute

difference

% change (p.p.)

Deposits and CDs

1,021,347

0.1%

1,021,347

0.1

Government bonds

229,591,819

32.8%

214,198,680

31.50%

15,393,139

1.3

Corporate bonds

88,089,961

12.6%

73,992,930

10.90%

14,097,031

1.7

Shares (excluding strategic shares)

3,538,972

0.5%

7,080,606

1.00%

-3,541,634

-0.5

Mutual funds

4,458,315

0.6%

3,933,982

0.60%

524,333

0.0

Bond funds

2,397,194

0.3%

2,246,501

0.30%

150,693

0.0

Equity funds

2,061,121

0.3%

1,687,481

0.20%

373,640

0.1

Infrastructure funds

21,084,448

3.0%

18,843,871

2.80%

2,240,577

0.2

Real estate funds

3,884,428

0.6%

4,584,214

0.70%

-699,786

-0.1

Loans granted

2,714,904

0.4%

1,796,693

0.30%

918,211

0.1

Financial investments

354,384,196

50.7%

324,430,976

47.80%

29,953,220

2.9

Financial investments in Group companies

325,241,793

46.5%

322,935,793

47.60%

2,306,000

-1.1

Investment property

7,582,168

1.1%

7,721,693

1.10%

-139,525

0.0

Cash and cash equivalents

12,260,049

1.8%

23,926,029

3.50%

-11,665,980

-1.7

Total financial investments exposed to financial risk

699,468,206

100.0%

679,014,492

100.0%

20,453,715

264

16.7.4.1Market risk

As part of the management of market risk, the Group and the Company assess interest rate risk, property price risk, equity price risk and currency risk. The following table shows the Group’s investments exposed to market risk (investment portfolio excluding cash and cash equivalents).

Group financial investments exposed to market risk

Sava Insurance Group

Type of investment

31 December 2023

As % of total

31 December 2023

31 December 2022

As % of total

31 December 2022

Absolute change

% change (p.p.)

Deposits and CDs

25,616,171

1.2%

18,848,260

1.0%

6,767,911

0.2

Government bonds

819,083,092

39.7%

734,273,049

40.3%

84,810,043

-0.6

Corporate bonds

457,727,881

22.2%

420,528,608

23.1%

37,199,273

-0.9

Shares (excluding strategic shares)

21,754,273

1.1%

24,883,922

1.4%

-3,129,649

-0.3

Mutual funds (excluding underlying financial investments)

18,564,549

0.9%

22,157,732

1.2%

-3,593,183

-0.3

Bond and money market

13,293,605

0.6%

14,095,023

0.8%

-801,418

-0.2

Mixed

0.0%

0.0

Equity funds

5,270,945

0.3%

8,062,709

0.4%

-2,791,764

-0.1

Infrastructure funds

57,339,858

2.8%

53,856,376

3.0%

3,483,482

-0.2

Real estate funds

13,888,193

0.7%

16,497,061

0.9%

-2,608,868

-0.2

Loans granted and other investments

754,140

0.0%

1,194,821

0.1%

-440,681

-0.1

Investments of contracts with

direct participation

597,804,473

29.0%

483,892,247

26.6%

113,912,226

2.4

Financial investments

2,012,532,631

97.6%

1,776,132,077

97.5%

236,400,554

0.1

Financial investments in associates

23,834,620

1.2%

21,856,109

1.2%

1,978,511

0.0

Investment property

24,890,276

1.2%

22,795,761

1.3%

2,094,515

-0.1

Investment portfolio

2,061,257,527

100.0%

1,820,783,947

100.0%

240,473,580

0.0

Investment portfolio excluding investments in associates

2,037,422,907

1,798,927,838

The value of the Group’s investments portfolio exposed to market risk increased by EUR 240.5 million in 2023 compared to year-end 2022, which is explained in section 8.1.3.4 “Investment portfolio” of the business report part (first part of the annual report). The following table shows the Group’s and the Company’s investments exposed to market risk (investment portfolio excluding cash and cash equivalents).

Sava Re financial investments exposed to market risk

Sava Re

Type of investment

31 December 2023

As % of total31 December 2023

31 December 2022

As % of total31 December 2022

Absolute change

% change (p.p.)

Deposits and CDs

1,021,347

0.1%

0.0%

1,021,347

0.1

Government bonds

229,591,819

33.4%

214,198,680

32.7%

15,393,139

0.7

Corporate bonds

88,089,961

12.8%

73,992,930

11.3%

14,097,031

1.5

Shares (excluding strategic shares)

3,538,972

0.5%

7,080,606

1.1%

-3,541,634

-0.6

Mutual funds

4,458,315

0.6%

3,933,982

0.6%

524,333

0.0

Bond and money market

2,397,194

0.3%

2,246,501

0.3%

150,693

0.0

Equity funds

2,061,121

0.3%

1,687,481

0.3%

373,640

0.0

Infrastructure funds

21,084,448

3.1%

18,843,871

2.9%

2,240,577

0.2

Real estate funds

3,884,428

0.6%

4,584,214

0.7%

-699,786

-0.1

Loans granted

2,714,904

0.4%

1,796,693

0.3%

918,211

0.1

Financial investments

354,384,196

51.6%

324,430,976

49.5%

29,953,220

2.07

Financial investments in associates

325,241,793

47.3%

322,935,793

49.3%

2,306,000

-2.0

Investment property

7,582,168

1.1%

7,721,693

1.2%

-139,525

-0.1

Investment portfolio

687,208,157

100.0%

655,088,462

100.0%

32,119,694

0.0

265

The value of the Company’s financial investments exposed to market risk decreased by EUR 140 thousand in 2023 compared to year-end 2022, which is explained in section 8.2.3.4 “Investment portfolio” of the business report part (first part of the annual report).

16.7.4.1.1Interest rate risk

Interest rate risk is measured through sensitivity analysis, which measures the change in value of interest rate sensitive investments and the change in value of insurance contract liabilities when interest rates change by 1 p.p. or 100 basis points.

The interest rate sensitive portion of the Group’s and the Company’s investment portfolio includes government and corporate bonds, deposits, loans, bond and mixed mutual funds covering non-life and traditional life insurance and reinsurance contract liabilities, including insurance contract liabilities of direct participating contracts.

On the liabilities side, all liabilities arising from (re)insurance contracts are included in line with the IFRS 17 valuation. In the table, assets and liabilities relating to non-life and traditional life insurance business are shown together, whereas assets and liabilities relating to life insurance where policyholders bear the investment risk are shown separately under direct participating contracts.

The Group’s investment portfolio, excluding investments in direct participating contracts, also includes variable-rate investments. These investments are linked to a 3-month EURIBOR and therefore the Company has not recorded the effects of the benchmark reform (IBOR), which provides for the substitution of certain interest rate benchmarks. It holds no other variable-rate investments. The Group does not have any variable-rate liabilities.

Interest rate sensitive investments and liabilities from the Group’s insurance and reinsurance contracts

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Financial investments

Investments other than investments supporting direct participating contracts, of which

1,315,373,623

1,188,938,775

– Fixed-income investments

1,314,567,547

1,182,673,414

– Variable-rate investments

806,076

6,265,361

Investments supporting direct participating contracts*, of which

159,707,518

140,505,540

– Fixed-income investments

159,707,518

140,505,540

– Variable-rate investments

Financial liabilities

-56,290,346

Total financial investments

1,475,081,141

1,273,153,969

Insurance and reinsurance contracts

(Re)insurance contract liabilities (other than for direct participating contracts)

1,065,741,226

1,006,526,331

(Re)insurance contract assets (other than for direct participating contracts)

-115,630,856

-75,271,982

Direct participating contracts

586,910,698

478,840,441

Total insurance and reinsurance contracts

1,537,021,068

1,410,094,790

* Includes interest rate sensitive investments. These are debt securities and interest rate sensitive investments in bond and mixed mutual funds underlying participating contracts.

The total value of the Group’s interest rate sensitive investments at 31 December 2023 was EUR 1,475.1 million (31 December 2022: EUR 1,273.2 million). The value of interest rate sensitive liabilities at 31 December 2023 was EUR 1,537.0 million (31 December 2022: EUR 1,410.1 million).

The value of investments other than investments supporting direct participating contracts (31 December 2023: EUR 1,315.4 million; 31 December 2022: EUR 1,188.9 million) is significantly above insurance and reinsurance contract liabilities (31 December 2023: EUR 950.1 million; 31 December 2022: EUR 931.3 million), due to interest rate sensitive investments of the Group companies’ own funds, which are not immediately intended to cover insurance and reinsurance liabilities. The higher value of (re)insurance contract assets in relation to (re)insurance contract liabilities also affects the higher sensitivity of insurance contract assets. In managing these

266

investments, Group companies ensure that the maturities of the investments match those of the liabilities.

The lower value of the investments underlying direct participating contracts compared to the corresponding liabilities is due to the fact that only interest rate sensitive investments (bonds, bond mutual funds) with a total value of EUR 159.7 million are shown among the investments underlying direct participating contracts (31 December 2022: EUR 140.5 million), whereas all the assets and liabilities relating to direct participating contracts are interest rate sensitive.

For Sava Re, the table shows total reinsurance contract assets and liabilities. The Company’s investment portfolio supporting contracts other than direct participating contracts also includes variable-rate investments. These investments are linked to a 3-month EURIBOR and therefore the Company has not recorded the effects of the benchmark reform (IBOR), which provides for the substitution of certain interest rate benchmarks. It holds no other variable-rate investments. The Company does not have any variable-rate liabilities.

Interest rate sensitive investments supporting and liabilities arising from reinsurance contracts of Save Re

Sava Re

EUR

31 December 2023

31 December 2022

Financial investments

Investments other than investments supporting direct participating contracts, of which

322,793,879

291,928,359

– Fixed-income investments

322,290,081

291,927,867

– Variable-rate investments

503,797

492

Investments supporting direct participating contracts, of which

– Fixed-income investments

– Variable-rate investments

Financial liabilities

-58,702,709

-56,290,346

Total financial investments

264,091,170

235,638,013

Insurance and reinsurance contracts

Insurance and reinsurance contract liabilities (other than for direct participating contracts)

296,199,571

272,734,094

Insurance and reinsurance contract assets

-100,857,965

-64,296,545

Total insurance and reinsurance contracts

195,341,606

208,437,549

The total value of the Company’s interest rate sensitive investments at 31 December 2023 was EUR 264.1 million (31 December 2022: EUR 235.6 million). The value of interest rate sensitive liabilities and assets at 31 December 2023 was EUR 195.3 million (31 December 2022: EUR 208.4 million).

The value of interest rate sensitive investments (31 December 2023: EUR 322.8 million; 31 December 2022: EUR 291.9 million) is significantly above the value of insurance and reinsurance contract assets and liabilities (31 December 2023: EUR 195.3 million; 31 December 2022: EUR 208.4 million), due to interest rate sensitive investments of the Company’s own funds, which are not immediately intended to cover insurance and reinsurance liabilities. The excess of investments over liabilities increases the Company’s sensitivity to changes in interest rates. In managing these investments, the Company ensures that the maturities of the investments match those of the liabilities.

Sensitivity analysis of the Group’s interest rate risk

The sensitivity analysis for interest rate risk shows separately the impact on profit or loss and AOCI in the event of a 100 basis point increase or decrease in interest rates, on a pre-tax basis. The total impact of both the contract value and the related investments of this portfolio is already presented under “Direct participating contracts and investments supporting direct participating contracts”. The impact of a change in interest rates on an insurer’s profit or loss or AOCI depends on the IFRS category of each interest rate sensitive investment. In accordance with the accounting policies adopted by the Group companies, the majority of the changes in value of the items are recognised in AOCI with only a minor impact on profit or loss.

267

Results of sensitivity analysis of interest rate risk sensitive investments

Sava Insurance Group

EUR

Profit or loss

AOCI

Increase(+100 bps)

Decrease(-100 bps)

Increase(+100 bps)

Decrease(-100 bps)

31 December 2023

Insurance and reinsurance contracts (other than direct participating contracts)

346,437

-395,100

24,637,677

-28,600,218

Financial investments (other than those supporting direct participating contracts)

-750,810

806,026

-39,299,988

42,529,399

Direct participating contracts and investments supporting direct participating contracts

82,634

-132,489

-130,533

136,910

-321,738

278,438

-14,792,844

14,066,091

31 December 2022 (restated)

Insurance and reinsurance contracts (other than direct participating contracts)

346,118

-397,261

28,355,647

-31,508,205

Financial investments (other than those supporting direct participating contracts)

-998,031

912,825

-46,408,432

42,747,965

Direct participating contracts and investments supporting direct participating contracts

-99,175

91,240

-108,573

114,447

-751,088

606,804

-18,161,358

11,354,207

As can be seen from the results, an increase in interest rates has a negative effect, while a decrease in interest rates has a positive effect, mainly on the Company’s AOCI.

Interest rate risk was slightly lower in 2023 compared to the previous year, mainly due to the shorter duration of interest rate sensitive investments.

The average maturity of bonds and deposits of non-life business was 3.6 years at year-end 2023 (31 December 2022: 3.2 years), while the expected maturity of non-life liabilities was 2.2 years (31 December 2022: 2.1 years).

The average maturity of bonds and deposits supporting the life business was 4.0 years at year-end 2023 (31 December 2022: 4.6 years), and the expected maturity of life insurance liabilities was 7.5 years (31 December 2022: 7.5 years).

Sensitivity analysis of Sava Re’s interest rate risk

The following table shows the results of the sensitivity analysis for Sava Re.

Results of sensitivity analysis of interest rate risk sensitive investments

Sava Re

EUR

Profit or loss

AOCI128

Increase(+100 bps)

Decrease(-100 bps)

Increase(+100 bps)

Decrease(-100 bps)

31 December 2023

Insurance and reinsurance contracts

4,157,916

-4,639,531

Financial investments

-263,249

273,031

-7,766,939

7,166,405

-263,249

273,031

-3,609,023

2,526,874

31 December 2022 (restated)

Insurance and reinsurance contracts

4,018,749

-4,478,846

Financial investments

-267,618

284,609

-7,668,485

8,099,557

-267,618

284,609

-3,649,736

3,620,711

As can be seen from the results, an increase in interest rates has a negative effect, while a decrease in interest rates has a positive effect, mainly on the Company’s AOCI.

Overall interest rate sensitivity decreased slightly compared to the previous year, whereas the expected volatility of market interest rates remained elevated due to macroeconomic conditions. There was no impact on the income statement for insurance and reinsurance contracts. This is because no new reinsurance contracts were recognised in the last month.

268

We estimate that the interest rate risk remained at about the same level as the previous year.

16.7.4.1.2Risk of change in the market value of property investments

The Group and the Company are exposed to the risk of change in the market value of property investments as part of the risks affecting the investment portfolio. In addition to investment property, real estate funds shown as alternative investments under financial investments are also exposed to this risk.

The following two tables show the value of investment property and real estate funds of the Group and Sava Re.

Investment property

Sava Insurance Group

EUR

31 December 2023

As % of total

31 December 2023

31 December 2022

As % of total

31 December 2022

Absolute change

% change (p.p.)

Investment property

24,890,276

1.67%

22,795,761

1.70%

2,094,515

0.0

Real estate funds

13,888,193

0.93%

16,497,061

1.20%

-2,608,868

-0.3

Total

38,778,469

2.60%

39,292,822

2.9%

-514,353

0.0

Sava Re

EUR

31 December 2023

As % of total31 December 2023

31 December 2022

As % of total31 December 2022

Absolute change

% change (p.p.)

Investment property

7,582,168

1.1%

7,721,693

1.10%

-139,525

0.0

Real estate funds

3,884,428

0.6%

4,584,214

0.70%

-699,786

-0.1

Total

11,466,596

1.6%

12,305,907

1.8%

-839,311

-0.2

As at 31 December 2023, the value of the Group’s investments exposed to investment property price risk was EUR 38.8 million (31 December 2022: EUR 39.3 million), a decrease of EUR 0.5 million compared to the previous period. As at 31 December 2023, the value of the Company’s investments exposed to investment property price risk was EUR 11.5 million (31 December 2022: EUR 12.3 million), a decrease of EUR 0.8 million compared to the previous period.

The risk was assessed through a sensitivity analysis to a 15% decrease in the value of the investments. The result is shown in the following two tables, separately for the Group and Sava Re.

Result of sensitivity analysis of real estate investments

Sava Insurance Group

EUR

Profit or loss

AOCI

Increase(+15%)

Decrease(-15%)

Increase(+15%)

Decrease(-15%)

31 December 2023

Investment property

3,733,541

-3,733,541

Real estate funds

2,083,229

-2,083,229

5,816,770

-5,816,770

31 December 2022 (restated)

Investment property

3,419,364

-3,419,364

Real estate funds

2,474,559

-2,474,559

5,893,923

-5,893,923

269

Result of sensitivity analysis of real estate investments

Sava Re

Profit or loss

AOCI

Profit or loss

AOCI

EUR

Profit or loss

AOCI

Increase(+15%)

Decrease(-15%)

Increase(+15%)

Decrease(-15%)

31 December 2023

Investment property

1,137,325

-1,137,325

Real estate funds

582,664

-582,664

1,719,989

-1,719,989

31 December 2022 (restated)

Investment property

1,158,254

-1,158,254

Real estate funds

687,632

-687,632

1,845,886

-1,845,886

The selected shock would reduce the value of the Group’s investments sensitive to investment property risk by EUR 5.8 million (31 December 2022: EUR 5.9 million), and the value of the Company’s investments exposed to investment property risk would decrease by EUR 1.8 million (31 December 2022: EUR 1.8 million). The investment property price risk has not changed significantly compared to the previous year.

16.7.4.1.3Equity price risk

Assets exposed to the risk include shares, equity and mixed mutual funds (the sensitivity analysis takes into account half of the value), alternative funds (infrastructure) and ETFs.

Unlike the bond portfolio, which moves inversely to interest rates, the value of equities and mutual funds changes linearly with stock prices. Equity price risk is measured by a sensitivity analysis, i.e., the change in the value of such investments in case of a 20% change.

Equity investments and direct participating contracts included in the sensitivity analysis

Sava Insurance Group

EUR

31 December 2023

As % of total

31 December 2023

31 December 2022

As % of total

31 December 2022

Absolute change 31 December 2023 - 31 December 2022

% change (p.p.)

Financial investments

21,754,273

1.1%

24,883,922

1.4%

-3,129,649

-0.3

of which Slovenian shares

5,593,016

0.3%

9,844,715

0.5%

-4,251,699

-0.2

Equity and mixed mutual funds

5,270,865

0.3%

8,062,709

0.4%

-2,791,844

-0.1

Infrastructure funds

57,339,858

2.8%

53,856,376

3.0%

3,483,482

-0.2

Investments supporting direct participating contracts*

440,659,529

21.4%

343,293,401

18.9%

97,366,128

2.5

Total financial investments

525,024,525

25.5%

430,096,408

23.6%

94,928,117

1.9

Insurance and reinsurance contracts

Direct participating contracts

586,910,698

478,840,441

108,070,257

Total insurance and reinsurance contracts

586,910,698

478,840,441

108,070,257

* Includes investments exposed to equity price risk in equity and mixed mutual funds supporting direct participating contracts.

270

Equity investments included in the sensitivity analysis

Sava Re

EUR

31 December 2023

As % of total portfolioas at 31 December 2023

31 December 2022

As % of total portfolioas at 31 December 2022

Absolute change 31 December 2023 - 31 December 2022

% change (p.p.)

3,538,972

0.5%

7,080,606

1.10%

-3,541,634

-0.6

of which Slovenian shares

3,298,739

0.5%

6,892,061

1.10%

-3,593,322

-0.6

Equity mutual funds

2,061,121

0.3%

1,687,481

0.30%

373,640

0.0

Infrastructure funds

21,084,448

3.1%

18,843,871

2.90%

2,240,577

0.2

Total

26,684,541

3.88%

27,611,958

4.2%

-927,417

-0.4

The Company’s assets exposed to equity price risk include equities, equity and mutual funds, and infrastructure funds. Investments in subsidiaries and associates are disclosed in section 16.7.4.1.4 “Risk of change in value of investments in subsidiaries and associates of the Sava Insurance Group and Sava Re”.

Results of sensitivity analysis of equity investments

Sava Insurance Group

EUR

Profit or loss

AOCI

Increase

(+20%)

Decrease

(-20%)

Increase

(+20%)

Decrease

(-20%)

31 December 2023

Financial investments (other than those supporting direct participating contracts)

13,679,021

-13,679,021

3,193,978

-3,193,978

Direct participating contracts and investments supporting direct participating contracts

21,714

-60,490

13,700,735

-13,739,511

3,193,978

-3,193,978

31 December 2022 (restated)

Financial investments (other than those supporting direct participating contracts)

14,373,066

-14,373,066

2,987,535

-2,987,535

Direct participating contracts and investments supporting direct participating contracts

88,013

-104,133

14,461,079

-14,477,199

2,987,535

-2,987,535

Thus, a 20% fall in equity prices would reduce the value of investments other than direct participating contracts by EUR 16.9 million (31 December 2022: EUR 17.4 million). The Sava Insurance Group’s exposure to equity price risk remained at approximately the same level in 2023 compared to the end of 2022.

Results of sensitivity analysis of equity investments

Sava Re

EUR

Profit or loss

AOCI

Increase

(+20%)

Decrease

(-20%)

Increase

(+20%)

Decrease

(-20%)

31 December 2023

Financial instruments

5,336,908

-5,336,908

5,336,908

-5,336,908

31 December 2022 (restated)

Financial instruments

5,522,392

-5,522,392

5,522,392

-5,522,392

A 20% change in the value of the equity securities would decrease the value of the investments by EUR 5.3 million (31 December 2022: EUR 5.5 million).

The equity price risk of the Group’s and the Company’s equity securities remained at approximately the same level in 2023 as in 2022.

271

16.7.4.1.4Risk of change in value of investments in subsidiaries and associates of the Sava Insurance Group and Sava Re

With regard to the risk associated with their financial investments in associates, the Sava Insurance Group and Sava Re are mainly exposed to the risk of a decline in the value of these investments. As at 31 December 2023, the Group’s total exposure to the risk of financial investments in associates was EUR 23.8 million (31 December 2022: EUR 21.9 million).

The following table shows the sensitivity of investments in associates to changes in value. The analysis only includes the associated company Diagnostic Centre Bled.

Results of sensitivity analysis of the Sava Insurance Group’s investments in associates

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Value

Post-stress value

Change in value

Value

Post-stress value

Change in value

Decrease in value of 10%

23,834,620

21,451,158

-2,383,462

21,856,109

19,670,498

-2,185,611

Decrease in value of 20%

23,834,620

19,067,696

-4,766,924

21,856,109

17,484,887

-4,371,222

Regarding the risk related to its investments in subsidiaries and associates, Sava Re is especially exposed to the risk of a decline in the value of these investments and to concentration risk. In 2023, the Company’s largest exposure among investments in subsidiaries and associates was from its investment in Zavarovalnica Sava, which accounted for 37.9% as at 31 December 2023 (31 December 2022: 38.2%) of the total value of its investments in subsidiaries and associates. As at 31 December 2023, the Company’s total exposure to the risk related to investments in subsidiaries and associates was EUR 325.2 million (31 December 2022: EUR 322.9 million).

The following table shows the sensitivity of investments in subsidiaries and associates to changes in value.

Results of the sensitivity analysis of investments in subsidiaries and associates of Sava Re

Sava Re

EUR

31 December 2023

31 December 2022

Value

Post-stress value

Change in value

Value

Post-stress value

Change in value

Decrease in value of 10%

325,241,793

292,717,614

-32,524,179

322,935,793

290,642,214

-32,293,579

Decrease in value of 20%

325,241,793

260,193,435

-65,048,359

322,935,793

258,348,635

-64,587,159

Value decrease of largest subsidiary of 10%

123,364,958

111,028,462

-12,336,496

123,364,958

111,028,462

-12,336,496

Value decrease of largest subsidiary of 20%

123,364,958

98,691,967

-24,672,992

123,364,958

98,691,967

-24,672,992

The Company’s exposure to the risk related to investments in subsidiaries and associates was at a similar level in 2023 as in 2022. Taking account of all the impacts, we believe that the risk related to participations remained moderate due to their active management.

The Sava Insurance Group and Sava Re manage the risk related to their investments in subsidiaries and associates through active management of the companies, comprising:

•a governance system (management and supervision) and clear segregation of responsibilities at all levels,

•risk management policies,

•systematic risk management with a three-lines-of-defence framework (detailed in section 10 “Risk management”),

•the setting of business and risk management strategies from the top down, taking into account both the Group as a whole as well as its individual members,

•a comprehensive system of monitoring operations, reporting on business results and risks at all levels.

272

16.7.4.1.5Currency risk

As at 31 December 2023, the Sava Insurance Group recorded 8.3% of liabilities nominated in a foreign currency (2022: 10.7%).

The Sava Insurance Group manages currency risk through the efforts of each company to optimise asset-liability currency matching. Based on the market situation, individual companies assess the ability of currency matching in the primary currency, and, if this is not possible, the transaction currency is used for matching.

The following table shows the currency (mis)match for the Sava Insurance Group for the five currencies that account for the largest portion of its liabilities.

Transaction currency (mis)match as at 31 December 2023 (all amounts translated to euros)

Sava Insurance Group

EUR

Euro (EUR)

US dollar (USD)

Korean won (KRW)

Macedonian denar (MKD)

Serbian dinar (RSD)

Other

Total

Financial investments and cash

1,343,270,392

44,029,051

14,006,703

18,804,267

25,429,025

57,742,657

1,503,282,095

Financial liabilities

-74,987,535

Insurance and reinsurance contract assets

107,111,477

2,439,525

88,730

100,186

3,446,017

3,901,107

117,087,042

Insurance and reinsurance contract liabilities

-914,467,838

-42,171,929

-14,550,070

-12,234,485

-21,897,715

-60,428,938

-1,065,750,976

Other assets

312,115,253

7,762,500

10,032,698

9,239,395

489,947

339,639,793

Other liabilities

-825,972,622

-79,293

-11,208,304

-3,575,024

-59,066

-840,894,309

Currency mismatch

11,979,854

454,638

5,494,361

12,641,698

1,645,706

32,216,257

Currency matching ratio

98.4%

Direct participating contracts

-586,910,697

-586,914,306

Investments supporting direct participating contracts

607,667,203

858,516

9,680

608,535,399

273

Transaction currency (mis)match as at 31 December 2022 (all amounts translated to euros)

Sava Insurance Group

EUR

Euro (EUR)

US dollar (USD)

Korean won (KRW)

Macedonian denar (MKD)

Serbian dinar (RSD)

Other

Total

Financial investments and cash

1,260,327,187

45,054,700

18,050,266

16,812,760

21,698,149

53,288,337

1,415,231,398

Financial liabilities

-74,924,356

Insurance and reinsurance contract assets

67,133,351

2,630,004

30,262

1,987,189

3,491,178

75,271,985

Insurance and reinsurance contract liabilities

-829,403,926

-44,578,266

-15,330,910

-10,687,947

-16,500,514

-90,024,771

-1,006,526,334

Other assets

298,223,324

5,507,267

11,990,350

6,593,818

545,933

322,860,692

Other liabilities

-746,252,584

-51,085

-2,889,598

-2,654,942

-911

-751,849,120

Currency mismatch

8,562,621

2,749,618

15,225,565

11,123,699

32,700,234

70,361,736

Currency matching ratio

96.1%

Direct participating contracts

-478,840,440

Investments supporting direct participating contracts

498,013,107

761,512

1,556

498,776,175

The Sava Insurance Group manages a high level of currency matching by monitoring matching of assets and liabilities at the level of individual companies and the portfolio. The Group manages the matching of currencies used by the Group companies in accordance with local accounting standards and regulations, which results in a slightly higher mismatch at Group level.

274

Impact of a 10-percent increase or decrease in the exchange rate as at 31 December 2023 (all amounts translated into euros)

Sava Insurance Group

EUR

Profit or loss

AOCI

Effect of 10% strengthening

Effect of 10% weakening

Effect of 10% strengthening

Effect of 10% weakening

US dollar (USD)

Insurance and reinsurance contracts

-3,971,210

3,971,210

-50,638

50,638

Financial investments

4,402,905

-4,402,905

431,695

-431,695

-50,638

50,638

Korean won (KRW)

Insurance and reinsurance contracts

-1,446,134

1,446,134

-14,493

14,493

Financial investments

1,400,670

-1,400,670

-45,464

45,464

-14,493

14,493

Serbian dinar (RSD)

Insurance and reinsurance contracts

-1,819,069

1,819,069

7,962

-7,962

Financial investments

2,542,903

-2,542,903

723,834

-723,834

7,962

-7,962

Macedonian denar (MKD)

Insurance and reinsurance contracts

-1,208,244

1,208,244

-5,185

5,185

Financial investments

1,880,427

-1,880,427

672,182

-672,182

-5,185

5,185

Other

Insurance and reinsurance contracts

-5,630,485

5,630,485

-54,372

54,372

Financial investments

5,774,266

-5,774,266

Direct participating contracts and

investments supporting direct participating contracts

-188,646

176,531

-44,865

32,750

-54,372

54,372

Impact of a 10-percent increase or decrease in the exchange rate as at 31 December 2022 (all amounts translated into euros)

Sava Insurance Group

EUR

Profit or loss

AOCI

Effect of 10% strengthening

Effect of 10% weakening

Effect of 10% strengthening

Effect of 10% weakening

US dollar (USD)

Insurance and reinsurance contracts

-4,189,323

4,189,323

-163,164

163,164

Financial investments

4,505,470

-4,505,470

316,146

-316,146

-163,164

163,164

Korean won (KRW)

Insurance and reinsurance contracts

-1,530,065

1,530,065

-38,072

38,072

Financial investments

1,805,027

-1,805,027

274,962

-274,962

-38,072

38,072

Serbian dinar (RSD)

Insurance and reinsurance contracts

-1,438,097

1,438,097

-6,231

6,231

Financial investments

2,169,815

-2,169,815

731,718

-731,718

-6,231

6,231

Macedonian denar (MKD)

Insurance and reinsurance contracts

-1,048,640

1,048,640

-20,154

20,154

Financial investments

1,681,276

-1,681,276

632,636

-632,636

-20,154

20,154

Other

Insurance and reinsurance contracts

-8,481,494

8,481,494

-238,667

238,667

Financial investments

5,328,834

-5,328,834

Direct participating contracts and

investments supporting direct participating contracts

27,256

-32,263

-3,125,404

3,120,397

-238,667

238,667

275

Sava Re is the Sava Insurance Group member with the largest exposure to currency risk.

As at 31 December 2023, the Company’s liabilities denominated in foreign currencies accounted for 14.0% (2022: 15.4%) of the Company’s total liabilities. As the proportion of international business is rising (as is the number of different currencies), Sava Re has put in place rules on currency matching, which define the conditions and method of currency matching. To mitigate currency risk, assets and liabilities in foreign currencies are actively matched. The currency matching rules lay down the criteria as to when the Company should start currency matching by accounting currency131. Based on the market situation, the Company assesses the ability of currency matching in the primary currency, and if this is not possible, the transaction currency is to be used for matching.132

The currency mismatch of assets and liabilities is monitored by individual accounting currency. The following table showes the currency mismatch for the five currencies that account for the largest share of liabilities.

Transaction currency (mis)match as at 31 December 2023 (all amounts translated to euros)

Sava Re

EUR

Euro (EUR)

US dollar (USD)

Korean won (KRW)

Chinese yuan (CNY)

Indian rupee (INR)

Other

Total

Financial investments and cash

595,859,090

38,288,843

14,006,703

9,305,018

5,721,095

36,287,456

699,468,206

Financial liabilities

-74,987,535

Insurance and reinsurance contract assets

94,515,178

2,439,525

88,730

447,814

244,989

3,121,729

100,857,965

Insurance and reinsurance contract liabilities

-182,553,431

-42,167,875

-14,550,070

-9,958,235

-7,437,358

-39,532,600

-296,199,571

Other assets

13,623,626

4,525

13,628,151

Other liabilities

-442,764,537

-2,679

-442,767,216

Currency mismatch

1,434,982

454,638

205,403

1,471,274

126,094

3,692,391

Currency matching ratio

99.5%

131 The accounting currency is the local currency used in the accounting documentation. Reinsurance contracts may be accounted for in various accounting currencies. Generally, this is the currency of liabilities and receivables due from cedants, and hence also the reinsurer.

132 The transaction currency is the currency in which reinsurance contract transactions are processed.

276

Transaction currency (mis)match as at 31 December 2022 (all amounts translated to euros)

Sava Re

EUR

Euro (EUR)

US dollar (USD)

Korean won (KRW)

Chinese yuan (CNY)

Indian rupee (INR)

Other

Total

Financial investments and cash

575,036,552

38,567,392

18,050,266

8,321,462

5,882,185

33,156,633

679,014,490

Financial liabilities

-74,924,356

Insurance and reinsurance contract assets

59,534,851

2,630,004

30,262

244,344

62,758

1,794,326

64,296,545

Insurance and reinsurance contract liabilities

-156,060,611

-44,826,248

-15,330,910

-7,939,249

-6,866,522

-41,710,554

-272,734,094

Other assets

10,937,310

Other liabilities

-406,583,489

-6,405

-406,589,894

Currency mismatch

3,635,256

2,749,618

626,557

921,580

6,759,595

14,692,606

Currency matching ratio

98.1%

In the management of currency risk (ALM aspect), Sava Re directly matches all the more liquid currencies. Other currencies are matched based on their correlation with the euro or the US dollar.

Impact of a 10-percent increase or decrease in the exchange rate as at 31 December 2023 (all amounts translated into euros)

Sava Re

EUR

Profit or loss

AOCI

Effect of 10% strengthening

Effect of 10% weakening

Effect of 10% strengthening

Effect of 10% weakening

US dollar (USD)

Insurance and reinsurance contracts

-3,972,835

3,972,835

-50,525

50,525

Financial investments

3,828,884

-3,828,884

-143,951

143,951

-50,525

50,525

Korean won (KRW)

Insurance and reinsurance contracts

-1,446,134

1,446,134

-14,493

14,493

Financial investments

1,400,670

-1,400,670

-45,464

45,464

-14,493

14,493

Chinese yuan (CNY)

Insurance and reinsurance contracts

-951,042

951,042

21,596

-21,596

Financial investments

930,502

-930,502

-20,540

20,540

21,596

-21,596

Indian rupee (INR)

Insurance and reinsurance contracts

-719,237

719,237

3,512

-3,512

Financial investments

572,110

-572,110

-147,127

147,127

3,512

-3,512

Other

Insurance and reinsurance contracts

-3,641,087

3,641,087

-64,439

64,439

Financial investments

3,628,746

-3,628,746

-12,341

12,341

-64,439

64,439

277

Impact of a 10-percent increase or decrease in the exchange rate as at 31 December 2022 (all amounts translated into euros)

Sava Re

EUR

Profit or loss

AOCI

Effect of 10% strengthening

Effect of 10% weakening

Effect of 10% strengthening

Effect of 10% weakening

US dollar (USD)

Insurance and reinsurance contracts

-4,219,624

4,219,624

-162,735

162,735

Financial investments

3,856,099

-3,856,099

-363,525

363,525

-162,735

162,735

Korean won (KRW)

Insurance and reinsurance contracts

-1,530,065

1,530,065

-38,072

38,072

Financial investments

1,805,027

-1,805,027

274,962

-274,962

-38,072

38,072

Chinese yuan (CNY)

Insurance and reinsurance contracts

-769,491

769,491

15,754

-15,754

Financial investments

832,146

-832,146

62,656

-62,656

15,754

-15,754

Indian rupee (INR)

Insurance and reinsurance contracts

-680,376

680,376

-5,053

5,053

Financial investments

588,218

-588,218

-92,158

92,158

-5,053

5,053

Other

Insurance and reinsurance contracts

-3,991,623

3,991,623

-80,713

80,713

Financial investments

3,315,663

-3,315,663

-675,960

675,960

-80,713

80,713

16.7.4.2Liquidity risk

The Group companies manage liquidity risk in line with the guidelines laid down in the Sava Insurance Group’s liquidity risk management policy. Each Group member carefully plans and monitors the realisation of cash flows (cash inflows and outflows) and, in the event of liquidity problems, informs the parent company, which assesses the situation and provides the necessary funds to ensure liquidity.

Liquidity risk is monitored and managed by the Group companies in accordance with the size and complexity of their operations, with particular attention paid to liquidity risk management in the EU-based insurance companies due to their importance to the Group’s operations.

The Group monitors and manages liquidity risk:

•with clearly defined procedures and rules for the daily planning and liquidity management of each Group company,

•by carefully planning, monitoring, analysing and reporting on realised cash flows,

•by maintaining an adequate level of highly liquid assets,

•through a system of intercompany liquidity lines of credit within the Group,

•through long-term planning and appropriate matching of asset and liability maturities.

The Group companies generally meet their short-term liquidity needs by allocating funds to money market instruments in proportion to their estimated normal day-to-day liquidity requirements.

The adequacy of the assessed liquidity needs at the individual company level is regularly reviewed and analysed by monitoring and analysing realised operating cash flows and comparing them with medium-term cash flow projections.

278

Additional liquidity is provided to the Group companies through a system of intercompany liquidity lines of credit established within the Group companies and by maintaining an appropriate level of highly liquid investments. The Group’s risk strategy requires its EU-based insurance companies to hold at least 20% of their investment portfolio in highly liquid financial assets.

The Group companies prepare monthly reports on the cash flows generated by their core business, which are sent to the parent company together with explanations of significant inflows or outflows and deviations.

The Group’s management is informed of liquidity risks through regular reports which include, as a minimum, a comparison of realised and projected cash flows from the core business and the value and proportion of highly liquid investments in the portfolio.

As at 31 December 2023, highly liquid investments of the Sava Insurance Group represented 44.5% (31 December 2022: 43.0%) of the total investment portfolio, which demonstrates the high liquidity of the portfolio and its consistency with the risk strategy.

We consider the Sava Insurance Group’s liquidity risk to be largely unchanged from 2022 and low.

Insurance liabilities payable on demand

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Amount payable on demand

Carrying amount

Amount payable on demand

Carrying amount

Life – insurance contracts issued without direct participation

2,722,670

13,633,667

2,099,155

11,103,685

Insurance contracts issued with direct participation

517,421,856

586,910,697

416,314,739

478,840,439

Contracts issued with indirect participation

241,511,538

358,163,058

251,720,145

364,121,528

Total

761,656,064

958,707,422

670,134,039

854,065,652

The surrender value, being the amount payable on demand, is the highest in the group of direct participating contracts, which also has the highest carrying amount. The increase in amounts payable on demand compared to the previous year is mainly due to an increase in the volume of direct participating contracts, as a result of portfolio growth and financial market developments.

279

The following two tables show the values of financial investments on the basis of undiscounted cash flows.

Maturity analysis of financial investments and cash and cash equivalents

Sava Insurance Group

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Financial investments measured at fair value through profit or loss

114,587,332

2,686,757

1,726,306

1,442,417

2,734,225

764,548

22,705,242

95,576,983

127,636,477

Financial investments measured at amortised cost

74,776,353

28,287,735

7,304,922

15,475,996

6,787,865

5,808,577

24,190,317

87,855,412

Financial investments measured at fair value through other comprehensive income

1,225,364,473

262,344,328

225,229,656

242,274,174

136,530,084

144,302,234

332,062,823

15,969,890

1,358,713,188

Cash and cash equivalents

39,829,039

Investments supporting direct participating contracts

608,535,398

22,686,684

7,860,727

6,253,938

5,880,288

3,169,538

24,717,738

544,804,326

615,373,237

Total

2,063,092,594

355,834,543

242,121,610

265,446,524

151,932,462

154,044,896

403,676,119

656,351,200

2,229,407,354

Sava Insurance Group

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Financial investments measured at fair value through profit or loss

122,378,486

3,089,623

1,352,122

1,791,671

1,507,782

2,799,590

25,053,276

100,113,761

135,707,825

Financial investments measured at amortised cost

62,325,228

13,626,989

16,885,042

2,910,243

11,877,501

5,008,761

22,635,496

72,944,033

Financial investments measured at fair value through other comprehensive income

1,107,536,116

188,994,586

142,478,911

183,014,527

191,411,646

116,142,061

452,348,748

14,927,677

1,289,318,156

Cash and cash equivalents

78,339,699

Investments supporting direct participating contracts

498,776,177

17,419,990

1,509,810

1,506,810

3,060

1,709,120

333,522,219

355,674,069

Total

1,869,355,706

301,470,887

162,225,886

189,223,251

204,799,988

123,953,472

501,746,640

448,563,657

1,931,983,781

The following two tables show insurance and reinsurance contract assets and liabilities on the basis of discounted cash flows.

280

Maturity analysis of insurance liabilities

Sava Insurance Group

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Insurance contract liabilities (other than for participating contracts)

1,064,109,744

474,068,555

145,461,430

92,150,282

60,319,930

47,493,806

244,615,741

1,064,109,744

Insurance contract assets (other than for participating contracts)

-9,605,486

-6,718,928

726,297

-395,315

-1,217,307

-1,221,771

-778,462

-9,605,486

Participating contracts

586,910,697

15,487,299

13,907,928

16,963,764

24,029,368

25,181,637

491,340,702

586,910,697

Total insurance contracts

1,641,414,955

482,836,925

160,095,656

108,718,731

83,131,992

71,453,672

735,177,980

1,641,414,955

Reinsurance contract liabilities

1,642,044

2,653,349

-865,452

-188,938

-28,915

12,152

59,848

1,642,044

Reinsurance contract assets

-107,481,558

-75,799,217

-17,702,959

-9,349,710

-2,586,260

-647,629

-1,395,783

-107,481,558

Total reinsurance contracts

-105,839,514

-73,145,868

-18,568,411

-9,538,648

-2,615,175

-635,477

-1,335,934

-105,839,514

Total insurance liabilities

1,535,575,441

409,691,057

141,527,245

99,180,083

80,516,816

70,818,194

733,842,046

1,535,575,441

Sava Insurance Group

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Insurance contract liabilities (other than for participating contracts)

1,005,474,718

413,873,860

144,695,165

86,781,016

62,105,280

44,941,060

253,078,337

1,005,474,718

Insurance contract assets (other than for participating contracts)

-7,138,341

-7,820,778

1,015,519

475,393

54,667

-129,629

-733,514

-7,138,341

Participating contracts

478,840,440

10,328,289

11,465,862

13,662,764

15,557,307

22,206,957

405,619,260

478,840,440

Total insurance contracts

1,477,176,817

416,381,371

157,176,546

100,919,173

77,717,255

67,018,387

657,964,084

1,477,176,817

Reinsurance contract liabilities

1,051,614

1,015,826

78,110

-28,746

-79,291

3,643

62,072

1,051,614

Reinsurance contract assets

-68,133,645

-29,862,851

-20,852,286

-7,573,412

-2,990,393

-1,539,831

-5,314,873

-68,133,645

Total reinsurance contracts

-67,082,031

-28,847,024

-20,774,175

-7,602,158

-3,069,684

-1,536,188

-5,252,801

-67,082,031

Total insurance liabilities

1,410,094,786

387,534,347

136,402,371

93,317,015

74,647,571

65,482,199

652,711,283

1,410,094,786

281

Maturity analysis of other liabilities

Sava Insurance Group

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Subordinated liabilities

74,987,535

Other provisions

8,074,255

1,543,811

177,514

61,270

31,533

1,789,475

4,378,040

92,612

8,074,255

Other financial liabilities

737,085

Investment contract liabilities

180,437,695

80,324,218

1,417,236

1,550,345

1,865,798

2,460,961

92,819,137

180,437,695

Liabilities from operating activities

23,136,124

18,569,124

5,370

3,538

1,799,135

2,751,881

23,136,124

Other liabilities

42,845,539

41,652,245

2,067,951

-874,785

42,845,535

Total

330,218,233

142,826,484

1,600,120

3,683,104

1,900,869

4,253,974

173,983,847

1,969,708

330,218,228

Sava Insurance Group

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Subordinated liabilities

74,924,356

Other provisions

7,973,454

1,952,902

1,789,152

3,573,897

48,498

26,432

582,573

7,973,454

Other financial liabilities

548,576

548,581

-7

548,574

Investment contract liabilities

166,197,363

79,023,431

952,066

1,592,421

1,728,492

2,106,754

80,794,199

166,197,363

Liabilities from operating activities

13,176,941

8,157,730

3,557,652

7,785

1,626,315

-172,541

13,176,941

Other liabilities

33,353,137

32,532,864

221,150

398,776

346,934

40,948

-187,536

33,353,136

Total

296,173,827

122,215,508

6,520,020

5,565,094

2,131,709

2,133,186

157,968,391

-360,084

296,173,824

282

Sava Re manages liquidity risk in accordance with the guidelines laid down in the liquidity risk management policy of the Sava Insurance Group and Sava Re.

The Company monitors and manages liquidity risk:

•with clearly defined procedures and rules for the daily planning and liquidity management of each Group company,

•by carefully planning, monitoring, analysing and reporting on realised cash flows,

•by maintaining an adequate level of highly liquid assets,

•through a system of intercompany liquidity lines of credit within the Group,

•through long-term planning and appropriate matching of asset and liability maturities.

The Company manages liquidity risk by ensuring funds in the amount of the estimated liquidity requirement. This consists of an assessment of normal day-to-day liquidity needs and a liquidity buffer, and it is provided by allocating assets to money market instruments.

The Company makes the normal current liquidity assessment based on the projected cash flow analysis in the period of up to one year included in the monthly and weekly plans, which take into account the planned investment maturity dynamics as well as other inflows and outflows from operating activities. To this end, historical data from previous monthly and weekly liquidity plans and projections regarding future operations are used. The liquidity reserve is then calculated on the basis of an assessment of the maximum weekly outflows based on historical data.

Additional liquidity is provided to Sava Re through a system of intercompany liquidity lines of credit established within the Group companies and by maintaining an appropriate level of highly liquid investments. The Company’s risk strategy requires that at least 20% of the investment portfolio be invested in highly liquid financial assets.

Management is informed of liquidity risks through regular reports which include, as a minimum, a comparison of realised and projected cash flows from the core business and the value and proportion of highly liquid investments in the portfolio.

The Company held EUR 192.0 million or 52% (31 December 2022: EUR 185.1 million or 52.1%) of highly liquid investments.

The Company’s liabilities with up to 1 year’s maturity at the end of 2023 exceeded short-term assets. Taking into consideration expected operating income and a high share of liquid investments, we estimate the Company’s liquidity position as appropriate.

Based on the above, we estimate that the liquidity risk of the Company is well managed and did not change significantly compared to year-end 2022.

In the following tables, the values of financial investments are shown on the basis of undiscounted cash flows, whereas (re)insurance contract assets and liabilities are shown on the basis of discounted cash flows.

283

Maturity analysis of financial investments and cash and cash equivalents

Sava Re

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Financial investments measured at fair value through profit or loss

37,286,800

186,300

7,748,409

32,966,164

41,646,073

Financial investments measured at amortised cost

5,811,776

406,400

339,486

3,326,176

1,153,403

82,046

1,968,593

7,276,104

Financial investments measured at fair value through other comprehensive income

311,285,620

81,249,862

84,720,879

71,499,122

27,509,728

23,533,266

48,274,645

336,787,501

Cash and cash equivalents

12,260,049

Total

366,644,245

94,102,611

85,246,665

75,011,598

28,849,431

23,801,612

57,991,647

32,966,164

397,969,727

Sava Re

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Financial investments measured at fair value through profit or loss

39,718,676

1,523,900

186,400

7,320,506

34,442,673

44,032,679

Financial investments measured at amortised cost

3,871,965

564,866

301,672

213,669

2,200,358

1,097,485

134,315

4,512,365

Financial investments measured at fair value through other comprehensive income

280,840,335

77,428,888

46,197,857

54,768,379

46,679,482

20,546,997

67,552,054

313,173,657

Cash and cash equivalents

23,926,029

Total

348,357,005

103,443,684

46,685,929

55,168,448

49,066,240

21,830,882

75,006,875

34,442,673

385,644,729

Maturity analysis of insurance liabilities

Sava Re

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Insurance contract liabilities

295,752,723

160,511,367

71,517,218

31,455,296

13,263,165

5,434,969

13,570,708

295,752,723

Insurance contract assets

-5,095,344

-8,420,440

1,722,355

1,058,942

405,773

110,555

27,471

-5,095,344

Total insurance contracts

290,657,379

152,090,928

73,239,573

32,514,238

13,668,938

5,545,524

13,598,179

290,657,379

Reinsurance contract liabilities

446,848

1,548,940

-853,818

-204,205

-44,069

446,848

Reinsurance contract assets

-95,762,621

-66,803,641

-16,272,578

-8,898,097

-2,286,338

-513,655

-988,312

-95,762,621

Total reinsurance contracts

-95,315,773

-65,254,701

-17,126,396

-9,102,302

-2,330,407

-513,655

-988,312

-95,315,773

Total insurance liabilities

195,341,606

86,836,227

56,113,177

23,411,936

11,338,531

5,031,869

12,609,868

195,341,606

284

Sava Re

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Insurance contract liabilities

272,414,051

133,056,229

72,843,218

31,721,798

14,199,439

6,027,470

14,565,898

272,414,051

Insurance contract assets

-3,071,631

-6,161,575

1,660,701

913,810

375,558

122,640

17,235

-3,071,631

Total insurance contracts

269,342,420

126,894,653

74,503,919

32,635,607

14,574,997

6,150,110

14,583,133

269,342,420

Reinsurance contract liabilities

320,044

418,130

58,851

-49,160

-96,926

-10,852

320,044

Reinsurance contract assets

-61,224,914

-25,185,819

-20,194,495

-7,225,375

-2,537,356

-1,336,254

-4,745,616

-61,224,914

Total reinsurance contracts

-60,904,871

-24,767,689

-20,135,643

-7,274,535

-2,634,282

-1,347,106

-4,745,616

-60,904,871

Total insurance liabilities

208,437,549

102,126,964

54,368,276

25,361,072

11,940,715

4,803,004

9,837,518

208,437,549

Maturity analysis of other liabilities

Sava Re

EUR

Carrying amount as at 31 December 2023

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2023

Subordinated liabilities

74,987,535

2,812,500

77,812,500

91,875,000

Other provisions

419,660

18,121

18,457

44,740

14,538

25,043

298,761

419,660

Other financial liabilities

Investment contract liabilities

Liabilities from operating activities

6,319,991

Other liabilities

5,130,387

Total

86,857,573

14,280,999

2,830,957

2,857,240

2,827,038

2,837,543

78,111,261

103,745,038

Sava Re

EUR

Carrying amount as at 31 December 2022

Up to 1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

No specified maturity

Total as at 31 December 2022

Subordinated liabilities

74,924,356

2,812,500

80,625,000

94,687,500

Other provisions

392,640

23,207

13,448

24,585

39,875

17,256

274,268

392,640

Other financial liabilities

Investment contract liabilities

Liabilities from operating activities

45,414

Other liabilities

4,476,183

4,223,827

Total

79,838,593

7,357,304

2,825,948

2,837,085

2,852,375

2,829,756

80,899,268

99,601,737

285

16.7.4.3Credit risk

Assets exposed to credit risk include financial investments (deposit investments, bonds, loans granted, deposits with cedants, bond and convertible mutual funds, and cash and cash equivalents), receivables due from reinsurers and other receivables.

Exposure of assets to credit risk of the Group

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Type of asset

Amount

Fixed-rate investments

1,420,034,999

1,334,655,954

Debt instruments

1,369,475,036

1,241,432,325

Cash and cash equivalents

50,559,963

93,223,629

Reinsurance contract assets

107,481,560

68,133,642

Current tax assets

444,616

3,412,855

Trade and other receivables

14,271,358

12,282,973

Total exposure

1,542,232,533

1,418,485,424

Exposure of assets to credit risk of Sava Re

Sava Re

EUR

31 December 2023

31 December 2022

Type of asset

Amount

Fixed-rate investments

336,075,275

316,160,834

Debt instruments

323,815,226

292,234,805

Cash and cash equivalents

12,260,049

23,926,029

Reinsurance contract assets

95,762,621

61,224,914

Current tax assets

49,594

Trade and other receivables

198,366

213,228

Total exposure

432,036,262

377,648,571

Credit risk due to issuer default

As at 31 December 2023, the Group was exposed to credit risk in the amount of EUR 1,542.2 million (31 December 2022: EUR 1,395.8 million).

As at 31 December 2023, the Company was exposed to credit risk in the amount of EUR 432.0 million (31 December 2022: EUR 377.4 million).

Credit risk for investments is estimated based on two factors:

•credit ratings used in determining credit risk for fixed-rate investments133 and cash assets134;

•performance indicators for other investments.

Below we set out an assessment of credit risk for fixed-rate investments.

133 Included are government bonds, corporate bonds, deposits and loans granted, deposits with cedants, bond and convertible mutual funds, and private debt fund investments.

134 This includes cash and demand deposits.

286

Fixed-rate investments by issuer credit rating

Sava Insurance Group

EUR

31 December 2023

31 December 2022

% change (p.p.)

Based on S&P/Fitch ratings

Amount

As % of total

Amount

As % of total

AAA

336,369,733

24.6%

272,546,840

22.0%

2.6

287,122,315

21.0%

230,124,711

18.5%

2.5

348,730,591

25.5%

322,414,303

26.0%

-0.5

BBB

248,860,893

18.2%

261,402,855

21.1%

-2.9

64,149,305

4.7%

56,794,372

4.6%

0.1

16,755,540

1.2%

14,975,341

1.2%

0.0

Not rated

67,486,659

4.9%

83,173,903

6.7%

-1.8

Total

1,369,475,036

100.0%

1,241,432,325

100.0%

0.00

Cash and cash equivalents by credit rating

Sava Insurance Group

EUR

31 December 2023

31 December 2022

% change (p.p.)

Based on S&P/Fitch ratings

Amount

As % of total

Amount

As % of total

416

0.0%

124

0.0%

0.0

BBB

20,365,890

40.3%

47,017,059

50.4%

-0.1

143,830

0.3%

291,663

0.3%

0.0

Not rated

30,049,828

59.4%

45,914,783

49.3%

0.1

Total

50,559,963

100.0%

93,223,629

100.0%

0.0

As regards management of credit risk, the objective pursued by the Group determines that the share of debt instruments and cash and cash-equivalents accounts for at least 75% of the investment portfolio value. As at 31 December 2023, these assets represented 93.6% of the investment portfolio (31 December 2022: 90.1%).

As at 31 December 2023, fixed-rate investments rated “A” or better accounted for 71.1% of the total fixed-rate portfolio (31 December 2022: 66.5%). The share of the best-rated investments increased somewhat in 2022 compared with the previous year. Fixed-rate investments with no credit rating available accounted for 4.9% of fixed-rate investments (previous year: 6.9%).

The composition of cash and cash equivalents reflects the banking system in the region where the Group has a presence through subsidiaries.

Fixed-rate investments by issuer credit rating*

Sava Re

EUR

31 December 2023

31 December 2022

% change (p.p.)

Based on S&P/Fitch ratings

Amount

As % of total

Amount

As % of total

AAA

122,374,700

37.8%

123,438,923

42.2%

-4.4

96,935,351

29.9%

75,239,126

25.7%

4.2

66,661,733

20.6%

53,222,345

18.2%

2.4

BBB

28,882,802

8.9%

29,847,230

10.2%

-1.3

0.0%

997,504

0.3%

-0.3

721,149

0.2%

405,253

0.1%

0.1

Not rated

8,239,491

2.5%

9,084,422

3.1%

-0.6

Total

323,815,226

100.0%

292,234,805

100.0%

Cash and cash equivalents by credit rating

Sava Re

EUR

31 December 2023

31 December 2022

% change (p.p.)

Based on S&P/Fitch ratings

Amount

As % of total

Amount

As % of total

416

0.0%

124

0.0%

0.0

BBB

7,682,651

62.7%

14,877,410

62.2%

0.5

Not rated

4,576,983

37.3%

9,048,495

37.8%

-0.5

Total

12,260,049

100.0%

23,926,029

100.0%

287

In terms of credit risk management, the Company aims to have a substantial portion of its debt investments rated “A-” or better. As at 31 December 2023, fixed-rate debt investments rated “A” or better represented 88.3% (31 December 2022: 86.1%) of total debt investments. The Company regularly monitors its exposure to individual issuers and any changes in their creditworthiness in order to be prepared to respond in a timely manner to any adverse developments in the financial markets or an increase in risk associated with an issuer.

The Company mitigates the credit risk of its other investments through a high degree of diversification and by investing in liquid securities.

The investment portfolios of the Sava Insurance Group and the Company are well diversified in accordance with local law and Group internal rules in order to avoid high concentration in a particular type of investment, high concentration with a particular counterparty or economic sector, or other potential forms of concentration.

The composition of cash and cash equivalents reflects the banking system in the region in which we operate.

Concentration of financial investments by industry

Sava Insurance Group

EUR

31 December 2023

31 December 2022

% change (p.p.)

Industry

Amount

As % of total

Amount

As % of total

Government

859,201,655

55.7%

772,241,781

52.9%

2.8

Banks

157,992,535

10.2%

166,396,360

11.4%

-1.2

– Cash and cash equivalents

50,531,494

3.3%

93,181,947

6.4%

-3.1

– Other

107,461,041

7.0%

73,214,413

5.0%

2.0

Utilities

143,832,627

9.3%

134,239,893

9.2%

0.1

Other financial institutions

109,418,846

7.1%

108,418,552

7.4%

-0.3

Consumables

100,956,361

6.5%

104,447,548

7.2%

-0.6

Manufacturing

63,031,354

4.1%

53,856,376

3.7%

0.4

Infrastructure

57,339,858

3.7%

52,054,299

3.6%

0.2

Property

51,405,309

3.3%

69,096,975

4.7%

-1.4

Total

1,543,178,544

100.0%

1,460,751,783

100.0%

The Group’s largest exposure by asset class is to government bonds (31 December 2023: Germany 10.3%, 31 December 2022: Slovenia 7.6%).

Concentration of financial investments by industry

Sava Re

EUR

31 December 2023

31 December 2022

% change (p.p.)

Industry

Amount

As % of total

Amount

As % of total

Government

231,494,236

61.9%

215,684,088

60.6%

1.3

Banks

33,816,689

9.0%

38,872,331

10.9%

-1.9

– Cash and cash equivalents

12,260,049

3.3%

23,926,029

6.7%

-3.4

– Other

21,556,640

5.8%

14,946,302

4.2%

1.6

Other financial institutions

29,439,519

7.9%

16,341,290

4.6%

3.3

Utilities

21,084,448

5.6%

25,175,956

7.1%

-1.4

Infrastructure

20,604,910

5.5%

18,843,871

5.3%

0.2

Consumables

18,328,796

4.9%

17,488,204

4.9%

0.0

Investment property

13,898,550

3.7%

15,149,931

4.3%

-0.5

Manufacturing

5,559,207

1.5%

8,523,027

2.4%

-0.9

Total

374,226,354

100.0%

356,078,698

100.0%

The Company’s largest exposure by asset class is also to government bonds (31 December 2023: Germany 12.9%; 31 December 2022: Germany 10.5%).

288

Concentration of financial investments by region

Sava Insurance Group

EUR

31 December 2023

31 December 2022

% change (p.p.)

Region

Amount

As % of total

Amount

As % of total

Slovenia

193,373,933

12.5%

228,540,299

15.6%

-3.1

Europe, EU Member States

918,335,348

59.5%

836,128,026

57.2%

2.3

Europe, non-EU members

187,016,915

12.1%

164,626,362

11.3%

0.8

United States

182,803,079

11.8%

168,553,859

11.5%

0.3

Rest of the world

61,649,269

4.0%

62,903,237

4.3%

-0.3

Total

1,543,178,544

100.0%

1,460,751,783

100.0%

The Group’s largest exposure by region is to the EU member states (31 December 2023: 59.5%, 31 December 2022: 57.2%). This is followed by the exposure to Slovenia-based issuers (31 December 2023: 12.5%; 31 December 2022: 15.6%) and the exposure to non-EU issuers (31 December 2022: 12.1%; 31 December 2021: 11.3%). The distribution of exposure to other regions did not change significantly compared to the end of 2022.

Concentration of financial investments by region

Sava Re

EUR

31 December 2023

31 December 2022

% change (p.p.)

Region

Amount

As % of total

Amount

As % of total

Slovenia

45,642,526

12.2%

56,453,808

15.9%

-3.7

Europe, EU Member States

229,660,282

61.4%

199,723,569

56.1%

5.3

Europe, non-EU members

13,877,950

3.7%

19,320,306

5.4%

-1.7

United States

47,354,483

12.7%

43,759,704

12.3%

0.4

Rest of the world

37,691,114

10.1%

36,821,312

10.3%

-0.2

Total

374,226,354

100.0%

356,078,698

100.0%

The largest exposure of the Company is to EU Member States (31 December 2023: 61.4%, 31 December 2022: 56.1%). This is followed by the exposure to Slovenia-based issuers (31 December 2023: 12.2%; 31 December 2022: 15.9%) and exposure to issuers based in the United States (31 December 2023: 12.7%; 31 December 2022: 12.3%).

Exposure to Slovenia by type of asset

Sava Insurance Group

EUR

31 December 2023

31 December 2022

% change (p.p.)

Type of investment

Amount

As % of total

Amount

As % of total

Government bonds

105,036,038

6.8%

103,325,597

7.1%

-0.3

Cash and cash equivalents

39,944,537

2.6%

77,128,062

5.3%

-2.7

Investment property

19,346,001

1.3%

19,595,377

1.3%

-0.1

Corporate bonds

14,666,100

1.0%

13,094,074

0.9%

0.1

5,593,016

0.4%

9,844,715

0.7%

-0.3

Mutual funds

3,428,351

0.2%

3,265,204

0.2%

0.0

Deposits and CDs

3,067,028

0.2%

0.0%

0.2

Infrastructure funds

1,641,000

0.1%

1,260,856

0.1%

0.0

Loans granted

651,862

0.0%

1,026,414

0.1%

0.0

Total

193,373,933

12.5%

228,540,299

15.6%

-3.1

The Group’s exposure to Slovenia decreased by 3.1 p.p. in 2023. As at 31 December 2023, investments in government bonds represented the largest exposure to Slovenia, the same as at 31 December 2022. They accounted for 6.8% of the total portfolio, down by 0.3 p.p. compared to the previous year.

As at 31 December 2023, the Group’s exposure to the ten largest issuers was EUR 569.4 million, representing 36.9% of financial investments (31 December 2022: EUR 485.9 million; 33.3%). The Group’s largest exposure to a single issuer is to Germany.

289

Exposure to Slovenia by type of asset

Sava Re

EUR

31 December 2023

31 December 2022

% change (p.p.)

Type of investment

Amount

As % of total

Amount

As % of total

Government bonds

13,590,744

3.6%

12,354,165

3.5%

0.2

Cash and cash equivalents

10,426,394

2.8%

22,551,153

6.3%

-3.5

Investment property

7,582,109

2.0%

7,721,693

2.2%

-0.1

Corporate bonds

5,411,620

1.4%

3,962,278

1.1%

0.3

3,298,739

0.9%

6,892,061

1.9%

-1.1

Loans granted

2,670,572

0.7%

1,711,601

0.5%

0.2

Infrastructure funds

1,641,000

0.4%

1,260,856

0.4%

0.1

Deposits and CDs

1,021,347

0.3%

0.0%

0.3

Total

45,642,526

12.2%

56,453,808

15.9%

-3.7

At the year end, the exposure of the Company to Slovenia-based issuers was EUR 45.6 million, representing 12.2% of financial investments (31 December 2022: EUR 56.4 million; 15.9%). Compared to 31 December 2022, the share of such investments decreased by 3.7 p.p., chiefly due to the lower balance of cash and cash equivalents and equity investments.

As at 31 December 2023, the Company’s exposure to the ten largest issuers was EUR 154.5 million, representing 41.3% of financial investments (31 December 2022: EUR 150.5 million; 42.3%). The largest single issuer of securities to which the Company is exposed is Germany. As at 31 December 2023, the exposure totalled EUR 48.3 million or 12.9% of financial investments (31 December 2022: EUR 38.5 million; 10.8%).

We assess that in 2023, the Sava Insurance Group companies – by maintaining a large percentage of highly-rated investments, diversification of investments by industry and geography and reducing concentration – managed credit risk well, maintaining it on the same level as in 2022.

Expected credit losses (ECL)

The Group monitors credit risk by monitoring the calculated expected credit losses, which measure the potential for an investment to be impaired or reduced in value due to the credit risk of the issuer. The expected credit loss of an investment is measured according to its stage, which is reviewed on a monthly basis. The majority of the investments for which the Company measures and monitors expected credit losses (bonds, loans, deposits) are classified as stage 1, meaning that the Company has not experienced a significant increase in credit risk since the date the investment was recognised. For the value of investments exposed to credit risk, changes in the fair value of interest on FVOCI investments, changes in the amortised cost of AC investments, and changes in accrued interest and exchange rate differences are recorded in the table under “Other changes”.

290

Gross carrying amount of financial assets exposed to credit risk

Sava Insurance Group

EUR

2023

2022

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Balance as at 1 January

1,198,111,917

7,344,968

1,205,456,885

1,350,271,713

14,467,493

1,364,739,206

Opening balance – without transfer

New financial assets acquired

360,584,373

258,062,215

Financial assets derecognised

-249,219,268

-2,245,105

-251,464,373

-240,670,820

-2,391,185

-243,062,005

Transfer to stage 1

Transfer to stage 2

-392,357

392,357

Transfer to stage 3

Change in business models and risk parameters

-73,523

-850,631

Other changes

21,943,498

692,025

22,635,522

-168,321,046

-5,123,697

-173,444,743

Exchange differences

-51,057

12,837

Balance as at 31 December

1,331,295,939

5,791,888

1,337,087,827

1,198,111,911

7,344,968

1,205,456,879

Total change in expected credit losses (ECL) for AC and FVOCI investments

Sava Insurance Group

EUR

2023

2022

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Balance as at 1 January

-1,539,951

-604,682

-2,144,633

Opening balance – without transfer

-1,347,048

-1,148,867

-2,495,915

Transfer to stage 1

Transfer to stage 2

339

-339

Transfer to stage 3

Change in contractual cash flows

Resulting from new acquisitions of financial assets

-600,119

-585,599

Eliminated on sale or maturity of financial assets

573,026

2,145

575,171

552,740

547,907

1,100,647

Other changes

117,232

252,034

369,266

-160,389

-3,383

-163,772

Exchange differences

164

Balance as at 31 December

-1,449,648

-350,503

-1,800,151

-1,539,947

-604,682

-2,144,629

Gross carrying amount of financial assets exposed to credit risk

Sava Re

EUR

2023

2022

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Balance as at 1 January

283,353,365

1,402,758

284,756,123

275,409,135

1,767,528

277,176,663

New financial assets acquired

118,305,237

100,226,328

Financial assets derecognised

-92,262,078

-1,000,000

-93,262,078

-68,469,935

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

Change in business models and risk parameters

Other changes

7,029,370

318,391

7,347,760

-23,812,163

-364,770

-24,176,933

Balance as at 31 December

316,425,894

721,149

317,147,043

283,353,365

1,402,758

284,756,123

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Total change in expected credit losses (ECL) for AC and FVOCI investments

Sava Re

EUR

2023

2022

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Balance as at 1 January

-103,893

-180,023

-283,916

-141,047

-164,859

-305,905

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

Change in contractual cash flows

24,232

-15,165

9,067

Resulting from new acquisitions of financial assets

-30,519

-65,093

Eliminated on sale or maturity of financial assets

16,528

90,477

Other changes

68,913

-12,461

Balance as at 31 December

-48,971

-180,023

-228,994

-103,893

-180,023

-283,916

The main input parameters for determining credit losses are the probability of default (PD), the loss given default (LGD) and the exposure at default (EAD). The probability of default is modelled as a function of historical average default probabilities over time, a systematic risk factor and a correlation parameter. The value of a systematic risk or economic condition factor reflects the position in the economic cycle over a period of time. The Company determines the business cycle index based on the deviation of GDP growth in the OECD area from its long-term trend. Mathematical operations can be used to obtain the long-term trend and the cyclical component (deviations from trend) from nominal GDP.

In addition to the baseline scenario, a downside and an upside scenario were used in the sensitivity analysis, after which the expected credit losses were recalculated.

Assumptions used in the sensitivity analysis

31 December 2023

31 December 2022

Downside

Baseline

Upside

Downside

Baseline

Upside

Change in GDP

5.0%

5.7%

10.7%

2.6%

6.8%

15.0%

Economic cycle index

-0.97

-0.74

0.40

-1.43

-0.82

Correlation factor

0.01

0.04

0.02

Average change in default rate

0.4%

0.0%

-0.4%

0.4%

0.0%

-0.4%

Sensitivity analysis of expected credit loss (ECL)

Sava Insurance Group

31 December 2023

31 December 2022

Downside

Baseline

Upside

Downside

Baseline

Upside

Investments for which expected credit loss (ECL) is calculated

1,338,671,336

1,205,643,710

Expected credit loss

-2,267,606

-1,800,154

-1,305,340

-2,647,327

-2,144,634

-1,660,630

% of stage 2 investments

19.6%

19.5%

20.1%

28.1%

28.2%

Sensitivity analysis of the change in expected credit loss (ECL)

Sava Re

31 December 2023

31 December 2022

Downside

Baseline

Upside

Downside

Baseline

Upside

Investments for which expected credit loss (ECL) is calculated

317,097,396

284,712,300

Expected credit loss

-286,791

-228,994

-169,812

-344,741

-283,916

-222,912

% of stage 2 investments

54.7%

56.1%

62.6%

63.4%

63.8%

For the purpose of sensitivity testing of the ECL level, a stress scenario has been prepared where the average default rate is shocked by around 40 basis points. Such a change in the probability of default would reduce the estimated long-term expected economic activity (change in GDP) by around 0.7 p.p. in the downside scenario and by 5 p.p. in the upside scenario. A change in these assumptions would

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increase the Group’s ECLs from EUR -1.8 million to EUR -2.3 million in 2023 in the case of deterioration and from EUR -1.8 million to EUR -1.3 million in the case of improvement. The Group has 6 stage 2 investments in its portfolio, representing 19.5% of the total ECL at 31 December 2023 (31 December 2022: 28.2%).

In Sava Re, in case of a deterioration of the situation, the ECL would increase from EUR -0.2 million to EUR -0.3 million, and in case of an improvement of the situation, the provision would decrease from EUR -0.2 million to EUR 0.2 million. The Company has 1 stage 2 investment in its portfolio, representing 54.7% of the total ECL as at 31 December 2023 (31 December 2022: 62.4%).

Credit risk with respect to reinsurers

The Group is also exposed to credit risk in relation to its reinsurance programme. As a rule, subsidiaries conclude reinsurance contracts directly with the parent company. Exceptionally, if so required by local regulations, they buy reinsurance from providers of assistance services and local reinsurers. In such cases, local reinsurers transfer the risks to Sava Re, thus reducing the effective credit risk exposure relating to reinsurers below the one correctly shown according to accounting rules.

Reinsurance programmes are mostly placed with first-class reinsurers with an appropriate credit rating (at least “A-” according to S&P Global Ratings for long-term business and at least “BBB+” for short-term business). Thus, more than 90% of the Sava Insurance Group’s credit risk exposure to reinsurers at the end of 2023 (2022: at least 90%) related to reinsurers rated “BBB” or better. When classifying reinsurers by credit rating group, we considered the credit rating of each individual reinsurer, also where the reinsurer is part of a group. Often such reinsurers are unrated subsidiaries, while the parent company has a credit rating. We consider such a treatment conservative, as ordinarily a parent company takes action if a subsidiary gets into trouble.

As at 31 December 2023, the total exposure of the Sava Insurance Group to credit risk relating to reinsurers was EUR 107.5 million (31 December 2022: EUR 68.1 million) and relates to reinsurance contract assets (including receivables due from reinsurers). At 31 December 2023, the credit risk exposure relating to reinsurers represented 4.2% of total assets (31 December 2022: 2.9%).

Exposure of the Sava Insurance Group to reinsurers by credit rating

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Rated by S&P / AM Best

Amount

As % of total

Amount

As % of total

(A++ or A+)/(AAA or AA)

9,217,251

8.6%

7,833,945

11.5%

A / (A or A-)

85,004,406

79.1%

49,126,424

72.1%

BBB / (B++ or B+)

5,091,721

4.7%

4,947,880

7.3%

Less than BBB / less than B+

929,745

0.9%

2,780,351

4.1%

Not rated

7,238,436

6.7%

3,445,045

5.1%

Total

107,481,558

100.0%

68,133,645

100.0%

The Company’s reinsurance programmes are mostly placed with first-class reinsurers with an appropriate credit rating (at least “A-” according to S&P Global Ratings for long-term business, and at least “BBB+” for short-term business). We consider this risk to be low, particularly as the investment portfolio is adequately diversified. See details in the following table. Thus, more than 95% of the credit risk exposure to reinsurers at the end of 2023 (2022: slightly less than 95%) related to reinsurers rated “BBB” or better.

As at 31 December 2023, the total exposure of the Company to credit risk from reinsurers was EUR 95.8 million (31 December 2022: EUR 61.2 million) and relates to reinsurance contract assets (including receivables due from reinsurers). The Company’s total credit risk exposure to retrocessionaires was 3.6% of total assets in 2023 (31 December 2022: 2.5%).

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Sava Re’s exposure to reinsurers by credit rating

Sava Re

EUR

31 December 2023

31 December 2022

Rated by S&P / AM Best

Amount

As % of total

Amount

As % of total

(A++ or A+)/(AAA or AA)

8,313,572

8.7%

7,007,250

11.5%

A / (A or A-)

82,329,114

86.0%

47,386,736

77.4%

BBB / (B++ or B+)

2,865,505

3.0%

3,504,453

5.7%

Less than BBB / less than B+

929,745

1.0%

2,780,351

4.5%

Not rated

1,324,684

1.4%

546,124

0.9%

Total

95,762,621

61,224,914

Counterparty default risk

The following tables show the Group’s and the Company’s share of total receivables by type and maturity.

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Receivables ageing analysis as at 31 December 2023

Sava Insurance Group

EUR

31 December 2023

Not past due

Past due up to 30 days

Past due from 31 to 60 days

Past due from 61 to 90 days

Past due from 91 to 180 days

Past due from 181 days to 1 year

Past due over 1 year

Total

Gross amount

Allowance

Receivables

Current tax assets

444,616

437,109

7,507

444,616

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

4,533,434

-1,148,176

3,385,258

1,551,247

1,712,619

36,470

10,302

15,459

2,887

56,274

3,385,258

Receivables arising out of investments

728,130

-166,900

561,230

368,526

174,693

18,011

561,230

Trade and other receivables

12,422,002

-2,097,132

10,324,870

10,009,539

217,384

29,101

25,669

14,550

8,962

19,665

10,324,870

Trade and other receivables

17,683,566

-3,412,208

14,271,358

11,929,312

2,104,696

65,571

35,971

30,009

11,849

93,950

14,271,358

Total

18,128,182

-3,412,208

14,715,974

12,366,421

2,104,696

65,571

35,971

30,009

11,849

101,457

14,715,974

Receivables ageing analysis as at 31 December 2022

Sava Insurance Group

EUR

31 December 2022

Not past due

Past due up to 30 days

Past due from 31 to 60 days

Past due from 61 to 90 days

Past due from 91 to 180 days

Past due from 181 days to 1 year

Past due over 1 year

Total

Gross amount

Allowance

Receivables

Current tax assets

3,412,855

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

4,466,344

-2,170,209

2,296,135

1,095,158

1,122,348

29,222

7,588

24,560

5,707

11,552

2,296,135

Receivables arising out of investments

2,203,462

-163,322

2,040,140

1,875,273

146,595

18,272

2,040,140

Trade and other receivables

10,777,938

-2,831,240

7,946,698

7,397,929

369,700

102,005

11,845

22,707

5,619

36,893

7,946,698

Trade and other receivables

17,447,744

-5,164,771

12,282,973

10,368,360

1,638,643

131,227

19,433

47,267

11,326

66,717

12,282,973

Total

20,860,599

-5,164,771

15,695,828

13,781,215

1,638,643

131,227

19,433

47,267

11,326

66,717

15,695,828

The Group assessed its receivables for impairment. Allowances were established for receivables that needed to be impaired. Receivables are discussed in greater detail in note 16.8.17 “Receivables”.

295

Receivables ageing analysis as at 31 December 2023

Sava Re

EUR

31 December 2023

Not past due

Past due up to 30 days

Past due from 31 to 60 days

Past due from 61 to 90 days

Past due from 91 to 180 days

Past due from 181 days to 1 year

Past due over 1 year

Total

Gross amount

Allowance

Receivables

Receivables arising out of investments

34,478

Trade and other receivables

504,923

-341,035

163,888

Trade and other receivables

539,401

-341,035

198,366

Total

539,401

-341,035

198,366

Receivables ageing analysis as at 31 December 2022

Sava Re

EUR

31 December 2022

Not past due

Past due up to 30 days

Past due from 31 to 60 days

Past due from 61 to 90 days

Past due from 91 to 180 days

Past due from 181 days to 1 year

Past due over 1 year

Total

Gross amount

Allowance

Receivables

Current tax assets

49,594

Receivables arising out of investments

15,889

Trade and other receivables

538,374

-341,035

197,340

197,339

Trade and other receivables

554,263

-341,035

213,228

Total

603,857

-341,035

262,823

262,822

Sava Re assessed its receivables for impairment. Allowances were established for receivables that needed to be impaired. Receivables are discussed in greater detail in note 16.8.17 “Receivables”.

296

Investment contracts

The Group’s investment contracts include a group of life cycle funds called MY Life-cycle Funds (Slovenian: MOJI skladi življenjskega cikla), relating to supplementary pension business of the company Sava Pokojninska in the accumulation phase. Investment contract liabilities are not included in the consolidated insurance and reinsurance contract liabilities, and are, therefore, not included in the presentation of underwriting risk. Investment contract assets are not included in the consolidated financial investments item, and are, therefore, not included in the presentation of investment portfolio risk.

As regards investment contract assets and liabilities, the Group is exposed to the risk of not achieving the interest-rate guarantees in one of the long-term business funds with an interest-rate guarantee (the MGF135 fund). The interest-rate guarantee on the MGF is 60% of the average annual interest rate on government securities with a maturity of over one year. Liabilities relating to the MGF comprise paid-in premiums, guaranteed return and amounts in excess of the guaranteed return, provided the company achieves it.

In years when the return in excess of guaranteed return is realised, liabilities to the members of the MGF for assets in excess of guaranteed levels of assets are increased; if, however, realised return is below the guaranteed level, this part of liabilities decreases until the provision is fully exhausted. The described control of guaranteed return is carried out at the level of individual members’ accounts. In the event that individual provisions of any account are not sufficient to cover the guaranteed assets, the company is required to make provisions for the difference, up to a maximum of 20% of equity.

The risk of failing to realise interest-rate guarantees is managed primarily through appropriate management of policyholder assets and liabilities, an appropriate investment strategy, an adequate level of the company’s equity and provisioning. The Group tests its risk exposure arising out of interest-rate guarantees through stress tests and scenarios as part of the own risk and solvency assessment. We estimate that the risk of additional payments made in order to achieve the interest-rate guarantees decreased in 2023 relative to 2022, due to favourable capital market conditions.

The value of fund assets of the North Macedonian pension company Sava Penzisko Društvo (two funds: a mandatory and a voluntary fund) is not included in the statement of financial position of the company as these are funds under management (similar treatment as for fund management companies). The role of the North Macedonian pension company is solely to manage the assets; the funds have no interest-rate guarantees. Consequently, the company is not exposed to the risk to which investment contracts are exposed, i.e. failure to realise the interest-rate guarantees.

We estimate that the risk of failure to achieve interest-rate guarantees is medium and slightly decreased in 2023 compared to the previous year due to the favourable financial market conditions.

16.7.5Operational risks

Operational risk is the risk of loss arising from inadequate or failed internal processes, people or systems, or from external events.

Operational risks are not among the main risks faced by the Sava Insurance Group and Sava Re, but they are nevertheless actively monitored and managed at both levels. The assessment of operational risks in the Group companies and at Group level is mainly based on qualitative assessment of the likelihood and financial severity within the risk register. Through regular assessments, the Group

135 Moj zajamčeni sklad (My Guaranteed Fund).

297

companies gain insight into the actual level of their exposure to such risks and take the necessary measures to mitigate them.

According to the qualitative assessment, the exposure of the Sava Insurance Group and Sava Re to operational risk is medium.

The key operational risks of the Sava Insurance Group in 2023, ranked according to their rating in the risk register (from highest to lowest) are set out below. Risks that increased in 2023 are marked as such:

•the risk of personal data breaches by the EU-based companies (increased due to the implementation of the new Data Protection Act (ZVOP-2)),

•the risk of intentional or unintentional leakage of confidential information,

•the risk of data loss due to a compromised or non-functioning IT system (slightly increased),

•the risk of cyberattack,

•the risks associated with subsidiaries reporting to the parent,

•the risk of inadequate provision of external IT services (in-house or commercial cloud services),

•the risk of errors in the consolidated calculations for the Group (increased due to the implementation of the new accounting standard IFRS 17).

The key operational risks of the Company in 2023, ranked according to their rating in the risk register (from highest to lowest), are set out below. Risks that increased in 2023 are marked as such:

•the risk of personal data breaches (increased due to the implementation of the new Data Protection Act (ZVOP-2)),

•the risk of intentional or unintentional leakage of confidential information,

•the risk of cyberattack,

•the risk of inadequate IT support for reinsurance,

•the risk of inadequate provision of external IT services (in-house or commercial cloud services),

•the risk of data loss due to a compromised or non-functioning IT system (slightly increased),

•the risk related to the sanctions clause,

•the risk of incorrect calculation input data, miscalculations or errors in Sava Re’s internal or external reports (related to Solvency II) (increased due to the transition to the new accounting standard IFRS 17),

•risk of misstatements in reports to the management or supervisory boards (increased due to the implementation of the new accounting standard IFRS 17).

To manage operational risks effectively, the Group companies have processes in place to identify, measure, monitor, manage and report on such risks. Operational risk management processes have also been set up at the Group level and are defined in the operational risk management policy.

The main measures of operational risk management at the individual company and Group levels include:

•maintaining an effective business processes management system and a system of internal controls,

•maintaining records of and monitoring incidents,

•awareness-raising and training of all employees on their role in the implementation of the internal control system and management of operational risks,

•implementing appropriate policies as regards information security,

•having in place a business continuity plan for all critical processes (to minimise the risk of unpreparedness for incidents and external events and any resulting business interruption),

•monitoring operational risk indicators at Group level for all Group companies (indicators are defined in the risk strategy and are also used to indirectly measure reputational risk),

298

•having in place IT-supported processes and controls in the key areas of business of every Group company,

•awareness-raising and training of all employees.

The Group and the Company estimate the exposure to operational risk to be moderate in 2023, with a slight increase compared to 2022. At Group and company level, risks have increased mainly due to higher assessed risks related to legal and regulatory compliance (including the risk of personal data breaches and the risk that IT plans do not comply with legal or regulatory requirements) and risks related to the management and implementation of processes (including the risk of data loss and the risk of misstatements in reports to the management and supervisory boards, or the risk of errors in consolidated calculations at Group level).

16.7.6Strategic risks

The Sava Insurance Group and Sava Re are exposed to various internal and external strategic risks that may have a negative impact on income or capital adequacy. Strategic risks are by nature very diverse, difficult to quantify and heavily dependent on various (including external) factors.

At Group and individual company level, strategic risks are qualitatively assessed in the risk register by assessing the frequency and potential financial severity of each event. In addition, the EU-based (re)insurance companies seek to assess key strategic risks through qualitative analysis of various scenarios. Combining the two types of analysis provides a picture of the status and changing exposure to these risks.

The key strategic risks of the Sava Insurance Group in 2023, ranked according to their rating in the risk register (from highest to lowest), are set out below. Risks that increased in 2023 are marked as such:

•the risk of deteriorating macroeconomic conditions or changes in capital markets affecting the Group’s profitability or causing the investment portfolio to underperform,

•the risk that the Group will fall behind the market in terms of digitalisation and innovation (increased risk),

•the risk of increased competition in the markets in which the Group has a presence,

•the risk of changes in legal and regulatory practices and the resulting impact on the Group’s operations,

•the risk that IT support is not adequate in terms of content, funding or priorities to enable the Group to achieve its strategic objectives.

In 2023, the risk of a deterioration in macroeconomic conditions and the resulting impact on the Group’s profitability was still high. The macroeconomic situation was more favourable in 2023, but the geopolitical situation remained uncertain (escalating tensions between Russia and NATO, the outbreak of war between Israel and Hamas). These conflicts pose a major risk of humanitarian crises and disruptions to trade and the flow of raw materials. Energy and climate change continued to dominate talks between countries. In 2023, we saw increased government borrowing and credit rating downgrades, as well as an increase in cyberattacks. The situation is expected to remain uncertain. The Group has already taken the necessary measures to mitigate the impact of these risks and will continue to monitor the situation and take appropriate action.

In 2023, the project for the transition to the new accounting standards IFRS 17 and IFRS 9 was completed at the Group level, and an information security strategy was adopted to establish a high level of cyber resilience for the Sava Insurance Group. The Group will continue to monitor legislative changes to limit regulatory risk, as well as competition in the markets in which it operates and factors affecting the performance of its individual companies.

299

The key strategic risks of the Company in 2023, ranked according to their rating in the risk register (from highest to lowest), are set out below. Risks that increased in 2023 are marked as such:

•the risk of deteriorating macroeconomic and geopolitical conditions, which may make it more difficult to underwrite reinsurance or to achieve the projected returns on the investment portfolio,

•the risk of negative changes in legislation related to the underwriting of reinsurance business,

•the risk related to changes in legal and regulatory practices and the resulting impact on the Company’s operations or insurance underwriting,

•the risk of making the wrong decision on new strategic investments (increased by uncertain macroeconomic conditions).

Similar to the level of the Sava Insurance Group, the assessment of the risks associated with the deterioration of the macroeconomic situation at Sava Re remained at a high level. The high risk ratings have been maintained due to the ongoing uncertain geopolitical situation, notably the war in Ukraine, tensions between Russia and the West, and the outbreak of war between Israel and Hamas. The significant natural catastrophes that occurred during the summer months (such as storms, floods and wildfires), combined with other loss events, also had an impact on reinsurance rates, putting pressure on retention levels and making it more difficult to obtain adequate reinsurance protection. We also expect these risks to remain high in the coming year. Sava Re will endeavour to ensure that the amounts of cover and premiums in reinsurance contracts adequately reflect the effects of claims inflation and loss experience, and that the Company obtains the best possible retrocession cover under the circumstances.

The Group companies mitigate individual strategic risks primarily through preventive measures, and each has various processes in place to ensure that it can properly identify, measure, monitor, manage, control and report strategic risks to ensure that they are effectively managed. In addition to the relevant organisational units in the Group companies, strategic risks are identified and managed by governance bodies, risk management committees, risk management functions and the key function holders of the risk management system. The identification of the Group’s strategic risks is also the responsibility of the Group’s risk management committee. Strategic risks are also managed by continually monitoring the achievement of the Group companies’ short- and long-term goals and by monitoring regulatory changes in the pipeline and market developments.

The Group recognises that reputation is important to the achievement of its business goals and long-term strategic plans. To this end, its companies have put in place procedures to mitigate reputational risk, such as the establishment of fit and proper procedures applicable to employees in key positions, the systematic operation of a compliance monitoring function, business continuity planning, stress and scenario testing, and contingency and response planning in the event of a risk materialising. Operational indicators, which also indirectly measure reputational risk, have been monitored at the level of all Group companies since 2023. Toward ensuring the Group’s good reputation, each and every employee is responsible for improving the quality of services delivered and overall customer satisfaction.

The Group estimates that its exposure to strategic risks was moderate in 2023, at the same level as in 2022.

16.7.6.1Emerging risks

To ensure successful long-term business operations, it is extremely important for the Sava Insurance Group and Sava Re to anticipate and identify new risks. Both try to keep abreast of trends, technological developments and events that may shape future risk development. As their occurrence is difficult to predict with certainty, information is sought from external sources and an attempt is

300

made to identify those that could have a significant impact on the business in future periods. In 2023, a survey was conducted in all Group companies to assess emerging risks and, based on the responses, a weighted risk assessment was prepared at Group level. The assessors in each Group company rated the risks in terms of materiality for the strategic period (up to 2027) and for the longer term (beyond 2027).

At the level of the Sava Insurance Group and Sava Re, the highest assessed risks up to 2027 were the macroeconomic risk, the physical climate risk (extreme weather conditions) and the financial stability risk. However, these risks were also highlighted as important beyond 2027 at the level of Sava Re. At Group level, in addition to the risk of climate change, the risk of a major cyberattack and the risk related to artificial intelligence were highlighted as the main risks beyond 2027. The Group and the Company will consider the risks in terms of their potential impact on the business and analyse the possible responses and actions to be taken.

16.7.6.2Sustainability risk and climate change risk

Climate change risks

The Group monitors both physical and transition risks related to climate change risk.

Physical risks, in the form of increased exposure to natural catastrophes and weather-related losses, are most evident in the insurers’ business models. In terms of natural catastrophes, the year 2023 was much more turbulent for the Sava Insurance Group than the previous year, as Slovenia was hit by the most extensive floods in its history.

Investments in sustainable development and preventive activities (renewables, awareness-raising among policyholders) will continue to be factors that will have a significant impact on the scope and scale of losses due to natural catastrophes.

The Group companies are exposed to transition risk associated with the shift to more sustainable business operations, and the Group manages this risk by regularly monitoring changes in sustainability legislation and adapting its business accordingly, including by offering more sustainable products and by actively learning about new customer needs. The Group has implemented its guidelines for responsible underwriting of environmental, social, and governance risks in non-life insurance, which guide the Group companies in the underwriting of risks and Sava Re in the reinsurance of facultative risks. At the Group level, the Sustainable Investment Policy of Sava Insurance Group was updated this year, which, among other things, defines the activities in which the Sava Insurance Company will no longer invest (industries identified as non-sustainable). In this way, the Group manages the risks associated with the transition to sustainable business on the investment side.

Climate change risks are included in the risk register and periodically assessed against other risks. They are linked to the basic risk categories they affect (market, insurance, credit, strategic and operational risks). The main climate risks for the Sava Insurance Group are:

•the risk of an increase in the frequency and/or severity of extreme weather events and natural catastrophes due to climate change (physical risk – non-life underwriting risk),

•the risk of reduced availability and the risk of excessive prices of reinsurance/retrocession due to increased frequency, severity and interconnectedness of natural catastrophes (physical risk – strategic risk),

•the risk of loss of income/premiums and poor portfolio diversification due to (re)insurance underwriting restrictions (physical risk – strategic risk),

•the risk of non-life underwriting strategy and/or rules not taking account of climate change impacts (transition risk – strategic risk).

301

Climate change risks are also assessed periodically in Sava Re. The key climate risks are:

•the risk of claims increasing due to a higher frequency and concentration of extreme weather events and natural catastrophes (heat waves, landslides, floods, wildfires, storms, hail) (physical risk – non-life underwriting risk),

•the risk of reduced availability and unaffordable retrocession prices due to increased frequency, severity and interconnectedness of natural catastrophes (physical risk – strategic risk),

•the risk of an increase in the cost of capital due to an increase in the frequency and severity of extreme weather events (physical risk – liquidity risk).

The Group and the Company recognise the importance of the impact of climate change on long-term business performance, and therefore they have included a qualitative and quantitative assessment of climate change risks in the ORSA. The qualitative assessment covers the likelihood and severity of these risks over the long term. The materiality of physical and transition risk exposures was analysed as the basis for the quantitative scenarios in the investment and non-life insurance portfolios, where qualitative analysis indicated that the Group and the Company could experience the greatest impact from climate change.

Taking into account the exposure analysis, three scenarios were constructed, one in the investment portfolio and two in the insurance portfolio. The investment portfolio was tested for the potential adverse impact of the transition to a carbon-free society. Non-life insurance business can be significantly affected by the physical effects of climate change, so the impact of an increase in the frequency and severity of natural catastrophes was tested in the short and long term, focusing on floods (as analyses show that Slovenia is most exposed to this risk in the long term) and hailstorms (indicating that more of these types of events can be expected and that they will be more severe). The short-term scenario also included a European flood scenario, whereas the long-term scenario took into account the increased severity of natural catastrophes due to the effects of climate change, in addition to the increased frequency. The scenarios were based on the investment and insurance portfolios in the 2024 business plan.

The robustness of the solvency position of the Group and Sava Re means that both the Group and Sava Re will remain solvent even if such scenarios materialise. But it is essential to monitor developments and assess the implications of both transition and physical risks to enable timely responses and measures. To this end, the ORSA also identifies actions for the future, including improving preparedness and appropriate technology for responding to and handling claims in the event of an increase in the frequency of natural catastrophes, monitoring the impact and making timely adjustments to premium rates and policy conditions, reducing the concentration of risks in certain areas where necessary, improving modelling capabilities and analysing the effects of climate change, participating in industry and scientific initiatives, and raising public awareness of potential risks and promoting preventive measures among policyholders.

Other sustainability risks

In addition to climate change, the Group and Sava Re also monitor other sustainability risks. These are included in the risk register and periodically assessed against other risks. The key sustainability risks of the Company and the Group in 2023, ranked according to their rating in the risk register (from highest to lowest), are set out below:

•the risk of sustainability-related changes in legislation and their impact on business operations,

•reputational risk (including the risk of being accused of greenwashing, which has increased due to the uncertainty over the definition of green advertising itself; in 2023, the Group prepared for the first time a sustainability-related disclosure (Statement of Main Adverse Impacts) in its annual report, in line with the requirements of the SFDR; therefore, there is a potential for inadequate or insufficient reporting),

302

•the risk of opportunity losses for Group companies due to compliance with the restrictions imposed by sustainability policies and other regulations,

•the risk of higher costs due to adapting policies or operations to be environmentally friendly (in line with SFDR, CSRD and other regulations),

•the risk of inadequate or untimely implementation on and reporting in line with sustainability-related legislation.

The Group and the Company estimate that some of the above risks will increase over the strategy period, mainly due to the increased scope and complexity of the new sustainability legislation.

In addition to the above, the Group and the Company monitor other risks that have been assessed as low:

•the risk of social and/or financial inequality between the sexes in the Group,

•the risk of inconsistency or inadequacy of internal rules and policies regarding the Principles of Responsible Investment (PRI),

•the risk of a non-existent or inadequate whistleblowing protocol, and

•the risk of changes in sustainability legislation affecting the operations of Group companies and the underwriting of reinsurance business.

In 2023, the Group and the Company included three new sustainability risks in their regular assessment:

•the risk of failing to meet strategic goals,

•the risk of failing to identify new opportunities for sustainable development, and

•the risk of not recognising changes in the environment (with stakeholders) due to the implementation of new legislation and strategies.

Individual companies also monitor other risks relevant to their particular business.

303

16.8Notes to the financial statements

16.8.1Intangible assets

Movement in cost and accumulated amortisation / impairment losses of intangible assets

Sava Insurance Group

EUR

Software

Goodwill

Other intangible assets

Intangible assets in progress

Total

Cost

31 December 2022

19,008,519

40,877,792

35,013,365

13,315,699

108,215,375

Additions

729,733

1,969,375

1,988,754

4,687,862

Transfer to use

11,177,792

-11,177,792

Disposals

-333,078

-727,347

-17,243

-1,077,668

Reductions – subsidiaries – disposal

2,961

Exchange differences

-2,845

-4,697

-280

-7,822

31 December 2023

30,583,082

40,877,792

36,250,696

4,109,138

111,820,708

Accumulated amortisation and impairment losses

31 December 2022

12,977,943

8,444,979

20,897,161

42,320,083

Additions

3,527,113

1,107,129

4,634,242

Disposals

-282,264

Reductions – subsidiaries – disposal

2,996

Exchange differences

-2,166

-1,014

-3,180

31 December 2023

16,223,622

8,444,979

22,003,276

46,671,877

Carrying amount as at 31 December 2022

6,030,576

32,432,813

14,116,204

13,315,699

65,895,292

Carrying amount as at 31 December 2023

14,359,460

32,432,813

14,247,420

4,109,138

65,148,831

Sava Insurance Group

EUR

Software

Goodwill

Other intangible assets

Intangible assets in progress

Total

Cost

31 December 2021

17,087,942

40,877,792

34,524,529

9,915,405

102,405,668

Additions

907,178

500,930

4,521,930

5,930,038

Transfer to use

1,121,623

-1,121,623

Disposals

-107,235

-1,502

-108,737

Exchange differences

-989

-10,592

-13

-11,594

31 December 2022

19,008,519

40,877,792

35,013,365

13,315,699

108,215,375

Accumulated amortisation and impairment losses

31 December 2021

11,583,410

8,444,979

19,767,402

39,795,791

Additions

1,502,273

1,131,250

2,633,523

Disposals

-106,067

Exchange differences

-1,673

-1,491

-3,164

31 December 2022

12,977,943

8,444,979

20,897,161

42,320,083

Carrying amount as at 31 December 2021

5,504,532

32,432,813

14,757,127

9,915,405

62,609,877

Carrying amount as at 31 December 2022

6,030,576

32,432,812

14,116,204

13,315,699

65,895,292

304

Sava Re

EUR

Software

Other intangible assets

Intangible assets in progress

Total

Cost

31 December 2022

3,017,251

41,911

2,803,082

5,862,244

Additions

53,569

10,059

910,072

973,700

Transfer to use

867,459

-867,459

Disposals

-6,623

31 December 2023

3,938,279

45,347

2,845,695

6,829,321

Accumulated amortisation and impairment losses

31 December 2022

1,793,860

Additions

360,526

31 December 2023

2,154,386

Carrying amount as at 31 December 2022

1,223,391

41,911

2,803,082

4,068,384

Carrying amount as at 31 December 2023

1,783,893

45,347

2,845,695

4,674,935

Sava Re

EUR

Software

Other intangible assets

Intangible assets in progress

Total

Cost

31 December 2021

2,569,361

34,715

2,141,491

4,745,568

Additions

40,777

8,698

1,068,704

1,118,179

Transfer to use

407,113

-407,113

Disposals

-1,502

31 December 2022

3,017,251

41,911

2,803,082

5,862,245

Accumulated amortisation and impairment losses

31 December 2021

1,551,538

Additions

242,323

31 December 2022

1,793,861

Carrying amount as at 31 December 2021

1,017,824

34,715

2,141,491

3,194,031

Carrying amount as at 31 December 2022

1,223,391

41,911

2,803,082

4,068,384

The Group’s other intangible assets consist mainly of the assessed value of a customer list of EUR 8,135,290 (2022: EUR 8,537,034) and contractual customer relationships of EUR 3,520,000 (2022: EUR 4,160,000).

Assets in progress relate to new IT solutions acquired, in particular to prepare for the implementation of the new accounting standards IFRS 17 and IFRS 9, and to support the core business of Zavarovalnica Sava and Sava Re. The majority of these IT solutions were put into operation in 2023.

Movement in goodwill

Movement in goodwill in 2023

Sava Insurance Group

EUR

Total amount carried forward as at 31 December 2022

32,432,813

Balance as at 31 December 2023

32,432,813

Sava Neživotno Osiguranje (SRB)

4,565,229

Sava Osiguranje (MNE)

3,648,534

Zavarovalnica Sava

4,761,733

Sava Agent

2,718

TBS Team 24

2,787,676

Sava Penzisko Društvo

1,666,838

Sava Infond

15,000,085

305

Movement in goodwill in 2022

Sava Insurance Group

EUR

Total amount carried forward as at 31 December 2021

32,432,813

Balance as at 31 December 2022

32,432,813

Sava Neživotno Osiguranje (SRB)

4,565,229

Sava Osiguranje (MNE)

3,648,534

Zavarovalnica Sava

4,761,733

Sava Agent

2,718

TBS Team 24

2,787,676

Sava Penzisko Društvo

1,666,838

Sava Infond

15,000,085

Goodwill impairment testing

In the impairment testing of goodwill arising out of the acquired companies listed in the table at the beginning of this section (except for Zavarovalnica Sava), the recoverable amount of each cash-generating unit as at 31 December 2023 exceeded the carrying amount including goodwill belonging to the unit for all companies. The assumptions used to calculate the recoverable amount are described below. For Zavarovalnica Sava, where the estimated value exceeded the carrying amount by a very large margin, an impairment test was performed to determine whether there were any indications of impairment. As no indications were found, no valuation was necessary.

The cash flows are derived from the strategic plans of the companies constituting the cash-generating units. The companies’ plans have been approved by the parent company and adopted by the companies’ governing bodies. The supervisory board of Sava Re d.d. adopted the business plan of the Sava Insurance Group for 2024 on 13 December 2023. The business plans of the Group companies were prepared on the basis of the following key strategic directions:

•premium growth in relation to past performance, expected GDP growth and the level of development of the insurance sector in Slovenia and abroad,

•growth in assets under management of the pension and mutual fund management company in relation to the macroeconomic environment, demographic trends, projected trends in inflows and outflows, and returns in relation to expected developments in the financial markets,

•growth in assistance services revenue in relation to the macroeconomic environment, the market conditions and the expected demand for assistance services,

•improved cost effectiveness in all companies,

•a target combined ratio in line with the specifics of the Slovenian and non-Slovenian non-life segments,

•a target new business margin for life insurance, and

•a return on investments in relation to the expected developments in financial markets.

The valuations used a long-term growth rate (g) of the risk-free rate of return (2.3%) to estimate the residual value beyond the projection period.

The discount rate methodology is explained in section 16.4.7 “Goodwill”

Assumptions used in goodwill impairment testing in 2023

Sava Neživotno Osiguranje (SRB)

Sava Osiguranje (MNE)

Sava Penzisko

(MKD)

Sava Infond

(SVN)

TBS Team 24

(SVN)

Discount rate (%)

12.2

13.2

11.9

10.8

10.2

Long-term growth rate (%)

2.3

306

16.8.2Property, plant and equipment

Movement in cost and accumulated depreciation / impairment losses of property, plant and equipment assets

Sava Insurance Group

EUR

Land

Buildings

Equipment

Other items of property, plant and equipment

In progress

Total

Cost

31 December 2022

5,216,520

63,859,517

27,035,610

521,439

57,768

96,690,854

Additions – acquisition of subsidiary

4,530

Additions

993,277

1,156,387

94,224

2,647,495

4,891,383

Reclassification

100,000

Transfer to use

200,038

2,196,210

7,791

-2,404,039

Disposals

-271,157

-4,695,392

-3,778,635

-84,504

-8,829,688

Exchange differences

-1,538

-1,735

-105

-3,377

31 December 2023

4,945,363

60,455,902

26,612,367

538,845

301,225

92,853,702

Accumulated depreciation and impairment losses

31 December 2022

14,956,675

19,106,449

192,104

34,255,228

Additions

1,725,218

3,069,783

43,250

4,838,251

Reclassification

29,224

Disposals

-2,386,950

-3,477,805

-88,920

-5,953,675

Exchange differences

-921

-1,201

-2

-2,124

31 December 2023

14,323,246

18,697,226

146,432

33,166,904

Carrying amount as at 31 December 2022

5,216,520

48,902,842

7,929,161

329,335

57,768

62,435,626

Carrying amount as at 31 December 2023

4,945,363

46,132,656

7,915,141

392,413

301,225

59,686,798

Sava Insurance Group

EUR

Land

Buildings

Equipment

Other items of property, plant and equipment

In progress

Total

Cost

31 December 2021

5,577,582

56,065,061

25,704,208

589,920

9,460,483

97,397,254

Additions

106,390

1,316,012

213,018

13,217,555

14,852,975

Reclassification

-112,267

-8,195,699

-442,409

-15,945

-8,766,320

Transfer to use

433,464

19,171,538

3,015,267

-22,620,269

Disposals

-676,883

-3,289,830

-2,558,369

-265,669

-6,790,751

Reductions – subsidiaries – disposal

-5,376

Exchange differences

2,057

901

115

-1

3,072

31 December 2022

5,216,520

63,859,517

27,035,610

521,439

57,768

96,690,854

Accumulated depreciation and impairment losses

31 December 2021

22,099,361

18,779,073

186,264

41,064,698

Additions

1,010,884

3,054,865

34,560

4,100,309

Reclassification

-7,537,181

-495,875

-16,081

-8,049,137

Disposals

-616,422

-2,232,056

-12,641

-2,861,119

Exchange differences

442

477

31 December 2022

14,956,675

19,106,449

192,104

34,255,228

Carrying amount as at 31 December 2021

5,577,582

33,965,700

6,925,135

403,656

9,460,483

56,332,556

Carrying amount as at 31 December 2022

5,216,520

48,902,842

7,929,161

329,335

57,768

62,435,626

307

Sava Re

EUR

Land

Buildings

Equipment

Other items of property, plant and equipment

In progress

Total

Cost

31 December 2022

151,373

2,449,707

1,538,295

274,193

4,413,567

Additions

424,457

Disposals

-207,382

31 December 2023

151,373

2,449,707

1,755,371

274,193

4,630,643

Accumulated depreciation and impairment losses

31 December 2022

823,917

992,621

43,084

1,859,622

Additions

33,311

194,674

10,287

238,273

Disposals

-142,410

31 December 2023

857,228

1,044,885

53,371

1,955,484

Carrying amount as at 31 December 2022

151,373

1,625,790

545,674

231,109

2,553,945

Carrying amount as at 31 December 2023

151,373

1,592,478

710,486

220,822

2,675,158

Sava Re

EUR

Land

Buildings

Equipment

Other items of property, plant and equipment

In progress

Total

Cost

31 December 2021

151,373

2,417,757

1,492,149

314,359

10,554

4,386,192

Additions

366,711

207,242

31,880

605,833

Reclassification

31,950

1,360

33,310

Transfer to use

42,434

-42,434

Disposals

-364,359

-247,408

-611,768

31 December 2022

151,373

2,449,707

1,538,295

274,193

4,413,567

Accumulated depreciation and impairment losses

31 December 2021

787,359

1,086,070

48,551

1,921,980

Additions

33,150

185,554

7,174

225,878

Reclassification

3,408

1,128

4,536

Disposals

-280,131

-12,641

-292,772

31 December 2022

823,917

992,621

43,084

1,859,622

Carrying amount as at 31 December 2021

151,373

1,630,398

406,079

265,808

10,554

2,464,212

Carrying amount as at 31 December 2022

151,373

1,625,790

545,674

231,109

2,553,945

Property, plant and equipment assets are unencumbered by third-party rights.

16.8.3Right-of-use assets and liabilities

Movement in cost and accumulated amortisation / impairment losses of right-of-use assets

Sava Insurance Group

EUR

Land and buildings

Motor vehicles

Computers and IT equipment

Total

As at 31 December 2022

7,035,677

328,038

61,961

7,425,676

Depreciation of right-of-use assets

-1,610,826

-82,046

-23,163

-1,716,035

Change in right of use

2,232,598

649,726

2,882,324

New contracts

654,028

84,640

738,668

Derecognition of right-of-use assets

-524,464

-232,771

-757,235

As at 31 December 2023

7,787,013

747,587

38,798

8,573,398

308

Sava Insurance Group

EUR

Land and buildings

Motor vehicles

Computers and IT equipment

Total

As at 31 December 2021

6,967,008

405,669

12,139

7,384,816

Depreciation of right-of-use assets

-1,901,647

-204,825

-19,221

-2,125,693

Change in right of use

369,421

79,545

448,966

New contracts

2,115,345

197,997

69,043

2,382,385

Derecognition of right-of-use assets

-514,450

-150,348

-664,798

As at 31 December 2022

7,035,677

328,038

61,961

7,425,676

Sava Re

EUR

Land and buildings

Total

As at 31 December 2022

320,124

Depreciation of right-of-use assets

-82,608

Change in right of use

20,501

New contracts

19,141

Derecognition of right-of-use assets

As at 31 December 2023

277,158

Sava Re

EUR

Land and buildings

Total

As at 31 December 2021

204,879

Depreciation of right-of-use assets

-74,135

Change in right of use

193,899

Derecognition of right-of-use assets

-4,519

As at 31 December 2022

320,124

The amounts recognised in the income statement related to leases are shown in the table below.

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Depreciation/amortisation

1,716,035

2,125,693

82,608

74,135

Land and buildings

1,610,826

1,901,647

82,608

74,135

Motor vehicles

82,046

204,825

Computers and IT equipment

23,163

19,221

Interest on lease liabilities

239,055

150,489

7,318

1,985

Costs associated with short-term leases

209,629

194,057

Costs associated with low value leases

44,138

45,119

Total

2,208,857

2,515,358

89,926

76,120

Cash flow from leases

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Cash flow from leases

2,579,753

2,265,303

87,084

78,444

Movement in short- and long-term lease liabilities136

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Lease liability – maturity up to 1 year

2,493,988

2,541,330

87,347

78,425

Lease liability – maturity over 1 year

6,350,749

5,115,859

193,017

242,063

Total

8,844,737

7,657,189

280,364

320,488

136 The disclosure also includes long-term liabilities under finance lease contracts.

309

Sava Insurance Group

Sava Re

EUR

Short-term

Long-term

Short-term

Long-term

31 December 2022

2,541,330

5,115,859

78,425

242,063

New leases

3,528,246

39,642

Repayments

-2,579,753

-87,084

Interest attribution

239,055

7,318

Transfer to current liabilities

-47,342

47,342

8,922

-8,922

31 December 2023

2,493,988

6,350,749

87,347

193,017

Sava Insurance Group

Sava Re

EUR

Short-term

Long-term

Short-term

Long-term

31 December 2021

2,672,117

4,984,539

74,982

128,746

New leases

2,376,921

193,218

Repayments

-2,265,303

-78,444

Interest attribution

150,489

1985

Transfer to current liabilities

-130,787

3,443

-3,443

31 December 2022

2,541,330

5,115,859

78,425

242,063

Lease terms range from 1 to 10 years for land and buildings (one contract for up to 24 years), 1 to 6 years for cars and 6 years for hardware and IT equipment. For leases with an indefinite term, the Group has set the lease term at 5 years.

Group companies also act as lessors. The majority of these leases relate to land and buildings as disclosed in note 16.8.5 “Investment property”.

16.8.4Deferred tax assets and liabilities

Sava Insurance Group

EUR

Offset value as at 31 December 2022

Included in income statement

Included in other comprehensive income

Other

Exchange differences

Offset value as at 31 December 2023

Deferred tax assets

Deferred tax liabilities

Insurance contracts

-13,611,691

-139,380

3,544,920

134

-10,206,017

461,803

-10,667,820

Reinsurance contracts

-535,725

777,881

-5

242,151

469,735

-227,584

Financial investments

19,449,192

-306,284

-7,282,489

1,242,466

471

13,103,356

17,905,300

-4,801,944

Short-term operating receivables

275,515

382,962

658,477

Provisions for jubilee benefits and severance pay

(retirement)

524,352

19,008

-26,777

-4,931

511,681

760,918

-249,237

Provision for tax losses

1,963,749

-1,662,098

9,013

-358,314

-47,650

750

-48,400

Deferred tax liabilities due to transition to the new standards

-10,859,627

-130,553

15,205

9,859,690

1,096

-1,114,189

68,954

-1,183,143

Total

-2,794,235

-1,836,345

-2,962,247

10,738,911

1,725

3,147,809

20,325,937

-17,178,128

310

Sava Insurance Group

EUR

Offset value as at 31 December 2021

Included in income statement

Included in other comprehensive income

Other

Exchange differences

Offset value as at 31 December 2022

Deferred tax assets

Deferred tax liabilities

Insurance contracts

6,979,667

-20,591,643

285

-13,611,691

42,541

-13,654,232

Reinsurance contracts

-3,037,462

2,501,738

-1

-535,725

330,892

-866,617

Financial investments

-9,836,697

150,188

29,105,184

8,251

1,635

19,449,192

24,649,815

-5,200,623

Short-term operating receivables

275,515

Provisions for jubilee benefits and severance pay (retirement)

814,037

-128,140

-161,325

-231

524,352

555,828

-31,476

Provision for tax losses

2,505,994

-542,245

1,963,749

2,003,136

-39,387

Deferred tax liabilities due to transition to the new standards

-15,091,022

-1,321,463

5,553,117

-259

-10,859,627

657,440

-11,517,067

Total

-17,389,968

-1,841,660

10,874,585

5,561,137

1,671

-2,794,235

28,515,167

-31,309,402

Sava Re

EUR

Offset value as at 31 December 2022

Included in income statement

Included in other comprehensive income

Other

Offset value as at 31 December 2023

Deferred tax assets

Deferred tax liabilities

Insurance contracts

-1,685,669

1,096,411

-589,258

112,237

-701,496

Reinsurance contracts

270,415

-148,746

121,669

125,792

-4,123

Financial investments

5,148,067

30,796

-1,444,764

1,100,681

4,834,780

4,965,493

-130,712

Short-term operating receivables

275,515

382,962

658,477

Provisions for jubilee benefits and severance pay (retirement)

53,332

9,045

-624

61,753

66,327

-4,575

Provision for tax losses

1,644,072

-1,644,072

Deferred tax liabilities due to transition to the new standards

-2,673,481

2,673,481

Total

3,032,251

-1,221,269

-497,723

3,774,162

5,087,421

5,928,327

-840,907

Sava Re

EUR

Netted value as at 31 December 2021

Included in income statement

Included in other comprehensive income

Offset value as at 31 December 2022

Deferred tax assets

Deferred tax liabilities

Insurance contracts

1,433,097

-3,118,766

-1,685,669

Reinsurance contracts

-587,509

857,924

270,415

Financial investments

838,809

-490,034

4,799,292

5,148,067

6,381,266

-1,233,199

Short-term operating receivables

275,515

Provisions for jubilee benefits and severance pay (retirement)

53,777

-446

53,332

57,283

-3,951

Provision for tax losses

2,111,130

-467,058

1,644,072

Deferred tax liabilities due to transition to the new standards

-1,414,696

-1,258,785

-2,673,481

Total

2,710,123

-2,216,322

2,538,450

3,032,251

8,628,550

-5,596,300

In 2023, deferred tax assets and liabilities were accounted for using tax rates that the management believes will be used to tax the differences. Tax has been accounted for at the statutory rates applicable to each Group company. The tax rate applicable to most Group companies (Slovenia) is 19%, valid until 31 December 2023. Deferred tax assets and liabilities are restated at the new rate of 22% effective from 1 January 2024 (2022: 19%), and 9%–18% for other companies (Croatia 18%, Serbia 15%, Kosovo and North Macedonia 10%, Montenegro – a progressive scale of 9%–15% applies). The following table shows the restatement to the new tax rate for the Slovenia-based companies.

311

EUR

Slovenia-based companies of the Sava Insurance Group

Sava Re

Restatement at new tax rate (22%)

Included in income statement

Included in other comprehensive income

Included in income statement

Included in other comprehensive income

Insurance contracts

-1,301,630

-80,354

Reinsurance contracts

28,897

16,591

Financial investments

242,001

-147,789

212,012

446,270

Short-term operating receivables

89,792

Provisions for jubilee benefits and severance pay (retirement)

99,271

26,023

9,045

-624

16.8.5Investment property

Movement in cost and accumulated depreciation of investment property

Sava Insurance Group

EUR

Land

Buildings

Equipment

In progress

Total

Cost

31 December 2022

2,649,470

21,866,752

538,765

25,054,987

Additions

2,425,330

193,322

2,618,652

Transfer to use

177,278

16,044

-193,322

Disposals

-28,650

Exchange differences

-6,351

-6,311

31 December 2023

2,620,860

24,463,009

554,809

27,638,678

Accumulated depreciation and impairment losses

31 December 2022

28,610

2,138,903

91,715

2,259,228

Additions

426,567

91,832

518,399

Disposals

-28,650

Exchange differences

-618

-577

31 December 2023

2,564,852

183,548

2,748,400

Carrying amount as at 31 December 2022

2,620,860

19,727,849

447,050

22,795,759

Carrying amount as at 31 December 2023

2,620,860

21,898,157

371,261

24,890,278

Sava Insurance Group

EUR

Land

Buildings

Equipment

In progress

Total

Cost

31 December 2021

2,158,279

13,920,291

186,075

16,264,645

Additions

9,135,430

Reclassification

14,285

-15,459

-1,174

Transfer to use

756,622

8,006,050

372,758

-9,135,430

Disposals

-266,147

-76,841

-4,593

-347,581

Exchange differences

716

2,967

-16

3,667

31 December 2022

2,649,470

21,866,752

538,765

25,054,987

Accumulated depreciation and impairment losses

31 December 2021

28,640

1,863,547

91,858

1,984,045

Additions

319,549

19,768

339,317

Reclassification

-34,069

-15,331

-49,400

Disposals

-10,711

-4,580

-15,291

Exchange differences

-30

587

557

31 December 2022

28,610

2,138,903

91,715

2,259,228

Carrying amount as at 31 December 2021

2,129,639

12,056,744

94,217

14,280,600

Carrying amount as at 31 December 2022

2,620,860

19,727,848

447,050

22,795,759

312

Sava Re

EUR

Land

Buildings

Equipment

Total

Cost

31 December 2022

1,497,711

7,026,356

82,446

8,606,513

Additions

10,045

31 December 2023

1,497,711

7,036,401

82,446

8,616,558

Accumulated depreciation and impairment losses

31 December 2022

858,194

26,626

884,820

Additions

141,642

7,928

149,570

31 December 2023

999,836

34,554

1,034,390

Carrying amount as at 31 December 2022

1,497,711

6,168,162

55,820

7,721,693

Carrying amount as at 31 December 2023

1,497,711

6,036,565

47,892

7,582,168

Sava Re

EUR

Land

Buildings

Equipment

Total

Cost

31 December 2021

1,497,711

7,058,306

83,822

8,639,839

Reclassification

-31,950

-1,376

-33,326

31 December 2022

1,497,711

7,026,356

82,446

8,606,513

Accumulated depreciation and impairment losses

31 December 2021

720,320

19,825

740,145

Additions

141,282

7,929

149,211

Reclassification

-3,408

-1,128

-4,536

31 December 2022

858,194

26,626

884,820

Carrying amount as at 31 December 2021

1,497,711

6,337,985

63,997

7,899,693

Carrying amount as at 31 December 2022

1,497,711

6,168,162

55,820

7,721,693

The Group generated income of EUR 1,444,937 million from the lease of its investment property in 2023 (2022: EUR 1,368,236). Maintenance costs associated with investment property are either included in the rent or charged to the lessee. Costs covered by the Group in 2023 totalled EUR 110,340 (2022: EUR 202,919). We estimate that the Group will continue to lease its investment property in 2024 and over the next five-year period in a similar scope as in 2023 and generate a similar amount of lease income.

In 2023, the Group generated income of EUR 867,573 by leasing out its investment property (2022: EUR 829,030). Maintenance costs associated with investment property are either included in rent or charged to the lessees in a proportionate amount.

The investment properties are unencumbered by any third-party rights.

The fair values of investment property are presented in note 16.8.34 “Fair values of assets and liabilities”.

16.8.6Investments in subsidiaries and associates

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Investments in subsidiaries

305,666,793

303,360,793

Investments in associates

23,834,620

21,856,109

19,575,000

Total

23,834,620

21,856,109

325,241,793

322,935,793

313

Investments in subsidiaries

Sava Re

EUR

31 December 2022

Acquisition/

31 December 2023

recapitalisation

Holding

Value

Holding

Value

Zavarovalnica Sava

100.00%

123,364,958

100.00%

123,364,958

Sava Neživotno Osiguranje (SRB)

100.00%

16,143,299

100.00%

16,143,299

Illyria

100.00%

9,563,104

100.00%

9,563,104

Sava Osiguruvanje (MKD)

93.89%

8,905,868

93.89%

8,905,868

Sava Osiguranje (MNE)

100.00%

15,373,019

100.00%

15,373,019

Illyria Life

100.00%

4,035,893

100.00%

4,035,893

Sava Životno Osiguranje (SRB)

100.00%

5,142,278

100.00%

5,142,278

Sava Pokojninska

100.00%

6,417,800

100.00%

6,417,800

TBS Team 24

78.50%

3,326,504

78.50%

3,326,504

Sava Penzisko Društvo

100.00%

19,714,494

100.00%

19,714,494

Sava Infond

85.00%

24,583,778

85.00%

24,583,778

Vita

100.00%

66,789,797

100.00%

66,789,797

ASP (SRB)

100.00%

1,250,000

100.00%

1,250,000

Vita S Holding (MKD)

80.00%

1,056,000

80.00%

1,056,000

Total

303,360,793

2,306,002

305,666,793

Sava Re

EUR

31 December 2021

Impairments

Disposal/decrease

31 December 2022

(-)

Holding

Value

Holding

Value

Zavarovalnica Sava

100.00%

123,364,958

100.00%

123,364,958

Sava Neživotno Osiguranje (SRB)

100.00%

16,143,299

100.00%

16,143,299

Illyria

100.00%

9,563,104

100.00%

9,563,104

Sava Osiguruvanje (MKD)

93.86%

10,094,070

-1,188,202

93.89%

8,905,868

Sava Osiguranje (MNE)

100.00%

15,373,019

100.00%

15,373,019

Illyria Life

100.00%

4,035,893

100.00%

4,035,893

Sava Životno Osiguranje (SRB)

100.00%

5,142,278

100.00%

5,142,278

S Estate

100.00%

5,996

-5,996

100.00%

Sava Pokojninska

100.00%

6,417,800

100.00%

6,417,800

TBS Team 24

78.50%

3,326,504

78.50%

3,326,504

Sava Penzisko Društvo

100.00%

19,714,494

100.00%

19,714,494

Sava Infond

85.00%

24,583,778

85.00%

24,583,778

Vita

100.00%

66,789,797

100.00%

66,789,797

Total

304,554,991

-1,188,202

-5,996

303,360,793

Investments in associates

Sava Insurance Group

EUR

31 December 2022

Attributed profit or loss

31 December 2023

Holding

Value

Holding

Value

Share of voting rights (%)

DCB

50.00%

21,856,109

1,978,512

50.00%

23,834,621

50.00%

Total

21,856,109

1,978,512

23,834,620

Sava Insurance Group

EUR

31 December 2021

Attributed profit or loss

31 December 2022

Holding

Value

Holding

Value

Share of voting rights (%)

DCB

50.00%

20,479,729

1,376,380

50.00%

21,856,109

50.00%

G2I

17.50%

-90,649

17.50%

25.00%

Total

20,479,729

1,285,731

21,856,109

314

Sava Re

EUR

31 December 2022

31 December 2023

Holding

Value

Holding

Value

Share of voting rights (%)

DCB

50.00%

19,575,000

50.00%

19,575,000

50.00%

Total

19,575,000

Sava Re

EUR

31 December 2021

31 December 2022

Holding

Value

Holding

Value

Share of voting rights (%)

DCB

50.00%

19,575,000

50.00%

19,575,000

50.00%

G2I

17.50%

25.00%

Total

19,575,000

Sava Insurance Group

EUR

31 December 2023

31 December 2022

DCB

Value of assets

53,009,611

46,338,747

Liabilities

20,190,187

17,455,813

Equity

32,819,424

28,882,934

Income

30,401,886

30,423,226

Profit or loss

3,957,023

2,752,760

Part of the profit or loss attributable to the Group

1,978,512

1,376,380

G2I

Value of assets

1,250,937

Liabilities

1,127,753

Equity

123,184

Income

3,373,482

Profit or loss

-517,993

Part of the profit or loss attributable to the Group

-90,649

In 2023, the Sava Insurance Group sold its associate G2I. It realised a gain on the sale of EUR 112,595.

The assumptions used in the valuation are described in more detail in 16.4.13 “Investments in subsidiaries and associates”.

315

16.8.7Financial investments

The financial investments of the Sava Insurance Group amounting to EUR 2,012.5 million as at 31 December 2023 (31 December 2022: EUR 1,776.1 million) include, in addition to investments supporting non-life and traditional life insurance liabilities, investments supporting unit-linked life insurance liabilities and own funds.

Sava Insurance Group

EUR

Measured at amortised cost

Measured at fair value through profit or loss

Measured at fair value through other comprehensive income

Total

31 December 2023

Debt instruments

76,303,166

19,701,111

1,260,177,155

1,356,181,432

Deposits and CDs

25,616,171

Government bonds

37,676,521

2,105,477

811,741,040

851,523,038

Corporate bonds

12,256,335

17,595,634

448,436,115

478,288,084

Loans granted

754,139

Equity instruments

569,153,261

15,969,890

585,123,151

5,784,383

15,969,890

21,754,273

Mutual funds

563,368,878

Investments in infrastructure funds

57,339,858

Investments in real-estate funds

13,888,192

Total

76,303,166

660,082,422

1,276,147,045

2,012,532,633

Sava Insurance Group

EUR

Measured at amortised cost

Measured at fair value through profit or loss

Measured at fair value through other comprehensive income

Total

31 December 2022

Debt instruments

64,428,280

20,729,025

1,140,474,230

1,225,631,535

Deposits and CDs

18,848,261

Government bonds

32,143,970

253,420

729,392,990

761,790,380

Corporate bonds

12,241,228

20,475,605

411,081,240

443,798,073

Loans granted

1,194,821

Equity instruments

465,219,427

14,927,677

480,147,104

9,956,247

14,927,677

24,883,924

Mutual funds

455,263,180

Investments in infrastructure funds

53,856,375

Investments in real-estate funds

16,497,061

Total

64,428,280

556,301,888

1,155,401,907

1,776,132,075

316

Sava Re

EUR

Measured at amortised cost

Measured at fair value through profit or loss

Measured at fair value through other comprehensive income

Total

31 December 2023

Debt instruments

5,811,776

4,320,636

311,285,620

321,418,032

Deposits and CDs

1,021,347

Government bonds

2,075,525

227,516,295

229,591,819

Corporate bonds

4,320,636

83,769,325

88,089,961

Loans granted

2,714,904

Equity instruments

7,997,287

3,538,972

Mutual funds

4,458,315

Investments in infrastructure funds

21,084,448

Investments in real-estate funds

3,884,428

Total

5,811,776

37,286,800

311,285,620

354,384,196

Sava Re

EUR

Measured at amortised cost

Measured at fair value through profit or loss

Measured at fair value through other comprehensive income

Total

31 December 2022

Debt instruments

3,871,964

5,276,003

280,840,335

289,988,303

Deposits and CDs

Government bonds

2,075,272

212,123,409

214,198,680

Corporate bonds

5,276,003

68,716,927

73,992,930

Loans granted

1,796,693

Equity instruments

11,014,588

7,080,606

Mutual funds

3,933,982

Investments in infrastructure funds

18,843,871

Investments in real-estate funds

4,584,214

Total

3,871,964

39,718,676

280,840,335

324,430,976

The Sava Insurance Group held 1.6% of financial investments constituting subordinated instruments for the issuer (31 December 2022: 1.9%). The total value of these investments was EUR 31.1 million (31 December 2022: EUR 33.4 million).

Sava Re held 1.2% of financial investments that constitute subordinated instruments for the issuer (31 December 2022: 1.6%). The total value of these investments was EUR 4.3 million (31 December 2022: EUR 5.3 million).

The Group measures its investments in subordinated debt instruments through profit or loss or through accumulated other comprehensive income.

Equity instruments classified as FVOCI

EUR

31 December 2023

31 December 2022

1 January 2022

AENA S.M.E. SA

640,811

458,057

542,014

AMGEN INC.

591,418

558,719

450,377

AUTOROUTES DU SUD DE LA FRANCE

737,055

BAE SYSTEMS PLC

576,638

Bouygues

323,867

266,156

298,903

BP P.L.C.

276,076

CISCO SYSTEMS, INC.

499,028

487,522

610,273

DANONE

512,981

430,369

477,226

317

EUR

31 December 2023

31 December 2022

1 January 2022

Deutsche Telekom AG

1,050,525

900,215

787,290

Enbridge Inc.

249,080

ENGIE

639,378

ESSILORLUXOTTICA

668,288

622,656

689,043

Fortum Oyj

381,430

453,861

788,270

Fresenius SE & Co. KGaA

374,229

349,965

471,953

GALP ENERGIA, SGPS, S.A.

649,485

613,943

414,813

GlaxoSmithKline PLC

344,824

334,937

494,461

Haleon PLC

95,605

95,338

Iberdrola SA

430,311

396,234

377,383

INTERNATIONAL BUSINESS MACHINES CORPORATION

458,388

Johnson & Johnson

417,170

487,088

443,901

KELLANOVA

508,756

671,590

571,504

WK Kellogg Co

29,883

Koninklijke Ahold Delhaize N.V.

774,024

798,571

896,607

KRKA, tovarna zdravil, d.d., Novo mesto

759,880

635,536

815,144

LEGAL & GENERAL GROUP PLC

394,846

384,421

484,390

LVMH MOET HENNESSY LOUIS VUITTON

738,632

Naturgy Energy Group SA

870,804

784,046

923,375

Neste Oyj

294,978

OMV Aktiengesellschaft

276,004

333,814

346,653

Österreichische Post AG

709,067

637,510

819,655

PFIZER INC.

303,246

559,143

911,904

PPL Corp

523,835

RECKITT BENCKISER GROUP PLC

364,223

378,873

441,288

RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.P.A. IN BREVE RECORDATI S.P.A.

460,711

365,606

533,078

Siemens Aktiengesellschaft

608,823

464,500

547,052

TELENOR ASA

316,580

265,892

424,253

TELIA COMPANY AB

226,088

233,717

336,983

Veolia Environement, Paris

706,146

593,400

797,629

WW Grainger Inc

894,685

622,170

545,492

Zurich Insurance Group AG

786,153

743,829

639,836

Total

15,969,890

14,927,677

21,374,809

Due to the spin-off process of the company Kellanova (formerly Kellogg Company), the Group recorded an investment in WK Kellogg Co in 2023. This transaction did not result in any additional cost to the Group. In 2023, the Group did not dispose of any equity instruments measured at FVOCI.

Due to the spin-off process of the company GlaxoSmithKline PLC, the Group recorded an investment in Haleon PLC in 2022. This transaction did not result in any additional cost to the Company. In 2022, the Group disposed of equity instruments with a total fair value of EUR 5,011,460 and realised a net gain on disposal of EUR 988,811 EUR. The gain was transferred from accumulated other comprehensive income to retained earnings. The disposals were made to mitigate the increased risk in the financial markets due to the start of the war in Ukraine.

Amounts recognised in profit or loss and other comprehensive income

EUR

2023

2022

Dividends from equity investments held at FVOCI recognised in the income statement item other income

556,769

558,722

– Related to investments derecognised during the reporting period

55,272

– Related to investments held at the end of the reporting period

556,769

503,450

318

Movement in financial investments

Sava Insurance Group

EUR

FVOCI

FVTPL

Total

Opening balance as at 1 January 2023

1,155,401,907

64,428,280

556,301,888

1,776,132,075

New acquisitions

330,815,055

29,287,786

114,620,739

474,723,581

Maturity

-233,057,388

-17,167,481

-2,750,000

-252,974,869

Interest inflows

-17,089,575

-2,196,521

-817,975

-20,104,070

Disposal

-26,257,105

-345,705

-66,132,897

-92,735,707

Change in fair value – in equity

52,182,266

Change in fair value – in equity (ECL)

-397,551

Change in fair value – from equity to IS – disposals

-821,328

Change in fair value through profit or loss

87,110

58,343,186

58,430,296

Change in amortised cost, exchange differences

14,910,432

2,362,126

518,389

17,790,948

Change in ECL through profit or loss

397,053

-53,287

343,766

Exchange differences (opening balance)

-23,831

-12,032

-908

-36,772

Opening balance as at 31 December 2023

1,276,147,045

76,303,166

660,082,422

2,012,532,633

Sava Insurance Group

EUR

FVOCI

FVTPL

Total

Opening balance as at 1 January 2022

1,322,371,668

62,376,074

602,276,651

1,987,024,393

New acquisitions

234,283,388

24,021,164

108,985,305

367,289,857

Transfer between asset classes

-6,431,384

5,831,331

-600,053

Maturity

-182,917,666

-25,197,518

-1,221,985

-209,337,169

Interest inflows

-17,981,541

-1,885,445

-1,047,308

-20,914,294

Disposal

-49,043,768

-3,954

-80,976,599

-130,024,321

Change in fair value – in equity

-160,709,425

Change in fair value – in equity (ECL)

-374,458

Change in fair value – from equity to IS – disposals

556,947

557,032

Change in fair value through profit or loss

-72,045,780

Change in amortised cost, exchange differences

15,246,024

-661,426

333,268

14,917,865

Change in ECL through profit or loss

382,386

-47,784

334,602

Exchange differences (opening balance)

19,736

-4,163

-1,748

13,825

Opening balance as at 31 December 2022

1,155,401,907

64,428,280

556,301,888

1,776,132,075

Sava Re

EUR

FVOCI

FVTPL

Total

Opening balance as at 1 January 2023

280,840,335

3,871,964

39,718,676

324,430,976

New acquisitions

116,005,237

2,300,000

2,567,159

120,872,396

Maturity

-74,806,557

-409,349

-1,250,000

-76,465,906

Interest inflows

-3,528,659

-211,984

-275,258

-4,015,901

Disposal

-18,046,171

-4,519,826

-22,565,997

Change in fair value – in equity

10,013,555

Change in fair value – in equity (ECL)

-60,746

Change in fair value – from equity to IS – disposals

-120,448

Change in fair value through profit or loss

1,211,782

Change in amortised cost, exchange differences

928,825

266,968

-165,733

1,030,060

Change in ECL through profit or loss

60,250

-5,824

54,426

Opening balance as at 31 December 2023

311,285,620

5,811,776

37,286,800

354,384,196

319

Sava Re

EUR

FVOCI

FVTPL

Total

Opening balance as at 1 January 2022

271,786,710

5,323,531

42,514,795

319,625,037

New acquisitions

99,226,328

1,000,000

3,659,075

103,885,404

Maturity

-44,745,137

-2,459,349

-47,204,486

Interest inflows

-3,128,881

-266,495

-293,134

-3,688,510

Disposal

-21,265,449

-3,606,403

-24,871,852

Change in fair value – in equity

-25,260,034

Change in fair value – in equity (ECL)

608

Change in fair value – from equity to IS – disposals

197,687

Change in fair value through profit or loss

-3,103,084

Change in amortised cost, exchange differences

4,029,276

252,442

547,427

4,829,145

Change in ECL through profit or loss

-774

21,835

21,061

Opening balance as at 31 December 2022

280,840,335

3,871,964

39,718,676

324,430,976

Loans of the parent granted to Group companies

EUR

31 December 2023

31 December 2022

Sava Osiguruvanje, Skopje (MKD)

1,311,052

Sava Pokojninska (SVN)

1,030,575

Total

2,341,627

1,030,575

The Group companies have pledged securities of EUR 0.6 million (31 December 2022: EUR 0.7 million).

The fair values of financial investments are shown in note 16.8.34.

16.8.8Investment contract assets and liabilities

Investment contract assets and liabilities relate to the management of pension funds at the subsidiary Sava Pokojninska. The Group held EUR 180.6 million (2022: 166.4 million) of investment contract assets and EUR 180.4 million (2022: EUR 166.2 million) of investment contract liabilities. Its investment contracts include a group of lifecycle funds called MOJI Skladi Življenjskega Cikla (MY lifecycle funds), which relate to the supplementary pension business of the Sava Pokojninska in the accumulation phase. The risks associated with investment contract liabilities are discussed in detail in section 16.4.14 “Financial investments”.

320

Investment contract assets

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Financial investments

173,199,975

149,105,965

Investment property

593,000

Receivables

38,152

1,863,355

Cash and cash equivalents

6,797,572

14,815,315

Internal relation

-561

-3,516

Total

180,628,137

166,374,119

Sava Insurance Group

EUR

Measured at amortised cost

Measured at fair

value through

profit or loss

Total

31 December 2023

Debt instruments

94,321,242

37,710,007

132,031,249

Government bonds

50,169,820

18,376,896

68,546,716

Corporate bonds

44,151,422

19,333,110

63,484,532

Equity instruments

35,973,949

Investments in infrastructure funds

1,914,064

Investments in real-estate funds

3,280,713

Total financial investments

94,321,242

78,878,733

173,199,975

Cash, cash equivalents and receivables

6,797,572

Investment property

593,000

Receivables

37,590

Total investment contract assets

101,156,405

79,471,733

180,628,137

Sava Insurance Group

EUR

Measured at amortised cost

Measured at fair

value through

profit or loss

Total

31 December 2022

Debt instruments

83,197,007

33,412,414

116,609,421

Government bonds

41,027,854

6,561,439

47,589,293

Corporate bonds

42,169,153

26,850,976

69,020,129

Equity instruments

26,634,985

Investments in infrastructure funds

1,992,155

Investments in real-estate funds

3,869,404

Total financial investments

83,197,007

65,908,958

149,105,965

Cash, cash equivalents and receivables

14,815,315

Investment property

593,000

Receivables

1,859,839

Total investment contract assets

99,872,161

66,501,958

166,374,119

321

Investment contract assets by level of the fair value hierarchy

Sava Insurance Group

EUR

Carrying amount

Fair value

Difference between FV and CA

31 December 2023

Level 1

Level 2

Level 3

Total fair value

Investment contract assets measured at fair value

79,471,733

70,072,510

3,611,446

5,787,777

79,471,733

At FVTPL

79,471,733

70,072,510

3,611,446

5,787,777

79,471,733

Mandatorily measured at fair value through profit or loss, not held for trading

79,471,733

70,072,510

3,611,446

5,787,777

79,471,733

Debt instruments

37,710,007

34,098,561

3,611,446

37,710,007

Equity instruments

35,973,949

Investments in infrastructure funds

1,914,064

Investments in real-estate funds

3,280,713

Investment property

593,000

Investment contract assets not measured at fair value

101,156,405

86,463,519

6,049,579

6,835,162

99,348,260

-1,808,144

Investments measured at amortised cost

101,156,405

86,463,519

6,049,579

6,835,162

99,348,260

-1,808,144

Debt instruments

94,321,242

86,463,519

6,049,579

92,513,098

-1,808,144

Cash and cash equivalents

6,797,572

Receivables

37,590

Total investment contract assets

180,628,137

156,536,030

9,661,024

12,622,939

178,819,993

-1,808,144

Sava Insurance Group

EUR

Carrying amount

Fair value

Difference between FV and CA

31 December 2022

Level 1

Level 2

Level 3

Total fair value

Investment contract assets measured at fair value

66,501,958

55,824,819

4,222,580

6,454,559

66,501,958

FVTPL

66,501,958

55,824,819

4,222,580

6,454,559

66,501,958

Mandatorily measured at fair value through profit or loss, not held for trading

66,501,958

55,824,819

4,222,580

6,454,559

66,501,958

Debt instruments

33,412,414

29,189,834

4,222,580

33,412,414

Equity instruments

26,634,985

Investments in infrastructure funds

1,992,155

Investments in real-estate funds

3,869,404

Investment property

593,000

Investment contract assets not measured at fair value

99,872,161

72,269,907

4,047,226

16,675,154

92,992,287

-6,879,874

Investments measured at amortised cost

99,872,161

72,269,907

4,047,226

16,675,154

92,992,287

-6,879,874

Debt instruments

83,197,007

72,269,907

4,047,226

76,317,133

-6,879,874

Cash and cash equivalents

14,815,315

Receivables

1,859,839

Total investment contract assets

166,374,119

128,094,726

8,269,806

23,129,713

159,494,245

-6,879,874

The fair value of investment property as at 31 December 2023 stood at EUR 593,000 (2022: EUR 593,000).

322

Investment contract liabilities

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Net liabilities to pension policyholders

179,443,359

165,831,325

Other liabilities

1,185,340

546,309

TOTAL IN BALANCE SHEET – LONG-TERM BUSINESS FUNDS OF VOLUNTARY PENSION INSURANCE

180,628,699

166,377,635

Inter-company transactions between company and life insurance liability fund

-191,004

-180,272

TOTAL IN BALANCE SHEET

180,437,695

166,197,363

Movement in financial investments

Sava Insurance Group

EUR

Debt instruments

Equity instruments

Investments in infrastructure funds

Investments in real-estate funds

Total

Balance as at 1 January 2023

116,609,421

26,634,985

1,992,155

3,869,404

149,105,965

New acquisitions

26,951,166

7,343,516

83,739

34,378,421

Maturity

-12,250,000

Disposal

-962,459

-2,562,553

-196,095

-3,721,107

Coupon payments

-2,615,309

Accrued interest

3,129,844

Revaluation (through profit or loss)

1,496,341

4,769,727

34,733

-588,691

5,712,110

Income/expenses upon sale

-299,503

-5,801

-468

-305,772

Recognition/reversal of ECL allowance

17,205

Exchange differences

-45,457

-205,925

-251,382

Balance as at 31 December 2023

132,031,249

35,973,949

1,914,064

3,280,713

173,199,975

Sava Insurance Group

EUR

Debt instruments

Equity instruments

Investments in infrastructure funds

Investments in real-estate funds

Total

Balance as at 1 January 2022

117,099,239

25,571,612

666,260

2,699,832

142,670,851

New acquisitions

51,899,001

7,824,866

1,286,841

1,000,000

59,723,867

Maturity

-9,731,947

Disposal

-35,696,093

-2,796,788

-38,492,881

Coupon payments

-2,522,534

Accrued interest

2,590,651

Revaluation (through profit or loss)

-7,363,436

-4,253,434

39,054

169,571

-11,616,870

Income/expenses upon sale

106,591

-4,248

102,343

Recognition/reversal of ECL allowance

-17,924

Exchange differences

245,873

292,977

538,850

Balance as at 31 December 2022

116,609,421

26,634,985

1,992,155

3,869,404

149,105,965

323

Movement in investments, and income and expenses relating to investment contract assets measured at fair value – level 3

Sava Insurance Group

EUR

Debt instruments

Investments in infrastructure funds

Investments in real-estate funds

Investment property

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Opening balance

795,498

1,992,155

666,260

3,869,404

2,699,832

593,000

506,000

Additions

4,502

83,739

1,344,536

1,058,238

Disposals

-196,563

Maturity

-800,000

Revaluation to fair value

34,733

-18,641

-588,691

111,334

87,000

Reclassifications into levels

Closing balance

1,914,064

1,992,155

3,280,713

3,869,404

593,000

Income

126,668

103,335

73,749

227,809

Expenses

-468

-6,587

-588,691

The pension company eliminates inter-company transactions of the joint balance sheet; therefore, liabilities to pension policyholders exceed investment contract liabilities. Internal transactions between the group of My-Life-cycle long-term business funds and the pension company were eliminated in the balance sheet. These include entry charges and management fees for the current month, which may be recognised upon conversion or when credited to personal accounts.

Liabilities in the balance sheet of the long-term liability fund of the voluntary supplementary pension insurance are mostly long-term. These are liabilities relating to the voluntary supplementary pension life liability fund for premiums paid, guaranteed return and the return in excess of guaranteed return (provisions).

The table below shows income and expenses relating to investment contracts in 2023.

324

Net investment income for the financial period (EUR)

Investment contracts

Finance income

9,405,019

Dividend income

357,517

Interest income

3,138,400

Gains on disposal of financial investments

4,062

Gains on change in fair value

5,729,316

Other finance income

175,722

Income from investment property

58,981

Rental income

58,981

Gains on change in fair value

Financial expenses

-521,234

Losses on disposals

-309,833

Losses from fair value changes

Other finance expenses

-211,401

Expenses relating to investment property

-6,633

Expenses arising from management and renting

-6,633

Expenses relating to management of life insurance business fund

-1,890,768

Asset management commission

-1,718,330

Expenses relating to custodian bank

-29,212

Audit-related expenses

-25,144

Expenses relating to communication with life insurance business fund members

-38,387

Brokerage expenses for purchase and sale of securities

-3,652

Other expenses charged against the life ins. liability fund under applicable rules

-76,044

Transfer of cash from supplementary pension scheme

Net claims incurred

Change in mathematical provision

Expenses factored in policies

Net profit/loss attributable to policyholders

7,045,364

Profit or loss realised from investment contract assets is fully recognised in investment contract liabilities.

16.8.9(Re)insurance contract assets and liabilities

Sava Insurance Group

31 December 2023

31 December 2022

EUR

NON-LIFE

LIFE

TOTAL

NON-LIFE

LIFE

TOTAL

Insurance contract assets

-8,669,139

-938,149

-9,607,288

-7,041,725

-96,615

-7,138,340

Reinsurance contract assets

-107,239,429

-242,131

-107,481,560

-67,933,085

-200,557

-68,133,642

Insurance contract liabilities

691,376,675

959,645,572

1,651,022,247

630,152,889

854,162,269

1,484,315,158

Reinsurance contract liabilities

1,484,470

157,573

1,642,043

896,359

155,255

1,051,614

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Insurance and reinsurance contract assets

Insurance and reinsurance contract liabilities

Net (re)insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-8,180,369

172,238,904

164,058,535

Insurance contracts measured using the PAA

-488,770

519,137,770

518,649,000

Total insurance contracts

-8,669,139

691,376,674

682,707,535

Reinsurance contracts not measured using the PAA

-101,443,611

542,115

-100,901,496

Reinsurance contracts measured using the PAA

-5,795,817

942,355

-4,853,462

Total reinsurance contracts

-107,239,428

1,484,470

-105,754,958

325

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Insurance and reinsurance contract assets

Insurance and reinsurance contract liabilities

Net (re)insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-6,794,128

176,533,741

169,739,613

Insurance contracts measured using the PAA

-247,598

453,619,153

453,371,555

Total insurance contracts

-7,041,726

630,152,894

623,111,168

Reinsurance contracts not measured using the PAA

-64,683,059

381,053

-64,302,006

Reinsurance contracts measured using the PAA

-3,250,028

515,306

-2,734,722

Total reinsurance contracts

-67,933,087

896,359

-67,036,728

Sava Insurance Group as at 31 December 2023 – life

EUR

Insurance and reinsurance contract assets

Insurance and reinsurance contract liabilities

Net (re)insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-938,150

959,645,573

958,707,423

Total insurance contracts

-938,150

959,645,573

958,707,423

Reinsurance contracts not measured using the PAA

-242,131

157,573

-84,558

Total reinsurance contracts

-242,131

157,573

-84,558

Sava Insurance Group as at 31 December 2022 – life

EUR

Insurance and reinsurance contract assets

Insurance and reinsurance contract liabilities

Net (re)insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-96,616

854,162,269

854,065,653

Total insurance contracts

-96,616

854,162,269

854,065,653

Reinsurance contracts not measured using the PAA

-200,558

155,256

-45,302

Total reinsurance contracts

-200,558

155,256

-45,302

Sava Re as at 31 December 2023

EUR

Insurance and reinsurance contract assets

Insurance and reinsurance contract liabilities

Net (re)insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-5,081,479

256,344,343

251,262,865

Insurance contracts measured using the PAA

-13,866

39,408,380

39,394,514

Total insurance contracts

-5,095,344

295,752,723

290,657,379

Reinsurance contracts not measured using the PAA

-95,762,621

446,848

-95,315,773

Total reinsurance contracts

-95,762,621

446,848

-95,315,773

Sava Re as at 31 December 2022

EUR

Insurance contract assets

Insurance contract liabilities

Net insurance contract assets/liabilities

Insurance contracts not measured using the PAA

-3,055,560

256,661,771

253,606,211

Insurance contracts measured using the PAA

-16,071

15,752,280

15,736,209

Total insurance contracts

-3,071,631

272,414,051

269,342,420

Reinsurance contracts not measured using the PAA

-61,224,914

320,044

-60,904,871

Total reinsurance contracts

-61,224,914

320,044

-60,904,871

326

16.8.10Movement in liabilities for remaining coverage (LRC) and liabilities for incurred claims (LIC) – insurance contracts issued

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total LIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-10,900,401

58,500

-10,841,901

3,916,518

-116,342

3,800,176

-7,041,725

Liabilities

84,621,519

8,103,257

92,724,776

202,662,508

295,095,593

39,670,013

537,428,114

630,152,890

Opening balance – net assets/liabilities

73,721,118

8,161,757

81,882,875

206,579,026

294,979,251

39,670,013

541,228,290

623,111,165

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-630,737,528

Contracts under the fair value approach

-1,245,399

Other contracts

-629,492,129

Insurance service expenses

Incurred claims (excluding investment components) and other incurred insurance service expenses

-7,831,867

107,915,043

471,354,715

15,504,532

594,774,290

586,942,423

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-27,639,687

-31,465,007

-18,406,018

-77,510,712

Incurred claims

-7,831,867

80,275,356

439,889,708

-2,901,486

517,263,578

509,431,711

Amortisation of insurance acquisition cash flows

91,307,797

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

10,343,192

Insurance service operating expenses

91,307,797

10,343,192

101,650,989

Total insurance service expenses

91,307,797

2,511,325

93,819,122

80,275,356

439,889,708

-2,901,486

517,263,578

611,082,700

Investment components excluded from insurance revenue and insurance service expenses

-3,397,537

3,397,536

-1

Insurance service result

-542,827,268

2,511,325

-540,315,943

83,672,892

439,889,708

-2,901,486

520,661,114

-19,654,829

Net finance income or expenses from insurance contracts

-675,189

53,401

-621,788

8,395,539

11,589,813

1,396,140

21,381,492

20,759,704

Effect of movement in exchange rates

2,877,834

-29,765

2,848,069

-9,454,413

15,842

1,804

-9,436,767

-6,588,698

Foreign currency translation differences

15,400

-366

15,034

-14,973

-724

-15,697

-663

Total changes in the statement of profit or loss and other comprehensive income

-540,609,223

2,534,595

-538,074,628

82,614,018

451,480,390

-1,504,266

532,590,142

-5,484,486

Cash flows

Premiums received for insurance contracts issued

654,120,672

Claims incurred and insurance service expenses paid

-78,866,700

-414,325,539

-493,192,239

Insurance acquisition cash flows

-95,817,422

Total cash flows

558,303,250

-78,866,700

-414,325,539

-493,192,239

65,111,011

Other movements

-30,151

Assets

-14,482,936

46,591

-14,436,345

5,219,756

482,366

65,084

5,767,206

-8,669,139

Liabilities

105,867,928

10,649,761

116,517,689

205,106,588

331,651,736

38,100,663

574,858,987

691,376,676

Closing balance – net assets/liabilities

91,384,992

10,696,352

102,081,344

210,326,344

332,134,102

38,165,747

580,626,193

682,707,537

327

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total LIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-12,776,466

768

-12,775,698

5,483,709

-149,681

4,425

5,338,453

-7,437,245

Liabilities

87,289,500

5,976,536

93,266,036

206,083,233

299,910,996

38,091,765

544,085,994

637,352,030

Opening balance – net assets/liabilities

74,513,034

5,977,304

80,490,338

211,566,942

299,761,315

38,096,190

549,424,447

629,914,785

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-547,182,811

Contracts under the fair value approach

-619,266

Other contracts

-546,563,545

Insurance service expenses

Incurred claims (excluding investment components) and other incurred insurance service expenses

-8,721,999

100,097,568

367,061,696

16,220,258

483,379,522

474,657,523

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-33,202,936

-24,193,704

-12,269,399

-69,666,039

Incurred claims

-8,721,999

66,894,632

342,867,992

3,950,859

413,713,483

404,991,484

Amortisation of insurance acquisition cash flows

80,011,463

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

10,844,930

Insurance service operating expenses

80,011,463

10,844,930

90,856,393

Total insurance service expenses

80,011,463

2,122,931

82,134,394

66,894,632

342,867,992

3,950,859

413,713,483

495,847,877

Investment components excluded from insurance revenue and insurance service expenses

-4,194,280

4,194,281

Insurance service result

-471,365,628

2,122,931

-469,242,697

71,088,913

342,867,992

3,950,859

417,907,764

-51,334,933

Net finance income or expenses from insurance contracts

815,237

36,994

852,231

-3,146,293

-21,721,978

-2,388,334

-27,256,605

-26,404,374

Effect of movement in exchange rates

9,231

24,362

33,593

-388,206

97,318

10,772

-280,116

-246,523

Foreign currency translation differences

-27,476

166

-27,310

-1

3,406

526

3,931

-23,379

Total changes in the statement of profit or loss and other comprehensive income

-470,568,636

2,184,453

-468,384,183

67,554,413

321,246,738

1,573,823

390,374,974

-78,009,209

Cash flows

Premiums received for insurance contracts issued

552,130,710

Claims incurred and insurance service expenses paid

-72,542,329

-326,028,802

-398,571,131

Insurance acquisition cash flows

-82,386,780

Total cash flows

469,743,930

-72,542,329

-326,028,802

-398,571,131

71,172,799

Other movements

32,792

Assets

-10,900,401

58,500

-10,841,901

3,916,518

-116,342

3,800,176

-7,041,725

Liabilities

84,621,519

8,103,257

92,724,776

202,662,508

295,095,593

39,670,013

537,428,114

630,152,890

Closing balance – net assets/liabilities

73,721,118

8,161,757

81,882,875

206,579,026

294,979,251

39,670,013

541,228,290

623,111,165

328

Sava Insurance Group as at 31 December 2023 – life

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Total LIC

Excluding loss component

Loss component

Assets

-324,596

17,079

-307,517

210,902

-96,615

Liabilities

826,454,221

4,298,640

830,752,861

23,409,407

854,162,268

Opening balance – net assets/liabilities

826,129,625

4,315,719

830,445,344

23,620,309

854,065,653

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-66,825,275

Contracts under the modified retrospective approach

-32,967,889

Contracts under the fair value approach

-11,028,948

Other contracts

-22,828,438

Insurance service expenses

Incurred claims (excluding investment components) and other incurred insurance service expenses

-398,513

38,509,225

38,110,712

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-1,599,207

Incurred claims

-398,513

36,910,018

36,511,505

Amortisation of insurance acquisition cash flows

9,557,778

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

-26,471

Insurance service operating expenses

9,557,778

-26,471

9,531,307

Total insurance service expenses

9,557,778

-424,984

9,132,794

36,910,018

46,042,812

Investment components excluded from insurance revenue and insurance service expenses

-110,271,436

110,271,437

Insurance service result

-167,538,933

-424,984

-167,963,917

147,181,455

-20,782,462

Net finance income or expenses from insurance contracts

80,593,806

23,844

80,617,650

305,183

80,922,833

Effect of movement in exchange rates

-6,965

-804

-7,769

-20,437

-28,206

Foreign currency translation differences

908

-329

579

-993

-414

Total changes in the statement of profit or loss and other comprehensive income

-86,951,184

-402,273

-87,353,457

147,465,208

60,111,751

Cash flows

Premiums received for insurance contracts issued

194,809,673

Claims incurred and insurance service expenses paid

-133,937,909

Insurance acquisition cash flows

-16,332,938

Total cash flows

178,476,735

-133,937,909

44,538,826

Other movements

11,541,230

-11,550,035

-8,805

Assets

-8,827,605

49,229

-8,778,376

7,840,226

-938,150

Liabilities

938,024,007

3,864,217

941,888,224

17,757,347

959,645,571

Closing balance – net assets/liabilities

929,196,402

3,913,446

933,109,848

25,597,573

958,707,421

329

Sava Insurance Group as at 31 December 2022 – life

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Total LIC

Excluding loss component

Loss component

Assets

-13,293,626

24,000

-13,269,626

6,327,810

-6,941,816

Liabilities

963,671,184

2,232,364

965,903,548

17,847,246

983,750,794

Opening balance – net assets/liabilities

950,377,558

2,256,364

952,633,922

24,175,056

976,808,978

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-61,804,984

Contracts under the modified retrospective approach

-36,876,538

Contracts under the fair value approach

-1,627,658

Other contracts

-23,300,788

Insurance service expenses

Incurred claims (excluding investment components) and other incurred insurance service expenses

-752,184

34,504,072

33,751,888

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-3,623,010

Incurred claims

-752,184

30,881,062

30,128,878

Amortisation of insurance acquisition cash flows

8,734,800

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

2,798,995

Insurance service operating expenses

8,734,800

2,798,995

11,533,795

Total insurance service expenses

8,734,800

2,046,811

10,781,611

30,881,062

41,662,673

Investment components excluded from insurance revenue and insurance service expenses

-116,760,299

116,760,294

-5

Insurance service result

-169,830,483

2,046,811

-167,783,672

147,641,356

-20,142,316

Net finance income or expenses from insurance contracts

-132,335,244

12,595

-132,322,649

-425,961

-132,748,610

Effect of movement in exchange rates

10,001

-759

9,242

-9,721

-479

Foreign currency translation differences

-822,472

708

-821,764

270

-821,494

Total changes in the statement of profit or loss and other comprehensive income

-302,978,198

2,059,355

-300,918,843

147,205,944

-153,712,899

Cash flows

Premiums received for insurance contracts issued

180,750,118

Claims incurred and insurance service expenses paid

-135,175,500

Insurance acquisition cash flows

-14,842,731

Total cash flows

165,907,387

-135,175,500

30,733,887

Other movements

12,822,874

-12,874,191

235,683

Assets

-324,596

17,079

-307,517

210,902

-96,615

Liabilities

826,454,221

4,298,640

830,752,861

23,409,407

854,162,268

Closing balance – net assets/liabilities

826,129,625

4,315,719

830,445,344

23,620,309

854,065,653

330

Sava Re as at 31 December 2023

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total LIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-6,804,219

2,656

-6,801,563

3,729,932

-3,071,631

Liabilities

-22,943,613

532,067

-22,411,546

278,014,090

15,324,400

1,487,107

294,825,597

272,414,051

Opening balance – net assets/liabilities

-29,747,832

534,724

-29,213,108

281,744,022

15,324,400

1,487,107

298,555,528

269,342,420

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-167,804,126

Contracts under the modified retrospective approach

-426,267

Contracts under the fair value approach

-344,090

Other contracts

-167,033,770

Insurance service expenses

47,480,784

Incurred claims (excluding investment components) and other incurred insurance service expenses

-8,129,082

146,195,647

44,621,041

1,524,219

192,340,907

184,211,825

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-29,353,101

2,859,743

-183,052

-26,676,410

Incurred claims

-8,129,082

116,842,546

47,480,784

1,341,166

165,664,497

157,535,415

Amortisation of insurance acquisition cash flows

9,071,629

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

7,883,873

Insurance service operating expenses

9,071,629

7,883,873

16,955,503

Total insurance service expenses

9,071,629

-245,208

8,826,421

116,842,546

47,480,784

1,341,166

165,664,497

174,490,918

Investment components excluded from insurance revenue and insurance service expenses

-6,427,138

6,418,482

8,656

6,427,138

-2

Insurance service result

-165,159,635

-245,208

-165,404,843

123,261,028

47,489,440

1,341,166

172,091,634

6,686,791

Net finance income or expenses from insurance contracts

254,982

48,770

303,752

11,068,670

766,380

63,538

11,898,588

12,202,340

Effect of movement in exchange rates

2,877,226

-29,503

2,847,723

-9,540,392

8,053

1,985

-9,530,353

-6,682,630

Total changes in the statement of profit or loss and other comprehensive income

-162,027,427

-225,941

-162,253,368

124,789,306

48,263,874

1,406,689

174,459,869

12,206,501

Cash flows

Premiums received for insurance contracts issued

162,887,532

Claims incurred and insurance service expenses paid

-120,063,682

-25,507,274

-145,570,956

Insurance acquisition cash flows

-8,208,119

Total cash flows

154,679,414

-120,063,682

-25,507,274

-145,570,956

9,108,458

Assets

-9,456,970

17,249

-9,439,721

4,344,377

-5,095,344

Liabilities

-27,638,875

291,534

-27,347,342

282,125,269

38,081,000

2,893,796

323,100,065

295,752,723

Closing balance – net assets/liabilities

-37,095,845

308,783

-36,787,063

286,469,646

38,081,000

2,893,796

327,444,442

290,657,379

331

Sava Re as at 31 December 2022

EUR

Liability for remaining coverage – LRC

Liability for incurred claims – LIC

Total

Total LRC

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total LIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-8,294,473

768

-8,293,705

5,191,907

35,986

2,375

5,230,268

-3,063,438

Liabilities

-16,334,711

794,881

-15,539,830

290,779,555

14,794,305

1,412,877

306,986,737

291,446,906

Opening balance – net assets/liabilities

-24,629,184

795,649

-23,833,536

295,971,462

14,830,291

1,415,252

312,217,005

288,383,469

Changes in the statement of profit or loss and other comprehensive income

Insurance contract revenue, of which

-150,760,734

Contracts under the modified retrospective approach

-15,031,862

Contracts under the fair value approach

-591,401

Other contracts

-135,137,471

Insurance service expenses

6,053,136

Incurred claims (excluding investment components) and other incurred insurance service expenses

-8,898,334

147,003,163

5,044,928

279,542

152,327,633

143,429,299

Changes related to past services (changes in fulfilment cash flows related to the liability for incurred claims)

-27,761,777

1,008,208

-35,097

-26,788,666

Incurred claims

-8,898,334

119,241,387

6,053,136

244,445

125,538,968

116,640,633

Amortisation of insurance acquisition cash flows

7,302,382

Changes related to future services (recognition/reversal of losses on onerous groups of contracts)

8,580,314

Insurance service operating expenses

7,302,382

8,580,314

15,882,696

Total insurance service expenses

7,302,382

-318,020

6,984,361

119,241,387

6,053,136

244,445

125,538,968

132,523,329

Investment components excluded from insurance revenue and insurance service expenses

-7,229,643

7,140,735

88,908

7,229,643

-2

Insurance service result

-150,687,996

-318,020

-151,006,016

126,382,122

6,142,045

244,445

132,768,611

-18,237,405

Net finance income or expenses from insurance contracts

-501,340

35,304

-466,036

-8,905,207

-2,190,959

-168,439

-11,264,605

-11,730,640

Effect of movement in exchange rates

11,170

21,791

32,961

-8,684

-17,508

-4,150

-30,342

2,619

Total changes in the statement of profit or loss and other comprehensive income

-151,178,166

-260,925

-151,439,091

117,468,231

3,933,578

71,855

121,473,664

-29,965,427

Cash flows

Premiums received for insurance contracts issued

153,163,416

Claims incurred and insurance service expenses paid

-131,695,671

-3,439,469

-135,135,140

Insurance acquisition cash flows

-7,103,897

Total cash flows

146,059,518

-131,695,671

-3,439,469

-135,135,140

10,924,378

Assets

-6,804,219

2,656

-6,801,563

3,729,932

-3,071,631

Liabilities

-22,943,613

532,067

-22,411,546

278,014,090

15,324,400

1,487,107

294,825,597

272,414,051

Closing balance – net assets/liabilities

-29,747,832

534,724

-29,213,108

281,744,022

15,324,400

1,487,107

298,555,528

269,342,420

332

16.8.11Movement in assets for remaining coverage (ARC) and assets for incurred claims (AIC) – reinsurance contracts

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Reinsurance contracts measured using the PAA

Total AIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-981,794

-67,934

-1,049,728

-63,755,094

-2,782,668

-345,594

-66,883,356

-67,933,084

Liabilities

2,280,268

-10,105

2,270,163

-245,023

-1,121,196

-7,585

-1,373,804

896,359

Opening balance – net assets/liabilities

1,298,474

-78,039

1,220,435

-64,000,117

-3,903,864

-353,179

-68,257,160

-67,036,725

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

42,824,596

Reinsurers’ shares of insurance service expenses

Reinsurers’ share of incurred claims

-82,239,382

-7,141,789

-113,410

-89,494,581

Reinsurers’ share of operating expenses

Changes in reinsurers’ share of liability for incurred claims

4,335,519

-787,589

108,257

3,656,187

Changes in reinsurance loss-recovery component relating to onerous underlying contracts

-39,497

Total amounts recovered from reinsurers

-39,497

-77,903,863

-7,929,378

-5,153

-85,838,394

-85,877,891

Reinsurance investment components

7,509,865

-2,863,312

-4,646,553

-7,509,865

Result from reinsurance contracts held

50,334,461

-39,497

50,294,964

-80,767,175

-12,575,931

-5,153

-93,348,259

-43,053,295

Net finance income or expenses from reinsurance contracts

-334,056

-2,006,286

-182,765

-23,335

-2,212,386

-2,546,442

Finance effects from credit risk

1,255,566

306,177

91,023

397,200

1,652,766

Effect of movement in exchange rates

2,300

47,996

50,296

Foreign currency translation differences

-5,842

148

-5,694

-3

5,549

268

5,814

120

Total changes in the statement of profit or loss and other comprehensive income

51,252,429

-39,349

51,213,080

-82,419,291

-12,662,124

-28,220

-95,109,635

-43,896,555

Cash flows

Premiums received for insurance contracts issued

-47,770,461

Recovered claims and insurance service expenses

42,401,318

10,543,667

52,944,985

Total cash flows

-47,770,461

42,401,318

10,543,667

52,944,985

5,174,524

Other movements

3,797

Assets

-128,434

-117,386

-245,820

-102,985,870

-3,639,001

-368,737

-106,993,608

-107,239,428

Liabilities

4,912,673

-2

4,912,671

-1,032,220

-2,383,320

-12,662

-3,428,202

1,484,469

Closing balance – net assets/liabilities

4,784,239

-117,388

4,666,851

-104,018,090

-6,022,321

-381,399

-110,421,810

-105,754,959

333

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Reinsurance contracts measured using the PAA

Total AIC

Excluding loss component

Loss component

Present value of future cash flows

Adjustment for non-financial risk

Assets

-1,330,270

-118,836

-1,449,106

-59,010,346

-3,177,539

-541,277

-62,729,162

-64,178,268

Liabilities

2,197,050

-4,027

2,193,023

-186,386

-882,192

-1,226

-1,069,804

1,123,219

Opening balance – net assets/liabilities

866,780

-122,863

743,917

-59,196,732

-4,059,731

-542,503

-63,798,966

-63,055,049

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

38,433,907

Reinsurers’ shares of insurance service expenses

Reinsurers’ share of incurred claims

-41,919,763

-2,897,525

-47,554

-44,864,842

Changes in reinsurers’ share of liability for incurred claims

907,781

531,152

221,315

1,660,248

Changes in reinsurance loss-recovery component relating to onerous underlying contracts

44,934

Total amounts recovered from reinsurers

44,934

-41,011,982

-2,366,373

173,761

-43,204,594

-43,159,660

Reinsurance investment components

2,174,249

1,749,215

-3,923,464

-2,174,249

Result from reinsurance contracts held

40,608,156

44,934

40,653,090

-39,262,767

-6,289,837

173,761

-45,378,843

-4,725,753

Net finance income or expenses from reinsurance contracts

112,870

4,432,886

142,169

15,882

4,590,937

4,703,807

Finance effects from credit risk

360,420

60,717

8,542

69,259

429,679

Effect of movement in exchange rates

17,516

-261,418

-243,902

Foreign currency translation differences

27,395

-110

27,285

-3,659

-319

-3,974

23,311

Total changes in the statement of profit or loss and other comprehensive income

41,126,357

44,824

41,171,181

-35,030,578

-6,142,785

189,324

-40,984,039

187,142

Cash flows

Premiums received for insurance contracts issued

-40,669,237

Recovered claims and insurance service expenses

30,227,193

6,298,652

36,525,845

Total cash flows

-40,669,237

30,227,193

6,298,652

36,525,845

-4,143,392

Other movements

-25,426

Assets

-981,794

-67,934

-1,049,728

-63,755,094

-2,782,668

-345,594

-66,883,356

-67,933,084

Liabilities

2,280,268

-10,105

2,270,163

-245,023

-1,121,196

-7,585

-1,373,804

896,359

Closing balance – net assets/liabilities

1,298,474

-78,039

1,220,435

-64,000,117

-3,903,864

-353,179

-68,257,160

-67,036,725

334

Sava Insurance Group as at 31 December 2023 – life

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Total AIC

Excluding loss component

Assets

-200,557

Liabilities

183,175

-27,920

155,255

Opening balance – net assets/liabilities

-17,382

-27,920

-45,302

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

247,180

Reinsurers’ shares of insurance service expenses

Reinsurers’ share of incurred claims

-124,349

Changes in reinsurers’ share of liability for incurred claims

-110,000

Total amounts recovered from reinsurers

-234,349

Result from reinsurance contracts held

247,180

-234,349

12,831

Net finance income or expenses from reinsurance contracts

76,797

297

77,094

Finance effects from credit risk

Effect of movement in exchange rates

Foreign currency translation differences

-3

Total changes in the statement of profit or loss and other comprehensive income

323,974

-234,052

89,922

Cash flows

Premiums received for insurance contracts issued

-268,815

Recovered claims and insurance service expenses

139,637

Total cash flows

-268,815

139,637

-129,178

Assets

-128,969

-113,162

-242,131

Liabilities

166,746

-9,173

157,573

Closing balance – net assets/liabilities

37,777

-122,335

-84,558

335

Sava Insurance Group as at 31 December 2022 – life

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Total AIC

Excluding loss component

Assets

-67,739

Liabilities

253,582

Opening balance – net assets/liabilities

185,843

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

305,007

Reinsurers’ shares of insurance service expenses

Reinsurers’ share of incurred claims

-147,432

Changes in reinsurers’ share of liability for incurred claims

-27,999

Total amounts recovered from reinsurers

-175,431

Result from reinsurance contracts held

305,007

-175,431

129,576

Net finance income or expenses from reinsurance contracts

-203,646

-203,566

Effect of movement in exchange rates

Foreign currency translation differences

-2

-4

Total changes in the statement of profit or loss and other comprehensive income

101,361

-175,353

-73,992

Cash flows

Premiums received for insurance contracts issued

-304,586

Recovered claims and insurance service expenses

147,433

Total cash flows

-304,586

147,433

-157,153

Other movements

Assets

-200,557

Liabilities

183,175

-27,920

155,255

Closing balance – net assets/liabilities

-17,382

-27,920

-45,302

336

Sava Re as at 31 December 2023

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Total AIC

Excluding loss component

Assets

-602,359

-60,622,555

-61,224,914

Liabilities

559,021

-238,978

320,044

Opening balance – net assets/liabilities

-43,338

-60,861,532

-60,904,871

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

30,235,703

Reinsurers’ shares of insurance service expenses

Recoveries of incurred claims

-77,958,868

Changes in amounts recoverable arising from changes in liability for incurred claims

4,054,018

Total amounts recovered from reinsurers

-73,904,850

Reinsurance investment components

2,863,312

-2,863,312

Result from reinsurance contracts held

33,099,015

-76,768,162

-43,669,147

Net finance income or expenses from reinsurance contracts

-267,763

-1,929,864

-2,197,627

Finance effects from credit risk

1,350,574

267,140

1,617,714

Effect of movement in exchange rates

2,300

47,997

50,297

Total changes in the statement of profit or loss and other comprehensive income

34,184,127

-78,382,891

-44,198,763

Cash flows

Premiums received for insurance contracts issued

-30,846,126

Recovered claims and insurance service expenses

40,633,988

Total cash flows

-30,846,126

40,633,988

9,787,861

Assets

1,849,407

-97,612,028

-95,762,621

Liabilities

1,445,256

-998,408

446,848

Closing balance – net assets/liabilities

3,294,663

-98,610,435

-95,315,773

337

Sava Re as at 31 December 2022

EUR

Assets for remaining coverage – ARC

Assets for incurred claims – AIC

Total

Total ARC

Reinsurance contracts not measured using the PAA

Total AIC

Excluding loss component

Assets

-1,577,227

-54,491,270

-56,068,497

Liabilities

947,441

-180,896

766,545

Opening balance – net assets/liabilities

-629,786

-54,672,166

-55,301,952

Changes in the statement of profit or loss and other comprehensive income

Allocation of reinsurers’ shares of premiums

Amounts recoverable from insurance contracts ceded to reinsurers

29,572,834

Reinsurers’ shares of insurance service expenses

Recoveries of incurred claims

-40,069,392

Changes in amounts recoverable arising from changes in liability for incurred claims

628,975

Total amounts recovered from reinsurers

-39,440,417

Reinsurance investment components

-1,749,215

1,749,215

-0

Result from reinsurance contracts held

27,823,619

-37,691,201

-9,867,583

Net finance income or expenses from reinsurance contracts

104,041

4,344,640

4,448,681

Finance effects from credit risk

433,637

44,773

478,410

Effect of movement in exchange rates

17,516

-261,419

-243,902

Total changes in the statement of profit or loss and other comprehensive income

28,378,813

-33,563,207

-5,184,394

Cash flows

Premiums received for insurance contracts issued

-27,792,365

Recovered claims and insurance service expenses

27,373,840

Total cash flows

-27,792,365

27,373,840

-418,525

Assets

-602,359

-60,622,555

-61,224,914

Liabilities

559,021

-238,978

320,044

Closing balance – net assets/liabilities

-43,338

-60,861,532

-60,904,871

338

16.8.12Movement in individual components of insurance contracts

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts measured using the PAA

Total insurance contracts

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-11,982,626

1,390,322

3,798,176

-6,794,128

-247,597

-7,041,725

Liabilities

147,889,212

21,917,386

316,216

6,410,925

6,727,141

176,533,739

453,619,151

630,152,890

Opening balance – net assets/liabilities

135,906,586

23,307,708

316,216

10,209,101

10,525,317

169,739,611

453,371,554

623,111,165

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-32,267,932

11,238,939

171,700

27,897,612

28,069,312

7,040,319

-512,811,476

-505,771,157

Changes in estimates that adjust the contractual service margin

1,880,224

222,384

171,341

-835,202

-663,861

1,438,747

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

-1,734,317

16,361

359

6,469,617

6,469,976

4,752,020

Effects of contracts initially recognised in the period

-32,413,839

11,000,194

22,263,197

849,552

Effects of contracts measured using the PAA

-512,811,476

Changes that relate to current service

24,323,239

-3,431,319

-392,991

-27,068,080

-27,461,071

-6,569,151

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-392,991

-27,068,080

-27,461,071

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-3,431,319

Experience adjustment

24,323,239

Changes that relate to past service

-16,248,072

-11,391,615

-27,639,687

520,325,169

492,685,482

Changes in fulfilment cash flows relating to incurred claims

-16,248,072

-11,391,615

-27,639,687

520,325,169

492,685,482

Insurance service result

-24,192,765

-3,583,995

-221,291

829,532

608,241

-27,168,519

7,513,693

-19,654,826

Net finance income or expenses from insurance contracts

5,118,653

1,509,774

4,572

1,140,752

1,145,324

7,773,751

12,985,953

20,759,704

Effect of movement in exchange rates

-5,148,587

-935,077

-523,345

-6,607,009

18,311

-6,588,698

Foreign currency translation differences

-2

-665

-667

Total changes in the statement of profit or loss and other comprehensive income

-24,222,699

-3,009,298

-216,719

1,446,937

1,230,218

-26,001,779

20,517,292

-5,484,487

Cash flows

Premiums received for insurance contracts issued

108,957,590

545,163,082

654,120,672

Claims incurred and insurance service expenses paid

-78,866,700

-414,325,539

-493,192,239

Insurance acquisition cash flows

-9,770,186

-86,047,236

-95,817,422

Total cash flows

20,320,704

44,790,307

65,111,011

Other movements

-30,151

Assets

-14,016,607

1,011,471

4,824,767

-8,180,369

-488,770

-8,669,139

Liabilities

146,021,198

19,286,939

99,497

6,831,271

6,930,768

172,238,905

519,137,772

691,376,677

Closing balance – net assets/liabilities

132,004,591

20,298,410

99,497

11,656,038

11,755,535

164,058,536

518,649,002

682,707,538

339

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts measured using the PAA

Total insurance contracts

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-12,675,106

1,451,502

3,988,873

-7,234,731

-202,514

-7,437,245

Liabilities

157,695,709

20,137,664

491,947

7,632,607

8,124,554

185,957,927

451,394,103

637,352,030

Opening balance – net assets/liabilities

145,020,603

21,589,166

491,947

11,621,480

12,113,427

178,723,196

451,191,589

629,914,785

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-24,444,489

11,651,889

-71,213

20,946,400

20,875,187

8,082,587

-441,334,136

-433,251,549

Changes in estimates that adjust the contractual service margin

-38,531

187,562

-220,396

2,737,377

2,516,981

2,666,012

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

-1,919,205

-226,195

149,183

4,051,374

4,200,557

2,055,157

Effects of contracts initially recognised in the period

-22,486,753

11,690,522

14,157,649

3,361,418

Effects of contracts measured using the PAA

-441,334,136

Changes that relate to current service

21,308,066

-3,223,478

-113,604

-22,614,510

-22,728,114

-4,643,526

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-113,604

-22,614,510

-22,728,114

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-3,223,478

Experience adjustment

21,308,066

Changes that relate to past service

-26,690,239

-6,512,697

-33,202,936

419,763,075

386,560,139

Changes in fulfilment cash flows relating to incurred claims

-26,690,239

-6,512,697

-33,202,936

419,763,075

386,560,139

Insurance service result

-29,826,662

1,915,714

-184,817

-1,668,110

-1,852,927

-29,763,875

-21,571,061

-51,334,936

Net finance income or expenses from insurance contracts

-2,389,610

-280,500

9,086

366,963

376,049

-2,294,061

-24,110,312

-26,404,373

Effect of movement in exchange rates

-330,299

83,330

-111,230

-358,199

111,676

-246,523

Foreign currency translation differences

-1

-2

-5

-23,374

-23,379

Total changes in the statement of profit or loss and other comprehensive income

-32,546,572

1,718,542

-175,731

-1,412,379

-1,588,110

-32,416,140

-45,593,071

-78,009,211

Cash flows

Premiums received for insurance contracts issued

105,048,250

447,082,460

552,130,710

Claims incurred and insurance service expenses paid

-72,542,329

-326,028,802

-398,571,131

Insurance acquisition cash flows

-9,073,366

-73,313,414

-82,386,780

Total cash flows

23,432,555

47,740,244

71,172,799

Other movements

32,792

Assets

-11,982,626

1,390,322

3,798,176

-6,794,128

-247,597

-7,041,725

Liabilities

147,889,212

21,917,386

316,216

6,410,925

6,727,141

176,533,739

453,619,151

630,152,890

Closing balance – net assets/liabilities

135,906,586

23,307,708

316,216

10,209,101

10,525,317

169,739,611

453,371,554

623,111,165

340

Sava Insurance Group as at 31 December 2023 – life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-1,440,104

224,654

733,776

1,083

383,975

1,118,834

-96,616

Liabilities

698,607,643

30,802,689

70,803,096

911,525

53,037,313

124,751,934

854,162,266

Opening balance – net assets/liabilities

697,167,539

31,027,343

71,536,872

912,608

53,421,288

125,870,768

854,065,650

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-43,363,111

3,834,523

4,973,937

2,405,702

26,541,583

33,921,222

-5,607,366

Changes in estimates that adjust the contractual service margin

-15,525,170

382,206

3,770,294

2,211,365

3,117,281

9,098,940

-6,044,024

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

-435,515

-50,691

103,854

194,337

107,779

405,970

-80,236

Effects of contracts initially recognised in the period

-27,402,426

3,503,008

1,099,789

23,316,523

24,416,312

516,894

Changes that relate to current service

7,970,550

-4,137,020

-9,992,513

-1,085,171

-6,331,735

-17,409,419

-13,575,889

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-9,992,513

-1,085,171

-6,331,735

-17,409,419

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-4,137,020

Experience adjustment

7,970,550

Changes that relate to past service

-1,361,258

-237,949

-1,599,207

Changes in fulfilment cash flows relating to incurred claims

-1,361,258

-237,949

-1,599,207

Insurance service result

-36,753,819

-540,446

-5,018,576

1,320,531

20,209,848

16,511,803

-20,782,462

Net finance income or expenses from insurance contracts

78,325,727

1,416,935

697,427

-42,656

525,401

1,180,172

80,922,834

Effect of movement in exchange rates

-21,581

-964

-2,382

-3,279

-5,661

-28,206

Foreign currency translation differences

4,892

-177

-326

-4,803

-5,129

-414

Total changes in the statement of profit or loss and other comprehensive income

41,555,219

875,348

-4,323,857

1,277,875

20,727,167

17,681,185

60,111,752

Cash flows

Premiums received for insurance contracts issued

194,809,673

Claims incurred and insurance service expenses paid

-133,937,909

Insurance acquisition cash flows

-16,332,938

Total cash flows

44,538,826

Other movements

-8,805

Assets

-53,393,210

10,505,548

21,670,306

2,538

20,276,668

41,949,512

-938,150

Liabilities

836,645,989

21,397,143

45,542,709

2,187,945

53,871,787

101,602,441

959,645,573

Closing balance – net assets/liabilities

783,252,779

31,902,691

67,213,015

2,190,483

74,148,455

143,551,953

958,707,423

341

Sava Insurance Group as at 31 December 2022 – life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-58,575,161

10,714,284

32,171,902

10,495

8,736,665

40,919,062

-6,941,815

Liabilities

889,171,403

18,516,710

47,458,680

854,109

27,749,890

76,062,679

983,750,792

Opening balance – net assets/liabilities

830,596,242

29,230,994

79,630,582

864,604

36,486,555

116,981,741

976,808,977

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-20,294,544

8,574,434

-1,245,868

-915,387

19,123,209

16,961,954

5,241,844

Changes in estimates that adjust the contractual service margin

6,895,448

4,524,364

-1,837,514

-1,272,523

-5,009,688

-8,119,725

3,300,087

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

885,102

55,477

29,985

357,136

12,344

399,465

1,340,044

Effects of contracts initially recognised in the period

-28,075,094

3,994,593

561,661

24,120,553

24,682,214

601,713

Changes that relate to current service

-2,726,847

-3,314,887

-11,084,537

-121,730

-4,513,148

-15,719,415

-21,761,149

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-11,084,537

-121,730

-4,513,148

-15,719,415

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-3,314,887

Experience adjustment

-2,726,847

Changes that relate to past service

-3,334,925

-288,085

-3,623,010

Changes in fulfilment cash flows relating to incurred claims

-3,334,925

-288,085

-3,623,010

Insurance service result

-26,356,316

4,971,462

-12,330,405

-1,037,117

14,610,061

1,242,539

-20,142,315

Net finance income or expenses from insurance contracts

-137,227,605

-3,173,902

4,241,281

1,085,120

2,326,498

7,652,899

-132,748,608

Effect of movement in exchange rates

13,193

-2,310

-8,307

-3,056

-11,363

-480

Foreign currency translation differences

-827,545

1,099

3,721

1,230

4,952

-821,494

Total changes in the statement of profit or loss and other comprehensive income

-164,398,273

1,796,349

-8,093,710

48,004

16,934,733

8,889,027

-153,712,897

Cash flows

Premiums received for insurance contracts issued

180,750,118

Claims incurred and insurance service expenses paid

-135,173,500

Insurance acquisition cash flows

-14,842,731

Total cash flows

30,733,887

Other movements

235,683

Assets

-1,440,104

224,654

733,776

1,083

383,975

1,118,834

-96,616

Liabilities

698,607,643

30,802,689

70,803,096

911,525

53,037,313

124,751,934

854,162,266

Closing balance – net assets/liabilities

697,167,539

31,027,343

71,536,872

912,608

53,421,288

125,870,768

854,065,650

342

Sava Re as at 31 December 2023

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts measured using the PAA

Total insurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-4,902,477

1,118,175

728,718

728,742

-3,055,560

-16,071

-3,071,631

Liabilities

216,898,328

32,090,420

544,685

131,582

6,996,756

7,673,022

256,661,771

15,752,280

272,414,051

Opening balance – net assets/liabilities

211,995,851

33,208,596

544,708

131,582

7,725,474

8,401,764

253,606,211

15,736,209

269,342,420

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-52,521,291

16,030,102

-47,498

401,890

43,526,054

43,880,446

7,389,256

-9,972,681

-2,583,425

Changes in estimates that adjust the contractual service margin

-7,499,084

-104,539

-69,815

401,890

8,837,867

9,169,941

1,566,319

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

-1,875,104

-21,671

22,318

0.03

6,826,073

6,848,391

4,951,615

Effects of contracts initially recognised in the period

-43,147,103

16,156,312

27,862,113

871,322

Effects of contracts measured using the PAA

-9,972,681

Changes that relate to current service

38,564,349

-5,362,284

-197,088

-417,817

-42,968,137

-43,583,041

-10,380,976

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-197,088

-417,817

-42,968,137

-43,583,041

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-5,362,284

Experience adjustment

38,564,349

(0.00)

38,564,349

Changes that relate to past service

-12,142,948

-17,210,153

-29,353,101

49,004,293

19,651,192

Changes in fulfilment cash flows relating to incurred claims

-12,142,948

-17,210,153

-29,353,101

49,004,293

19,651,192

Insurance service result

-26,099,889

-6,542,336

-244,585

-15,927

557,917

297,404

-32,344,821

39,031,612

6,686,791

Net finance income or expenses from insurance contracts

7,944,769

2,082,193

-2,290

2,219

1,345,531

1,345,460

11,372,422

829,918

12,202,340

Effect of movement in exchange rates

-5,218,155

-951,093

-75

-523,345

-523,420

-6,692,669

10,038

-6,682,630

Total changes in the statement of profit or loss and other comprehensive income

-23,373,276

-5,411,236

-246,875

-13,783

1,380,103

1,119,444

-27,665,067

39,871,569

12,206,501

Cash flows

Premiums received for insurance contracts issued

153,462,566

9,424,967

162,887,532

Claims incurred and insurance service expenses paid

-120,063,682

-25,507,274

-145,570,956

Insurance acquisition cash flows

-8,077,162

-130,957

-8,208,119

Total cash flows

25,321,721

-16,213,264

9,108,458

Assets

-7,068,622

673,921

1,313,223

-5,081,479

-13,866

-5,095,344

Liabilities

221,012,919

27,123,439

297,833

117,799

7,792,353

8,207,985

256,344,343

39,408,380

295,752,723

Closing balance – net assets/liabilities

213,944,297

27,797,360

297,833

117,799

9,105,576

9,521,208

251,262,865

39,394,514

290,657,379

343

Sava Re as at 31 December 2022

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total insurance contracts not measured using the PAA

Total insurance contracts measured using the PAA

Total insurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-4,348,362

1,200,884

733,682

-2,413,796

-649,642

-3,063,438

Liabilities

236,905,166

29,677,243

3,178,028

191,511

4,851,790

8,221,328

274,803,738

16,643,169

291,446,906

Opening balance – net assets/liabilities

232,556,804

30,878,127

3,178,028

191,511

5,585,472

8,955,010

272,389,942

15,993,527

288,383,469

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

-47,972,792

15,801,002

7,643,826

358,681

32,024,472

40,026,979

7,855,188

-7,447,982

407,206

Changes in estimates that adjust the contractual service margin

-14,562,375

-160,780

7,626,668

355,233

9,636,844

17,618,746

2,895,591

Changes in estimates that do not adjust the contractual service margin (recognition/reversals of losses on onerous contracts)

-2,434,376

-273,423

17,157

3,448

4,218,841

4,239,446

1,531,646

Effects of contracts initially recognised in the period

-30,976,041

16,235,205

18,168,787

3,427,951

Effects of contracts measured using the PAA

-7,447,982

Changes that relate to current service

46,231,846

-2,686,213

-10,262,110

-421,306

-30,094,550

-40,777,966

2,767,667

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

-10,262,110

-421,306

-30,094,550

-40,777,966

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-2,686,213

Experience adjustment

46,231,846

Changes that relate to past service

-17,786,380

-9,975,397

-27,761,777

6,349,498

-21,412,279

Changes in fulfilment cash flows relating to incurred claims

-17,786,380

-9,975,397

-27,761,777

6,349,498

-21,412,279

Insurance service result

-19,527,326

3,139,392

-2,618,284

-62,625

1,929,922

-750,987

-17,138,921

-1,098,484

-18,237,405

Net finance income or expenses from insurance contracts

-8,710,197

-970,057

-15,035

2,736

321,310

309,010

-9,371,243

-2,359,397

-11,730,640

Effect of movement in exchange rates

-25,091

161,133

-39

-111,230

-111,269

24,773

-22,154

2,619

Total changes in the statement of profit or loss and other comprehensive income

-28,262,614

2,330,469

-2,633,320

-59,929

2,140,002

-553,246

-26,485,392

-3,480,035

-29,965,427

Cash flows

Premiums received for insurance contracts issued

146,422,654

6,740,762

153,163,416

Claims incurred and insurance service expenses paid

-131,695,671

-3,439,469

-135,135,140

Insurance acquisition cash flows

-7,025,322

-78,576

-7,103,897

Total cash flows

7,701,661

3,222,717

10,924,378

Assets

-4,902,477

1,118,175

728,718

728,742

-3,055,560

-16,071

-3,071,631

Liabilities

216,898,328

32,090,420

544,685

131,582

6,996,756

7,673,022

256,661,771

15,752,280

272,414,051

Closing balance – net assets/liabilities

211,995,851

33,208,596

544,708

131,582

7,725,474

8,401,764

253,606,211

15,736,209

269,342,420

344

16.8.13Movement in individual components of reinsurance contracts

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts measured using the PAA

Total reinsurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-53,912,524

-4,879,702

-5,890,831

-64,683,057

-3,250,028

-67,933,085

Liabilities

512,972

-40,081

-91,838

381,053

515,306

896,359

Opening balance – net assets/liabilities

-53,399,552

-4,919,783

-5,982,669

-64,302,004

-2,734,722

-67,036,726

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

21,944,374

-4,486,142

-13,600

-20,262

-17,411,785

-17,445,647

12,585

6,576,428

6,589,013

Changes in estimates that adjust the contractual service margin

5,095,447

295,229

-13,039

-20,262

-5,264,631

-5,297,932

92,744

Changes in estimates relating to recognition of and reversals of losses on onerous underlying contracts

-2,692

Changes in recoveries of losses on onerous underlying contracts that adjust the contractual service margin

-561

-76,907

-77,468

Effects of contracts initially recognised in the period

16,848,927

-4,781,371

-12,067,555

Effects of contracts measured using the PAA

6,576,428

Changes that relate to current service

-65,042,513

241,262

13,607

30,909

18,747,624

18,792,140

-46,009,111

Amount of the contractual service margin recognised in profit or loss

13,607

30,909

18,747,624

18,792,140

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

241,262

Experience adjustment

-65,042,513

Changes that relate to past service

6,150,485

-1,814,966

4,335,519

-7,968,712

-3,633,193

Changes in fulfilment cash flows relating to incurred claims

6,150,485

-1,814,966

4,335,519

-7,968,712

-3,633,193

Result from reinsurance contracts held

-36,947,654

-6,059,846

10,647

1,335,839

1,346,493

-41,661,007

-1,392,284

-43,053,291

Net finance income or expenses from reinsurance contracts

-1,614,282

-333,868

251

-392,446

-392,191

-2,340,341

-206,100

-2,546,441

Finance effects from credit risk

1,561,743

91,023

1,652,766

Effect of movement in exchange rates

36,258

6,545

7,493

50,296

Foreign currency translation differences

2.00

-3

-1

-2

-3

121

118

Total changes in the statement of profit or loss and other comprehensive income

-36,963,933

-6,387,172

10,897

950,884

961,793

-42,389,312

-1,507,240

-43,896,552

Cash flows

Premiums received for insurance contracts issued

-36,611,496

-11,158,965

-47,770,461

Recovered claims and insurance service expenses

42,401,318

10,543,667

52,944,985

Total cash flows

5,789,822

-615,298

5,174,524

Other movements

3,797

Assets

-85,862,361

-11,203,130

10,897

-4,389,028

-4,378,119

-101,443,610

-5,795,817

-107,239,427

Liabilities

1,288,698

-103,825

-642,757

542,116

942,354

1,484,470

Closing balance – net assets/liabilities

-84,573,663

-11,306,955

10,897

-5,031,785

-5,020,876

-100,901,494

-4,853,463

-105,754,957

345

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts measured using the PAA

Total reinsurance contracts

Contracts under the modified retrospective approach

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

-50,829,073

-5,399,611

-239,309

-4,238,660

-4,477,969

-60,706,653

-3,471,613

-64,178,266

Liabilities

1,032,032

-91,279

-6,853

-49,581

-56,434

884,319

238,901

1,123,220

Opening balance – net assets/liabilities

-49,797,041

-5,490,890

-246,162

-4,288,241

-4,534,403

-59,822,334

-3,232,712

-63,055,046

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

20,558,265

-4,648,747

-175,969

104,044

-19,314,808

-19,386,733

-3,477,215

4,088,926

611,711

Changes in estimates that adjust the contractual service margin

4,960,399

442,621

-175,971

104,044

-8,749,604

-8,821,531

-3,418,511

Changes in estimates relating to recognition of and reversals of losses on onerous underlying contracts

-5,111

Changes in recoveries of losses on onerous underlying contracts that adjust the contractual service margin

-53,593

-53,591

Effects of contracts initially recognised in the period

15,597,866

-5,091,368

-10,506,500

-2

Effects of contracts measured using the PAA

4,088,926

Changes that relate to current service

-24,576,997

2,572,595

420,904

-104,045

17,589,599

17,906,458

-4,097,944

Amount of the contractual service margin recognised in profit or loss

420,904

-104,045

17,589,599

17,906,458

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

2,572,595

Experience adjustment

-24,576,997

Changes that relate to past service

-1,262,454

2,170,235

907,781

-2,147,304

-1,239,523

Changes in fulfilment cash flows relating to incurred claims

-1,262,454

2,170,235

907,781

-2,147,304

-1,239,523

Result from reinsurance contracts held

-5,281,186

94,083

244,935

-1

-1,725,209

-1,480,275

-6,667,378

1,941,622

-4,725,756

Net finance income or expenses from reinsurance contracts

4,036,753

478,844

1,227

28,931

30,158

4,545,755

158,051

4,703,806

Finance effects from credit risk

421,137

8,542

429,679

Effect of movement in exchange rates

-243,929

-1,824

1,851

-243,902

Foreign currency translation differences

-1

23,303

23,311

Total changes in the statement of profit or loss and other comprehensive income

-1,067,221

571,107

246,162

-1,694,428

-1,448,266

-1,944,380

2,131,518

187,138

Cash flows

Premiums received for insurance contracts issued

-32,762,483

-7,906,754

-40,669,237

Recovered claims and insurance service expenses

30,227,193

6,298,652

36,525,845

Total cash flows

-2,535,290

-1,608,102

-4,143,392

Other movements

-25,426

Assets

-53,912,524

-4,879,702

-5,890,831

-64,683,057

-3,250,028

-67,933,085

Liabilities

512,972

-40,081

-91,838

381,053

515,306

896,359

Closing balance – net assets/liabilities

-53,399,552

-4,919,783

-5,982,669

-64,302,004

-2,734,722

-67,036,726

346

Sava Insurance Group as at 31 December 2023 – life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

635,238

52,261

-888,056

-200,557

Liabilities

323,386

-8,258

-159,873

155,255

Opening balance – net assets/liabilities

958,624

44,003

-159,873

-888,056

-1,047,929

-45,302

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

21,330

-3,703

-17,627

Changes in estimates that adjust the contractual service margin

3,339

-3,236

-102

Effects of contracts initially recognised in the period

17,991

-467

-17,525

-1

Changes that relate to current service

-1,110

-4,148

128,089

122,831

Amount of the contractual service margin recognised in profit or loss

128,089

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-4,148

Experience adjustment

-1,110

Changes that relate to past service

-110,000

Changes in fulfilment cash flows relating to incurred claims

-110,000

Result from reinsurance contracts held

-89,780

-7,851

110,462

12,831

Net finance income or expenses from reinsurance contracts

71,043

4,050

2,001

77,094

Finance effects from credit risk

Effect of movement in exchange rates

Foreign currency translation differences

-2

-1

-4

Total changes in the statement of profit or loss and other comprehensive income

-18,739

-3,802

112,462

89,921

Cash flows

Premiums received for insurance contracts issued

-268,815

Recovered claims and insurance service expenses

139,637

Reinsurance acquisition cash flows

Total cash flows

-129,178

Other movements

Assets

489,865

46,922

109,137

-888,056

-778,919

-242,132

Liabilities

320,842

-6,721

-156,548

157,573

Closing balance – net assets/liabilities

810,707

40,201

-47,411

-888,056

-935,467

-84,559

347

Sava Insurance Group as at 31 December 2022 – life

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts

Contracts under the fair value approach

Other contracts

Total contractual service margin

Assets

912,114

-979,853

-67,739

Liabilities

283,683

-24,550

-5,551

253,582

Opening balance – net assets/liabilities

1,195,797

-24,550

-5,551

-979,853

-985,404

185,843

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

121,592

79,698

-175,826

-25,464

-201,290

Changes in estimates that adjust the contractual service margin

121,592

79,696

-175,826

-25,464

-201,290

-2

Effects of contracts initially recognised in the period

Changes that relate to current service

18,592

3,087

21,479

114,417

135,896

157,575

Amount of the contractual service margin recognised in profit or loss

21,479

114,417

135,896

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

3,087

Experience adjustment

18,592

Changes that relate to past service

-27,999

Changes in fulfilment cash flows relating to incurred claims

-27,999

Result from reinsurance contracts held

112,185

82,785

-154,347

88,953

-65,394

129,576

Net finance income or expenses from reinsurance contracts

-192,202

-14,232

2,842

2,868

-203,566

Effect of movement in exchange rates

Foreign currency translation differences

-3

-1

-4

Total changes in the statement of profit or loss and other comprehensive income

-80,020

68,553

-154,322

91,797

-62,525

-73,992

Cash flows

Premiums received for insurance contracts issued

-304,586

Recovered claims and insurance service expenses

147,433

Total cash flows

-157,153

Assets

635,238

52,261

-888,056

-200,557

Liabilities

323,386

-8,258

-159,873

155,255

Closing balance – net assets/liabilities

958,624

44,003

-159,873

-888,056

-1,047,929

-45,302

348

Sava Re as at 31 December 2023

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts

Other contracts

Total contractual service margin

Assets

-51,254,588

-4,449,816

-5,520,510

-61,224,914

Liabilities

451,963

-40,081

-91,838

320,044

Opening balance – net assets/liabilities

-50,802,625

-4,489,897

-5,612,348

-60,904,871

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

18,029,294

-3,869,768

-14,066,786

92,740

Changes in estimates that adjust the contractual service margin

3,873,154

320,134

-4,100,549

92,740

Effects of contracts initially recognised in the period

14,156,140

-4,189,902

-9,966,238

Changes that relate to current service

-63,349,903

-58,786

15,592,785

-47,815,904

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

15,592,785

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

-58,786

Experience adjustment

-63,349,903

Changes that relate to past service

6,148,125

-2,094,108

4,054,018

Changes in fulfilment cash flows relating to incurred claims

6,148,125

-2,094,108

4,054,018

Result from reinsurance contracts held

-39,172,483

-6,022,662

1,525,999

-43,669,147

Net finance income or expenses from reinsurance contracts

-1,573,989

-304,691

-318,947

-2,197,627

Finance effects from credit risk

1,617,714

Effect of movement in exchange rates

36,259

6,546

7,492

50,297

Total changes in the statement of profit or loss and other comprehensive income

-39,092,500

-6,320,807

1,214,544

-44,198,763

Cash flows

Premiums received for insurance contracts issued

-30,846,126

Recovered claims and insurance service expenses

40,633,988

Reinsurance acquisition cash flows

Total cash flows

9,787,861

Assets

-81,217,678

-10,728,485

-3,816,458

-95,762,621

Liabilities

1,110,414

-82,220

-581,346

446,848

Closing balance – net assets/liabilities

-80,107,264

-10,810,704

-4,397,804

-95,315,773

349

Sava Re as at 31 December 2022

EUR

Present value of future cash flows

Adjustment for non-financial risk

Contractual service margin

Total reinsurance contracts not measured using the PAA

Total reinsurance contracts

Other contracts

Total contractual service margin

Assets

-47,104,536

-4,836,710

-4,127,250

-56,068,497

Liabilities

903,860

-87,733

-49,581

766,545

Opening balance – net assets/liabilities

-46,200,677

-4,924,443

-4,176,831

-55,301,952

Changes in the statement of profit or loss and other comprehensive income

Changes that relate to future services

18,108,161

-4,086,131

-17,440,538

-3,418,508

Changes in estimates that adjust the contractual service margin

4,947,211

410,609

-8,776,329

-3,418,508

Effects of contracts initially recognised in the period

13,160,950

-4,496,740

-8,664,210

Changes that relate to current service

-25,147,040

2,088,829

15,980,161

-7,078,050

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

15,980,161

Change in the risk adjustment for non-financial risk that does not relate to future service or past service

2,088,829

Experience adjustment

-25,147,040

Changes that relate to past service

-1,342,777

1,971,752

628,975

Changes in fulfilment cash flows relating to incurred claims

-1,342,777

1,971,752

628,975

Result from reinsurance contracts held

-8,381,656

-25,549

-1,460,378

-9,867,583

Net finance income or expenses from reinsurance contracts

3,963,752

461,920

23,010

4,448,681

Finance effects from credit risk

478,410

Effect of movement in exchange rates

-243,929

-1,824

1,851

-243,902

Total changes in the statement of profit or loss and other comprehensive income

-4,183,423

434,546

-1,435,517

-5,184,394

Cash flows

Premiums received for insurance contracts issued

-27,792,365

Recovered claims and insurance service expenses

27,373,840

Total cash flows

-418,525

Assets

-51,254,588

-4,449,816

-5,520,510

-61,224,914

Liabilities

451,963

-40,081

-91,838

320,044

Closing balance – net assets/liabilities

-50,802,625

-4,489,897

-5,612,348

-60,904,871

350

16.8.14Effects of (re)insurance contracts initially recognised in the period (BBA, VFA)

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

58,429,069

9,031,430

Insurance acquisition cash flows

9,890,577

825,696

Present value of expected cash outflows

68,319,646

9,857,126

Present value of expected cash inflows

-99,784,470

-10,806,141

Adjustment for non-financial risk

9,201,628

1,798,567

Contractual service margin

22,263,196

Total at initial recognition

849,552

EUR

Contracts issued

Contracts recognised without loss recovery

Contracts recognised with loss recovery

Reinsurance contracts

Premiums

-16,354,885

-463,225

Present value of expected cash outflows

-16,354,885

-463,225

Present value of expected cash inflows

32,733,889

933,147

Adjustment for non-financial risk

-4,640,800

-140,570

Contractual service margin

-11,738,204

-329,352

Loss component

-116,259

Total at initial recognition

-116,259

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

46,751,437

23,825,323

Insurance acquisition cash flows

7,857,908

1,799,354

Present value of expected cash outflows

54,609,345

25,624,677

Present value of expected cash inflows

-75,507,081

-27,213,692

Adjustment for non-financial risk

6,740,087

4,950,435

Contractual service margin

14,157,649

Total at initial recognition

3,361,420

EUR

Contracts issued

Contracts recognised without loss recovery

Contracts recognised with loss recovery

Reinsurance contracts

Premiums

-17,436,355

-383,448

Present value of expected cash outflows

-17,436,355

-383,448

Present value of expected cash inflows

32,696,651

721,018

Adjustment for non-financial risk

-4,980,392

-110,976

Contractual service margin

-10,279,904

-226,595

Loss component

-84,899

Total at initial recognition

-84,900

351

Sava Insurance Group as at 31 December 2023 – life

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

110,423,889

10,913,234

Insurance acquisition cash flows

15,221,421

1,995,572

Present value of expected cash outflows

125,645,310

12,908,806

Present value of expected cash inflows

-153,393,135

-12,563,406

Adjustment for non-financial risk

3,331,512

171,495

Contractual service margin

24,416,313

Total at initial recognition

516,895

EUR

Contracts issued

Contracts recognised without loss recovery

Reinsurance contracts

Premiums

-4,472

Present value of expected cash outflows

-4,472

Present value of expected cash inflows

22,463

Adjustment for non-financial risk

-466

Contractual service margin

-17,525

Loss component

Total at initial recognition

Sava Insurance Group as at 31 December 2022 – life

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

110,947,434

10,232,167

Insurance acquisition cash flows

15,844,912

1,352,017

Present value of expected cash outflows

126,792,346

11,584,184

Present value of expected cash inflows

-155,322,932

-11,128,693

Adjustment for non-financial risk

3,848,372

146,223

Contractual service margin

24,682,214

Total at initial recognition

601,714

Expected cash flows in this disclosure include only contractually determined periodic premiums, single premiums and additional payments received in the year of contract recognition. Incurred claims and other insurance service expenses include only outflows for surrender arising from contractually determined periodic premiums and lump-sum and additional payments received in the year of recognition.

The expected cash inflows and expected cash outflows presented in this note do not include all expected cash inflows. Higher inflows correspond to higher outflows, and therefore the net effect is negligible.

352

Sava Re as at 31 December 2023

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

95,883,706

8,805,356

Insurance acquisition cash flows

8,092,629

754,107

Present value of expected cash outflows

103,976,335

9,559,462

Present value of expected cash inflows

-146,247,516

-10,435,385

Adjustment for non-financial risk

14,409,067

1,747,244

Contractual service margin

27,862,113

Total at initial recognition

871,322

EUR

Contracts issued

Contracts recognised without loss recovery

Reinsurance contracts

Premiums

-14,671,209

Present value of expected cash outflows

-14,671,209

Present value of expected cash inflows

28,827,349

Adjustment for non-financial risk

-4,189,902

Contractual service margin

-9,966,238

Total at initial recognition

Sava Re as at 31 December 2022

EUR

Contracts issued

Profitable

Onerous

Insurance contracts

Claims incurred and other insurance service expenses

79,965,238

23,880,015

Insurance acquisition cash flows

6,030,085

1,778,463

Present value of expected cash outflows

85,995,322

25,658,478

Present value of expected cash inflows

-115,427,349

-27,202,492

Adjustment for non-financial risk

11,263,240

4,971,965

Contractual service margin

18,168,787

Total at initial recognition

3,427,951

EUR

Contracts issued

Contracts recognised without loss recovery

Reinsurance contracts

Premiums

-15,636,975

Present value of expected cash outflows

-15,636,975

Present value of expected cash inflows

28,797,925

Adjustment for non-financial risk

-4,496,740

Contractual service margin

-8,664,210

Total at initial recognition

16.8.15Expected CSM release

Sava Insurance Group as at 31 December 2023 – non-life

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

7,202,399

1,101,693

769,903

589,566

470,039

1,245,255

376,679

11,755,534

Reinsurance contracts

-4,953,681

-42,413

-19,438

-5,203

-141

-5,020,876

Total

2,248,718

1,059,280

750,465

584,363

469,898

1,245,255

376,679

6,734,658

353

Sava Insurance Group as at 31 December 2022 – non-life

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

6,463,174

1,085,274

723,750

523,157

384,961

1,004,938

340,062

10,525,316

Reinsurance contracts

-5,573,662

-366,477

-23,004

-15,413

-4,006

-105

-5,982,667

Total

889,512

718,797

700,746

507,744

380,955

1,004,833

340,062

4,542,649

Sava Insurance Group as at 31 December 2023 – life

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

16,976,214

14,992,610

13,302,312

11,824,815

10,518,420

38,006,640

37,930,942

143,551,953

Reinsurance contracts

-111,396

-100,800

-91,077

-80,639

-71,402

-255,648

-224,502

-935,464

Total

16,864,818

14,891,810

13,211,235

11,744,176

10,447,018

37,750,992

37,706,440

142,616,489

Sava Insurance Group as at 31 December 2022 – life

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

15,012,296

13,253,567

11,792,672

10,524,042

9,380,061

33,481,826

32,426,305

125,870,769

Reinsurance contracts

-117,519

-109,273

-97,803

-89,063

-79,069

-286,627

-268,574

-1,047,928

Total

14,894,777

13,144,294

11,694,869

10,434,979

9,300,992

33,195,199

32,157,731

124,822,841

Sava Re as at 31 December 2023

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

9,168,508

197,371

107,473

10,836

8,628

23,697

4,695

9,521,208

Reinsurance contracts

-4,397,804

Total

4,770,704

197,371

107,473

10,836

8,628

23,697

4,695

5,123,404

Sava Re as at 31 December 2022

EUR

< 1 year

1–2 years

2–3 years

3–4 years

4–5 years

5–10 years

> 10 years

Total

Insurance contracts

7,871,130

235,518

137,057

120,530

8,276

23,160

6,093

8,401,764

Reinsurance contracts

-5,271,105

-341,244

-5,612,348

Total

2,600,025

-105,725

137,057

120,530

8,276

23,160

6,093

2,789,415

354

16.8.16Finance income or expenses from (re)insurance contracts

Sava Insurance Group as at 31 December 2023

Non-life

Life

Total

Net finance income or expenses from insurance contracts

Changes in the fair value of the portfolio of insurance contracts with direct participation features

-58,425,631

Accrued interest at locked-in interest rate

-8,379,535

-4,928,374

-13,307,909

Changes in interest rates and other financial assumptions

-12,551,570

-17,578,877

-30,130,447

Foreign exchange gains/losses

6,729,958

29,446

6,759,404

Foreign currency translation differences

30,814

9,219

40,033

Total net finance income or expenses from insurance contracts

-14,170,333

-80,894,217

-95,064,550

Net finance income or expenses from reinsurance contracts

Accrued interest at locked-in interest rate

1,094,834

-186

1,094,648

Changes in interest rates and other financial assumptions

1,455,775

-76,905

1,378,870

Foreign exchange gains/losses

-50,670

Foreign currency translation differences

-3,917

-3,914

Net finance income or expenses from reinsurance contracts

2,496,022

-77,088

2,418,934

Finance effects from credit risk

-1,652,765

Total net finance income or expenses from reinsurance contracts

843,257

-77,088

766,169

Total

-13,327,076

-80,971,305

-94,298,381

Amounts recognised in profit or loss

-2,231,823

-60,381,331

-62,613,154

Amounts recognised in other comprehensive income

-11,095,253

-20,589,972

-31,685,225

Finance income or expenses from insurance contracts

Net finance income or expenses from insurance contracts

-14,170,332

-80,894,215

-95,064,547

Recognised in profit or loss

-1,619,434

-60,381,145

-62,000,579

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

-12,440,453

-20,520,975

-32,961,428

Effects of exchange rate differences in other comprehensive income

-141,259

-1,314

-142,573

Foreign currency translation differences

30,814

9,219

40,033

Net finance income or expenses from reinsurance contracts

843,256

-77,088

766,168

Recognised in profit or loss

-612,389

-186

-612,575

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

1,459,189

-76,905

1,382,284

Effects of exchange rate differences in other comprehensive income

373

Foreign currency translation differences

-3,917

-3,914

355

Sava Insurance Group as at 31 December 2022

Non-life

Life

Total

Net finance income or expenses from insurance contracts

Changes in the fair value of the portfolio of insurance contracts with direct participation features

67,796,261

Accrued interest at locked-in interest rate

-5,818,135

5,475,482

-342,653

Changes in interest rates and other financial assumptions

32,087,278

60,308,260

92,395,538

Foreign exchange gains/losses

414,549

-2,204

412,345

Foreign currency translation differences

-9,413

-7,214

-16,627

Total net finance income or expenses from insurance contracts

26,674,279

133,570,585

160,244,864

Net finance income or expenses from reinsurance contracts

Accrued interest at locked-in interest rate

558,687

880

559,567

Changes in interest rates and other financial assumptions

-5,282,632

202,685

-5,079,947

Foreign exchange gains/losses

238,612

-2

238,610

Foreign currency translation differences

2,115

2,119

Net finance income or expenses from reinsurance contracts

-4,483,218

203,567

-4,279,651

Finance effects from credit risk

-429,681

Total net finance income or expenses from reinsurance contracts

-4,912,899

203,567

-4,709,332

Total

21,761,380

133,774,152

155,535,532

Recognised in

Amounts recognised in profit or loss

-5,052,118

57,467,142

52,415,024

Amounts recognised in other comprehensive income

26,813,504

76,307,010

103,120,514

Finance income or expenses from insurance contracts

Net finance income or expenses from insurance contracts

26,674,278

133,570,585

160,244,863

Recognised in profit or loss

-5,421,905

57,466,264

52,044,359

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

32,273,622

76,108,852

108,382,474

Effects of exchange rate differences in other comprehensive income

-168,026

2,683

-165,343

Foreign currency translation differences

-9,413

-7,214

-16,627

Net finance income or expenses from reinsurance contracts

-4,912,892

203,567

-4,709,325

Recognised in profit or loss

369,787

878

370,665

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

-5,290,084

202,685

-5,087,399

Effects of exchange rate differences in other comprehensive income

5,290

Foreign currency translation differences

2,115

2,119

Sava Re as at 31 December 2023

Non-life

Total

BBA + PAA

C0020

C0040

Net finance income or expenses from insurance contracts

Accrued interest at locked-in interest rate

-6,091,760

Changes in interest rates and other financial assumptions

-6,255,974

Foreign exchange gains/losses

6,828,024

Total net finance income or expenses from insurance contracts

-5,519,710

Net finance income or expenses from reinsurance contracts

Accrued interest at locked-in interest rate

893,761

Changes in interest rates and other financial assumptions

1,304,240

Foreign exchange gains/losses

-50,670

Net finance income or expenses from reinsurance contracts

2,147,330

Finance effects from credit risk

-1,617,714

Total net finance income or expenses from reinsurance contracts

529,617

Total

-4,990,094

Recognised in

Amounts recognised in profit or loss

-38,359

Amounts recognised in other comprehensive income

-4,951,735

Finance income or expenses from insurance contracts

Net finance income or expenses from insurance contracts

-5,519,710

Recognised in profit or loss

736,264

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

-6,110,581

Effects of exchange rate differences in other comprehensive income

-145,394

Net finance income or expenses from reinsurance contracts

529,617

Recognised in profit or loss

-774,623

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

1,303,867

Effects of exchange rate differences in other comprehensive income

373

356

Sava Re as at 31 December 2022

Non-life

Total

BBA + PAA

Net finance income or expenses from insurance contracts

Accrued interest at locked-in interest rate

-4,904,187

Changes in interest rates and other financial assumptions

16,477,038

Foreign exchange gains/losses

155,170

Total net finance income or expenses from insurance contracts

11,728,022

Net finance income or expenses from reinsurance contracts

Accrued interest at locked-in interest rate

506,046

Changes in interest rates and other financial assumptions

-4,949,437

Foreign exchange gains/losses

238,612

Net finance income or expenses from reinsurance contracts

-4,204,779

Finance effects from credit risk

-478,410

Total net finance income or expenses from reinsurance contracts

-4,683,189

Total

7,044,833

Recognised in

Amounts recognised in profit or loss

-4,482,768

Amounts recognised in other comprehensive income

11,527,601

Finance income or expenses from insurance contracts

Net finance income or expenses from insurance contracts

11,728,022

Recognised in profit or loss

-4,749,017

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

16,634,827

Effects of exchange rate differences in other comprehensive income

-157,789

Net finance income or expenses from reinsurance contracts

-4,683,189

Recognised in profit or loss

266,249

Recognised in other comprehensive income (excluding the effect of exchange rate differences)

-4,954,727

Effects of exchange rate differences in other comprehensive income

5,290

16.8.17Receivables

Receivables by type

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Gross amount

Allowance

Receivables

Gross amount

Allowance

Receivables

Current tax assets

444,616

3,412,855

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

4,533,434

-1,148,176

3,385,258

4,466,344

-2,170,209

2,296,135

Receivables from financing

728,130

-166,900

561,230

2,203,462

-163,322

2,040,140

Trade and other receivables

12,422,002

-2,097,132

10,324,870

10,777,938

-2,831,240

7,946,698

Trade and other receivables

17,683,566

-3,412,208

14,271,358

17,447,744

-5,164,771

12,282,973

Total

18,128,182

-3,412,208

14,715,974

20,860,599

-5,164,771

15,695,828

Sava Re

EUR

31 December 2023

31 December 2022

Gross amount

Allowance

Receivables

Gross amount

Allowance

Receivables

Current tax assets

49,594

Receivables from financing

34,478

15,889

Trade and other receivables

504,923

-341,035

163,888

538,374

-341,035

197,340

Trade and other receivables

539,401

-341,035

198,366

554,263

-341,035

213,228

Total

539,401

-341,035

198,366

603,857

-341,035

262,823

357

Receivables from financing mainly relate to payments to the guarantee fund for Green Cards of the Republic of Kosovo, interest on late payment of premiums and advances from policyholders.

Trade and other receivables

EUR

Sava Insurance Group

Sava Re

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Receivables for advances for intangible assets

251,931

73,725

Short-term trade receivables

7,298,183

5,573,273

124,581

90,041

Short-term receivables due from government and other institutions

350,798

471,883

24,716

81,786

Short-term receivables due from employees

51,503

45,641

1,655

1,515

Receivables arising out of advances for property, plant and equipment

90,492

190

Other current receivables

2,281,963

1,781,986

12,935

23,998

Trade and other receivables

10,324,870

7,946,698

163,888

197,340

Net receivables ageing analysis

Sava Insurance Group

EUR

Not past due

Past due up to 180 days

Past due from 180 days to 1 year

Past due over 1 year

Total

31 December 2023

Current tax assets

437,109

7,507

444,616

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

1,551,247

1,774,850

2,887

56,274

3,385,258

Receivables from financing

368,526

174,693

18,011

561,230

Trade and other receivables

10,009,539

286,704

8,962

19,665

10,324,870

Trade and other receivables

11,929,312

2,236,247

11,849

93,950

14,271,358

Total

12,366,421

2,236,247

11,849

101,457

14,715,974

Sava Insurance Group

EUR

Not past due

Past due up to 180 days

Past due from 180 days to 1 year

Past due over 1 year

Total

31 December 2022

Current tax assets

3,412,855

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

1,095,158

1,183,718

5,707

11,552

2,296,135

Receivables from financing

1,875,273

146,595

18,272

2,040,140

Trade and other receivables

7,397,929

506,257

5,619

36,893

7,946,698

Trade and other receivables

10,368,360

1,836,570

11,326

66,717

12,282,973

Total

13,781,215

1,836,570

11,326

66,717

15,695,828

Sava Re

EUR

Not past due

Total

31 December 2023

Receivables from financing

34,478

Trade and other receivables

163,888

Trade and other receivables

198,366

Total

198,366

Sava Re

EUR

Not past due

Total

31 December 2022

Current tax assets

49,594

Receivables from financing

15,889

Trade and other receivables

197,339

Trade and other receivables

213,228

Total

262,822

358

Movement in allowance for receivables

Sava Insurance Group

EUR

31 December 2022

Additions

Reversals

Write-off

Exchange differences

31 December 2023

Current tax assets

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

-2,170,209

-51,960

1,066,400

7,419

174

-1,148,176

Receivables from financing

-163,322

-3,608

-166,900

Trade and other receivables

-2,831,240

-40,828

616,826

156,912

1,198

-2,097,132

Trade and other receivables

-5,164,771

-96,396

1,683,226

164,331

1,402

-3,412,208

Total

-5,164,771

-96,396

1,683,226

164,331

1,402

-3,412,208

Sava Insurance Group

EUR

31 December 2021

Additions

Reversals

Write-off

Exchange differences

31 December 2022

Current tax assets

Other short-term receivables arising out of insurance business (outside the scope of IFRS 17)

-2,198,522

-78,421

103,752

4,298

-1,316

-2,170,209

Receivables from financing

-163,501

172

-163,322

Trade and other receivables

-2,855,983

-92,056

102,021

16,451

-1,673

-2,831,240

Trade and other receivables

-5,218,006

-170,477

205,780

20,749

-2,817

-5,164,771

Total

-5,218,006

-170,477

205,780

20,749

-2,817

-5,164,771

Sava Re

EUR

31 December 2022

31 December 2023

Trade and other receivables

-341,035

Trade and other receivables

-341,035

Total

-341,035

Sava Re

EUR

31 December 2021

31 December 2022

Trade and other receivables

-341,035

Trade and other receivables

-341,035

Total

-341,035

16.8.18Other assets

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Inventories

147,794

155,299

Other short-term deferred costs (expenses) and accrued revenue

3,894,812

3,869,984

715,114

699,783

Total

4,042,606

4,025,283

715,114

699,783

The Group’s inventories consist of strict record forms and are not subject to pledging.

Other current deferred costs (expenses) and accrued revenue consist of prepaid costs for services (maintenance, development, user fees and electronic media costs).

359

16.8.19Cash and cash equivalents

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Cash in hand

28,611

24,051

Cash in bank accounts

29,138,100

56,250,164

9,110,049

15,846,029

Call and overnight deposits, and deposits of up to 3 months

21,393,253

36,949,416

3,150,000

8,080,000

Total

50,559,964

93,223,631

12,260,049

23,926,030

The decrease in cash and cash equivalents is mainly due to the reinvestment in higher yielding asset classes.

16.8.20Non-current assets held for sale

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Balance as at 1 January

991,803

770,544

Additions

352,271

Reclassification

-70,776

428,674

Disposal

-616,927

-559,686

Impairment

-44,451

Balance as at 31 December

259,649

991,803

Office premises partially disposed of in 2023 and 2022 were reclassified to non-current assets held for sale in 2022.

16.8.21Share capital

As at 31 December 2023, the parent’s share capital was divided into 17,219,662 shares (the same as at 31 December 2022). All shares are ordinary registered shares of the same class. Their holders are entitled to participate in the Company’s control and profits (dividends). Each share carries one vote in general meeting and entitles the bearer to a proportionate share of the dividend distribution.

Shares are recorded in the Central Securities Clearing Corporation (KDD) under the POSR ticker symbol.

As at year-end 2023, the Company’s shareholders’ register listed 4,376 shareholders (31 December 2022: 4,316 shareholders). The Company’s shares are listed in the prime market of the Ljubljana Stock Exchange.

16.8.22Capital reserves

Movement in capital reserves

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

As at 1 January

42,702,320

54,239,757

As at 31 December

42,702,320

54,239,757

360

16.8.23Profit reserves

Sava Re

31 December 2022

EUR

31 December 2023

31 December 2022

31 December 2023

Legal reserves and reserves provided for by the articles of association

12,176,144

12,150,797

14,986,525

Capital redemption reserve

24,938,709

Credit risk equalisation reserve

Catastrophe equalisation reserve

1,225,068

11,225,068

10,000,000

Other profit reserves

243,353,745

208,631,017

242,034,225

207,296,824

Total

281,693,666

256,945,591

281,959,459

257,222,058

In 2023, the Company reallocated EUR 10 million from the catastrophe equalisation reserve to other profit reserves.

Profit reserves are retained from previous years’ profits, primarily to offset potential future losses. In accordance with ZGD-1, the management board, when adopting the 2023 annual report, allocated half of the net profit of EUR 24.7 million to “other profit reserves” (2022: EUR 27.9 million).

16.8.24Treasury shares

As at 31 December 2023, the Company held a total of 1,721,966 own shares (2022: 1,721,966) traded on the Ljubljana Stock Exchange under the ticker symbol “POSR” (accounting for 10% less one share of the issued shares) for a value of EUR 24,938,709 (2022: EUR 24,938,709).

Treasury shares are a contra account of equity. Treasury shares are not pledged.

16.8.25Accumulated other comprehensive income

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Accumulated other comprehensive income from financial investments

-76,271,988

-120,775,659

-11,603,021

-20,111,066

Accumulated other comprehensive income on insurance contracts

46,400,360

74,431,742

2,089,191

7,248,755

Accumulated other comprehensive income on reinsurance contracts

-194,443

-887,877

-431,371

-1,586,865

Other reserves

1,870,419

2,093,462

178,886

152,447

Total

-28,195,652

-45,138,332

-9,766,315

-14,296,729

The movement in accumulated other comprehensive income from insurance and reinsurance contracts is described in section 16.6 “Transition to the new standards IFRS 17 and IFRS 9” and in note 16.8.16 “Finance income or expenses from (re)insurance contracts”. Other reserves comprise actuarial gains and losses arising from recognising provisions for retirement benefits. Movements are shown in section 16.8.30 “Other provisions”.

16.8.26Profit or loss for the period

The net consolidated profit for 2023 totalled EUR 64.7 million (2022: EUR 46.9 million).

The Company ended the 2023 financial year with a net profit of EUR 49.5 million (2022: EUR 61.4 million).

361

Earnings or loss per share

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Net profit or loss for the period

64,657,171

46,923,441

49,474,802

61,350,951

Net profit or loss attributable to owners of the controlling company

64,464,804

46,696,181

Weighted average number of shares outstanding

15,497,696

Earnings or loss per share

4.16

3.01

The Company’s earnings per share for the financial year 2023 were EUR 3.19 (2022: EUR 3.96).

Comprehensive income per share

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Comprehensive income for the period

81,804,162

1,242,147

54,005,839

50,213,481

Comprehensive income for the owners of the controlling company

81,614,473

1,023,481

Weighted average number of shares outstanding

15,497,696

Comprehensive income per share

5.27

0.07

The Company’s comprehensive income per share for the financial year 2023 was EUR 3.48 (2022: EUR 3.24).

The weighted number of shares takes into account the annual average calculated on the basis of monthly averages of ordinary shares less the number of treasury shares. The weighted average number of shares outstanding in the financial period was 15,497,696 and the same as in 2022. The parent does not have potentially dilutive capital instruments, which is why basic earnings per share equal diluted earnings per share.

16.8.27Retained earnings

The Company’s retained earnings as at 31 December 2023 grew by EUR 8.6 million from 31 December 2022 (2022: increase of EUR 26.4 million).

In 2023, the Company paid out EUR 24,796,314 in dividends (2022: EUR 23,246,544). The distributable profit for 2023 totals EUR 57.5 million (2022: EUR 41.8 million).

Statement of distributable profit or loss

Sava Re

EUR

2023

2022

Net profit or loss for the period

49,474,802.34

55,966,871.71

Profit or loss for the year under applicable standards

49,474,802.34

55,966,871.71

Retained earnings

32,809,208.67

13,807,182.07

Carry-forward of the previous year

16,994,304.32

13,807,182.07

Impact of the transition to the new standards

15,814,904.35

Additions to other reserves as per resolution of the management and supervisory boards

-24,737,401.17

-27,983,435.86

Distributable profit to be allocated by the general meeting

57,546,609.84

41,790,617.92

To shareholders

not yet published

24,796,313.60

To be carried forward to the next year

16,994,304.32

The difference of EUR 15,814,904.35 between the profit carried forward from the previous year and the total amount of retained earnings at the end of 2023 represents the impact of the transition to the new accounting standards. Specifically, EUR 6,031,074.26 relates to the impact of the transition due to the adoption of IFRS 17, EUR 4,387,131.59 relates to the impact of the adoption of IFRS 9 and EUR 5,396,698.50 represents the difference between the 2022 net profit determined under the old standards and the 2022 net profit determined under the new standards.

362

The Group recorded the decrease in retained earnings of EUR 2,937,157 in 2023 under “Other” due to the subsequent calculation of the actual tax liability resulting from the transition to the new accounting standards (EUR 53,217) and the subsequent inclusion of the transition of reinsurance contracts relating to the Group companies domiciled outside Slovenia (EUR 2,883,940).

The translation reserve relates to exchange differences arising from the translation or consolidation of the financial statements of subsidiaries. In 2023, translation differences amounted to EUR 3,049,094 (2022: EUR 3,256,083). Translation differences mainly relate to the change in the value of the Serbian dinar and the Macedonian denar and, in 2022, the Croatian kuna.

16.8.28Non-controlling interests in equity

Non-controlling interests in equity

Sava Insurance Group

EUR

31 December 2023

31 December 2022

Sava Osiguruvanje (MKD)

442,431

462,173

Sava Station

8,742

1,670

TBS Team 24

138,181

68,708

Vita S Holding (MKD)

261,417

Total

850,771

532,551

16.8.29Subordinated liabilities

In October 2019, Sava Re issued subordinated bonds with a scheduled maturity of 2039, ISIN code XS2063427574 and with an early recall option for 7 November 2029.

The total issue size is EUR 75.0 million. Until the early recall option of the bond, the annual interest rate is fixed at 3.75% and the coupon is payable annually. If the issuer does not exercise the early recall option, the annual interest rate after the date of the early recall will be 4.683% over the three-month Euribor, with coupons payable quarterly.

The bond is admitted to trading on the regulated market of the Luxembourg Stock Exchange. As at 31 December 2023, the market price of the bond was 77.717% and the market value EUR 58,702,709 (31 December 2022: price 74.499% and market value EUR 56,290,346). The book value of the bond as at 31 December 2023 was EUR 74,987,535 (31 December 2022: EUR 74,924,356).

The effective interest rate on the bond issued (calculated from the early recall option) is 3.86%.

Sava Re

EUR

31 December 2022

Increase

Decrease

31 December 2023

Subordinated bond

74,924,356

2,875,679

-2,812,500

74,987,535

The increase includes accrued interest until the end of 2023 and amortisation of issuance costs until maturity. The decrease represents interest paid (coupon).

16.8.30Other provisions

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Provision for severance pay upon retirement

4,660,639

4,244,938

270,203

266,392

Provision for jubilee benefits

2,688,742

2,648,899

149,457

126,248

Other provisions

724,874

1,079,617

Total

8,074,255

7,973,454

419,660

392,640

Movement in the provision for severance pay upon retirement and jubilee benefits

363

Sava Insurance Group

Sava Re

EUR

Provision for severance pay upon retirement

Provision for jubilee benefits

Total

Provision for severance pay upon retirement

Provision for jubilee benefits

Total

Balance as at 31 December 2022

4,244,938

2,648,899

6,893,837

266,392

126,248

392,640

Interest expense (IS)

135,247

85,644

220,891

8,608

4,164

12,772

Current service cost (IS)

327,284

269,498

596,782

31,569

19,947

51,516

Past service cost (IS)

62,514

22,299

84,813

Payout of benefits (-)

-300,920

-295,900

-596,820

-9,302

-9,716

-19,018

Actuarial losses (IS)

7,160

-41,639

-34,479

8,813

Actuarial losses (SFP)

184,499

-27,064

Additions – acquisition of subsidiary

Exchange differences

-83

-59

-142

Balance as at 31 December 2023

4,660,639

2,688,742

7,349,381

270,203

149,457

419,660

Sava Insurance Group

Sava Re

EUR

Provision for severance pay upon retirement

Provision for jubilee benefits

Total

Provision for severance pay upon retirement

Provision for jubilee benefits

Total

Balance as at 31 December 2021

4,954,165

2,976,448

7,930,616

295,760

126,105

421,864

Interest expense (IS137)

120,050

67,432

187,482

-1,730

-855

-2,585

Current service cost (IS)

303,743

255,154

558,897

28,266

15,495

43,761

Past service cost (IS)

3,736

19,867

23,603

14,064

Payout of benefits (-)

-171,197

-260,007

-431,204

-11,835

Actuarial losses (IS)

-4,650

-409,871

-414,521

-16,726

Actuarial losses (SFP138)

-960,947

-55,904

Exchange differences

-124

-86

Balance as at 31 December 2022

4,244,938

2,648,899

6,893,837

266,392

126,248

392,640

The main assumptions used in the calculation of provisions for jubilee benefits and severance pay upon retirement are as follows: The interest rate curves used for discounting are those published by EIOPA for the calculation of capital adequacy. The expected increase in salaries and jubilee benefits is calculated using real growth based on historical data for individual companies (Sava Re: 0.8%) and long-term inflation of 2.5%. The expected early departure rates used vary by age group and are based on the historical departure rates of each company (Sava Re: 3.1% under 35 years, 3.9% between 35 and 45 years, 5.3% over 45 years). Expected mortality is determined on the basis of the population mortality tables of the country of incorporation of each Group company.

Below we provide a sensitivity analysis of the provision for severance pay upon retirement and the provision for jubilee benefits.

137 Income statement or IS for short.

138 Statement of financial position or SFP for short.

364

Sava Insurance Group

Provision for severance pay upon retirement

Provision for jubilee benefits

Impact on the level of provisions (EUR)

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Decrease in discount rate of 1%

501,220

456,051

218,070

214,049

Increase in discount rate of 1%

-424,964

-387,196

-190,105

-186,735

Decrease in real income growth of 0.5%

-222,041

-196,066

-85,735

-85,090

Increase in real income growth of 0.5%

238,993

210,276

90,870

89,990

Decrease in staff turnover of 10%

170,790

152,777

79,575

77,227

Increase in staff turnover of 10%

-160,718

-144,684

-75,777

-73,859

Decrease in mortality rate of 10%

33,696

30,399

11,570

11,564

Increase in mortality rate of 10%

-33,359

-30,099

-11,480

-11,469

Sava Re

Provision for severance pay upon retirement

Provision for jubilee benefits

Impact on the level of provisions (EUR)

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Decrease in discount rate of 1%

32,755

32,369

11,520

9,474

Increase in discount rate of 1%

-27,872

-27,498

-10,083

-8,314

Decrease in real income growth of 0.5%

-14,808

-14,738

Increase in real income growth of 0.5%

16,160

16,032

Decrease in staff turnover of 10%

17,805

16,194

5,422

4,405

Increase in staff turnover of 10%

-16,461

-15,037

-5,113

-4,168

Decrease in mortality rate of 10%

2,192

2,137

351

290

Increase in mortality rate of 10%

-2,168

-2,115

-349

-289

Sava Insurance Group

EUR

31 December 2022

Additions

Uses and reversals

Exchange differences

31 December 2023

Other provisions

1,079,617

144,103

-498,766

-80

724,874

Total

1,079,617

144,103

-498,766

-80

724,874

Sava Insurance Group

EUR

31 December 2021

Additions

Uses and reversals

Exchange differences

31 December 2022

Other provisions

982,884

407,978

-310,088

-1,157

1,079,617

Total

982,884

407,978

-310,088

-1,157

1,079,617

Other provisions include provisions for the guarantee fund.

16.8.31Other financial liabilities

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Other financial liabilities

737,085

548,576

Other financial liabilities relate to a loan payable to a subsidiary in Serbia with a maturity of up to one year.

365

16.8.32Current tax liabilities

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Current income tax liabilities

9,930,830

1,554,992

6,319,991

45,414

Current tax liabilities recognised in accordance with tax legislation at the end of the financial year are settled by the Group companies within the statutory period of less than one year.

16.8.33Other liabilities

Other liabilities by maturity

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Other liabilities

30,896,035

23,044,216

2,898,366

2,266,787

Short-term provisions (deferred income and accrued expenses)

12,873,471

10,598,356

1,951,655

1,888,906

Other liabilities

43,769,505

33,642,572

4,850,021

4,155,693

Other liabilities include liabilities that are settled by the companies within the financial year, so all such liabilities are classified as liabilities with a maturity of up to one year.

Other liabilities and short-term provisions (deferred income and accrued expenses) are unsecured.

Other liabilities

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Current liabilities due to employees

4,530,558

4,107,379

685,475

637,853

Diverse other current liabilities for insurance business outside the scope of IFRS 17

11,405,144

10,376,366

252,356

Short-term trade liabilities

14,620,197

8,533,190

1,900,391

1,370,173

Diverse other current liabilities

340,136

27,281

312,500

6,405

Total

30,896,035

23,044,216

2,898,365

2,266,788

Diverse other current liabilities arising from insurance business outside IFRS 17 relate mainly to payables to insurance intermediaries for commissions.

Diverse other current liabilities are liabilities arising from the settlement of financial investments.

Current accrued costs (expenses) and deferred revenue

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Accrued costs and expenses due to Group companies

87,433

3,610

Accrued costs and expenses due to other companies

9,448,306

8,153,827

1,569,772

1,586,407

Other accrued costs (expenses) and deferred revenue

3,337,732

2,440,919

381,884

302,499

Total

12,873,471

10,598,356

1,951,655

1,888,906

Short-term provisions include accrued charges for unused vacation and severance payments to employees.

366

Other accrued costs (expenses) and deferred revenue consist mainly of provisions for employee bonuses and the share of premiums paid into a damage prevention fund under the Montenegrin Insurance Act.

Change in short-term provisions

Sava Insurance Group

EUR

31 December 2022

Additions

Uses

Exchange differences

31 December 2023

Short-term accrued expenses

8,157,437

33,961,425

-32,582,797

-326

9,535,739

Other accrued costs (expenses) and deferred revenue

2,440,920

3,039,028

-2,141,058

-1,158

3,337,732

Total

10,598,357

37,000,453

-34,723,855

-1,484

12,873,471

Sava Insurance Group

EUR

31 December 2021

Additions

Uses

Reversals

Exchange differences

31 December 2022

Short-term accrued expenses

7,585,339

28,386,811

-27,790,521

-23,913

-279

8,157,437

Other accrued costs (expenses) and deferred revenue

3,568,468

2,589,947

-3,717,503

2,440,920

Total

11,153,807

30,976,758

-31,508,024

-23,913

-271

10,598,356

Sava Re

EUR

31 December 2022

Additions

Uses

31 December 2023

Short-term accrued expenses

1,586,407

1,874,080

-1,890,715

1,569,772

Other accrued costs (expenses) and deferred revenue

302,499

79,385

381,884

Total

1,888,906

1,953,465

-1,890,715

1,951,655

Sava Re

EUR

31 December 2021

Additions

Uses

31 December 2022

Short-term accrued expenses

1,733,454

1,266,332

-1,413,379

1,586,407

Other accrued costs (expenses) and deferred revenue

251,207

51,292

302,499

Total

1,984,661

1,317,624

-1,413,379

1,888,906

367

16.8.34Fair values of assets and liabilities

Financial assets by level of the fair value hierarchy

Sava Insurance Group

EUR

31 December 2023

Carrying amount

Fair value

Difference between FV and CA

Level 1

Level 2

Level 3

Total fair value

Investments measured at fair value

1,936,229,467

1,746,868,840

117,886,785

71,473,842

1,936,229,467

Investments measured at fair value through profit or loss

660,082,422

569,956,001

18,652,579

71,473,842

660,082,422

Mandatorily measured at fair value through profit or loss, not held for trading

660,082,422

569,956,001

18,652,579

71,473,842

660,082,422

Debt instruments

19,701,111

5,568,931

14,132,180

19,701,111

Equity instruments

569,153,261

564,387,070

4,520,399

245,792

569,153,261

Investments in infrastructure funds

57,339,858

Investments in real-estate funds

13,888,192

Investments measured at fair value through other comprehensive income

1,276,147,045

1,176,912,839

99,234,206

1,276,147,045

Debt instruments

1,260,177,155

1,160,942,949

99,234,206

1,260,177,155

Equity instruments

15,969,890

Investments not measured at fair value

76,303,166

39,689,221

8,640,004

26,896,788

75,226,013

-1,077,153

Investments measured at amortised cost

76,303,166

39,689,221

8,640,004

26,896,788

75,226,013

-1,077,153

Debt instruments (bonds)

49,932,856

39,689,221

8,640,004

48,329,225

-1,603,631

Deposits and CDs

25,616,171

26,105,652

489,481

Loans granted

754,139

791,136

36,997

Sava Insurance Group

EUR

31 December 2022

Carrying amount

Fair value

Difference between FV and CA

Level 1

Level 2

Level 3

Total fair value

Investments measured at fair value

1,711,703,795

1,507,454,812

126,429,460

77,819,523

1,711,703,795

Investments measured at fair value through profit or loss

556,301,888

464,243,069

15,096,866

76,961,953

556,301,888

Mandatorily measured at fair value through profit or loss, not held for trading

556,301,888

464,243,069

15,096,866

76,961,953

556,301,888

Debt instruments

20,729,025

5,590,271

8,787,606

6,351,148

20,729,025

Equity instruments

465,219,427

458,652,798

6,309,260

257,369

465,219,427

Investments in infrastructure funds

53,856,375

Investments in real-estate funds

16,497,061

Investments measured at fair value through other comprehensive income

1,155,401,907

1,043,211,743

111,332,594

857,570

1,155,401,907

Debt instruments

1,140,474,230

1,028,284,066

111,332,594

857,570

1,140,474,230

Equity instruments

14,927,677

Investments not measured at fair value

64,428,280

35,495,150

6,379,072

20,525,245

62,399,467

-2,028,813

Investments measured at amortised cost

64,428,280

35,495,150

6,379,072

20,525,245

62,399,467

-2,028,813

Debt instruments (bonds)

44,385,198

35,495,150

6,379,072

41,874,222

-2,510,976

Deposits and CDs

18,848,261

19,276,121

427,860

Loans granted

1,194,821

1,249,124

54,303

Sava Re

EUR

31 December 2023

Carrying amount

Fair value

Difference between FV and CA

Level 1

Level 2

Level 3

Total fair value

Investments measured at fair value

348,572,420

290,130,414

33,473,129

24,968,877

348,572,420

Investments measured at fair value through profit or loss

37,286,800

5,030,865

7,287,059

24,968,877

37,286,800

Mandatorily measured at fair value through profit or loss, not held for trading

37,286,800

5,030,865

7,287,059

24,968,877

37,286,800

Debt instruments

4,320,636

Equity instruments

7,997,287

5,030,865

2,966,422

7,997,287

Investments in infrastructure funds

21,084,448

Investments in real-estate funds

3,884,428

Investments measured at fair value through other

comprehensive income

311,285,620

285,099,550

26,186,070

311,285,620

Debt instruments

311,285,620

285,099,550

26,186,070

311,285,620

Investments not measured at fair value

5,811,776

2,167,835

3,785,768

5,953,603

141,827

Investments measured at amortised cost

5,811,776

2,167,835

3,785,768

5,953,603

141,827

Debt instruments (bonds)

2,075,525

2,167,835

92,311

Deposits and CDs

1,021,347

1,041,806

20,458

Loans granted

2,714,904

2,743,962

29,058

368

Sava Re

EUR

31 December 2022

Carrying amount

Fair value

Difference between FV and CA

Level 1

Level 2

Level 3

Total fair value

Investments measured at fair value

320,559,011

261,449,355

32,265,422

26,844,235

320,559,012

Investments measured at fair value through profit or loss

39,718,676

5,856,230

7,441,495

26,420,951

39,718,676

Mandatorily measured at fair value through profit or loss, not held for trading

39,718,676

5,856,230

7,441,495

26,420,951

39,718,676

Debt instruments

5,276,003

2,283,137

2,992,866

5,276,003

Equity instruments

11,014,588

5,856,230

5,158,358

11,014,588

Investments in infrastructure funds

18,843,871

Investments in real-estate funds

4,584,214

Investments measured at fair value through other

comprehensive income

280,840,335

255,593,125

24,823,927

423,283

280,840,335

Debt instruments

280,840,335

255,593,125

24,823,927

423,283

280,840,335

Investments not measured at fair value

3,871,964

2,216,867

1,840,393

4,057,260

185,296

Investments measured at amortised cost

3,871,964

2,216,867

1,840,393

4,057,260

185,296

Debt instruments (bonds)

2,075,272

2,216,867

141,595

Loans granted

1,796,693

1,840,393

43,700

As at 31 December 2023, a large proportion of the debt securities portfolio is valued at the CBBT bid price, which represents the unadjusted quoted price and thus meets the criteria for a tier 1 classification. Mutual funds and listed equity securities that meet the criteria of an active market, as well as debt securities valued at BVAL bid prices that meet the relevant price quality criteria, are also classified into this level.

As at 31 December 2023, level 1 investments represented 88.8% (31 December 2022: 87%) of the value of financial investments measured at fair value.

Debt securities for which no CBBT bid price exists at the classification date, but a BVAL bid price of lower quality is available, are classified into Level 2. We classify into the same Level investments valued based on an internal model that uses directly and indirectly observable market inputs, such as the risk-free interest rate curve, yield of similar financial instruments, and credit and liquidity risk premiums. Equity securities valued using stock exchange prices that meet the criteria for a non-functioning market are also classified into this Level.

The Group classifies into Level 3 shares measured at cost, loans granted measured at amortised cost and investments in alternative funds, such as real-estate funds, infrastructure funds, private debt funds, private equity funds and the like. There are no market prices available for such investments; therefore, valuation based on available market data is not possible.

The Group classifies into Level 3 its investments in alternative funds, such as real-estate funds, infrastructure funds, private debt funds, private equity funds and similar. Alternative funds are valued by fund managers in the form of fund unit values or as the value of invested assets, being the best approximation of fair value. Assets are valued based on material non-public information on assets invested in funds. The Group has only limited access to input data as used by fund managers, which is why the Group does not carry out own valuations nor is it possible for the Group to run sensitivity analyses.

In order to value fund assets, managers of such funds generally use methods that comply with International Private Equity and Venture Capital Valuation standards, such as discounting of cash flows and the multiples method.

Valuation techniques for all items described above are defined in accounting policies. The method is described for investment property in section 16.4.12 “Investment property”, for investments in subsidiaries and associates in section 16.4.13 “Investments in subsidiaries and associates” and for financial investments in section 16.4.14 “Financial investments”.

369

The fair value of the Company’s investment property as at 31 December 2023 was EUR 10,007,145 (2022: EUR 9,997,159), that of the Group at EUR 28,591,968 (2022: 25,680,767). The Company and the Group classify investment property as level 3 assets.

Movements in level 3 financial assets measured at fair value

Sava Insurance Group

EUR

Debt instruments

Equity instruments

Investments in infrastructure funds

Investments in real-estate funds

31 December 2023

Opening balance

7,208,718

257,367

53,856,375

16,497,061

Exchange differences

-1

Additions

4,230,418

Disposals

-587,952

-11,600

-2,004,341

Maturity

-1,313,725

Revaluation to fair value

696,363

1,257,404

-2,608,868

Reclassification into other levels (from L3 to L2 or L1)

-6,003,405

Closing balance

245,792

57,339,858

13,888,192

Income

750

2,046,833

287,511

Unrealised gains/losses

23,483

1,567,201

-2,192,884

Sava Re

EUR

Debt instruments

Equity instruments

Investments in infrastructure funds

Investments in real-estate funds

31 December 2023

Opening balance

3,416,149

18,843,871

4,584,214

Exchange differences

-1

Additions

2,567,159

Maturity

-1,313,725

-711,560

Revaluation to fair value

297,701

384,977

-699,785

Reclassification into other levels (from L3 to L2 or L1)

-2,400,124

Closing balance

21,084,449

3,884,428

Income

921,507

86,504

Unrealised gains/losses

606,629

-699,785

370

Reclassification of assets and financial liabilities between levels

Sava Insurance Group

EUR

Level 1

Level 2

Level 3

31 December 2023

Investments measured at fair value through profit or loss

768,164

4,303,737

-5,071,901

Mandatorily measured at fair value through profit or loss, not held for trading

768,164

4,303,737

-5,071,901

Debt instruments

195,614

4,876,287

-5,071,901

Debt securities reclassified from level 2 into level 1

195,614

-195,614

Debt securities reclassified from level 3 into level 2

5,071,901

-5,071,901

Equity instruments

572,550

-572,550

Equity instruments reclassified from level 2 into level 1

572,550

-572,550

Investments measured at fair value through other comprehensive income

5,979,413

-5,047,910

-931,503

Debt instruments

5,979,413

-5,047,910

-931,503

Reclassification from level 1 into level 2

-2,526,398

2,526,398

Reclassification from level 2 into level 1

8,505,811

-8,505,811

Reclassification from level 3 into level 2

931,503

-931,503

The Group adopted a new fair value hierarchy methodology for investments with effect from 1 October 2023. The data presented are based on the new methodology for the comparative period. The differences from the previous classification presented in the 2022 annual report are due to a transfer of EUR 2.5 million of investments from level 1 into level 2, a transfer of EUR 9.3 million from level 2 into level 1 and a transfer of EUR 6.0 million of investments from level 3 into level 2.

Sava Re

EUR

Level 1

Level 2

Level 3

31 December 2023

Investments measured at fair value through profit or loss

572,550

1,341,375

-1,913,925

Mandatorily measured at fair value through profit or loss, not held for trading

572,550

1,341,375

-1,913,925

Debt instruments

1,913,925

-1,913,925

Debt securities reclassified from level 3 into level 2

1,913,925

-1,913,925

Equity instruments

572,550

-572,550

Equity instruments reclassified from level 2 into level 1

572,550

-572,550

Investments measured at fair value through other comprehensive income

-118,777

604,976

-486,199

Debt instruments

-118,777

604,976

-486,199

Reclassification from level 1 into level 2

-118,777

118,777

Reclassification from level 3 into level 2

486,199

-486,199

The Company adopted a new fair value hierarchy methodology for investments with effect from 1 October 2023. The data presented are based on the new methodology for the comparative period. The differences from the previous classification presented in the 2022 annual report are due to a transfer of EUR 0.1 million of investments from level 1 into level 2, a transfer of EUR 0.6 million from level 2 into level 1 and a transfer of EUR 2.4 million of investments from level 3 into level 2.

16.8.35Insurance revenue and insurance service expenses

Sava Insurance Group

31 December 2023

31 December 2022

EUR

Non-life

Life

Total

Non-life

Life

Total

Insurance revenue

-630,737,533

-66,825,278

-697,562,811

-547,182,815

-61,804,978

-608,987,793

Amounts recoverable from insurance contracts ceded to reinsurers

42,824,599

247,178

43,071,777

38,433,905

305,005

38,738,910

Total insurance service expenses

611,082,703

46,042,815

657,125,518

495,847,875

41,662,675

537,510,550

Total amounts recovered from reinsurers

-85,877,898

-234,348

-86,112,246

-43,159,652

-175,432

-43,335,084

371

16.8.35.1Analysis of insurance revenue (contracts for which the PAA as not been applied)

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

107,140,544

Expected insurance claims, benefits and expenses

59,831,277

Release of the risk adjustment for non-financial risk for risk expired

9,989,677

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

27,461,070

Other amounts (e.g. experience adjustments for premium receipts)

9,858,520

Refund of insurance acquisition cash flows

10,785,511

Total

117,926,055

Insurance contracts measured using the premium allocation approach

512,811,476

Insurance revenue

630,737,531

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

96,720,351

Expected insurance claims, benefits and expenses

58,325,598

Release of the risk adjustment for non-financial risk for risk expired

9,827,462

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

22,728,114

Other amounts (e.g. experience adjustments for premium receipts)

5,839,177

Refund of insurance acquisition cash flows

9,128,324

Total

105,848,675

Insurance contracts measured using the premium allocation approach

441,334,138

Insurance revenue

547,182,813

Sava Insurance Group as at 31 December 2023 – life

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

57,267,502

Expected insurance claims, benefits and expenses

35,847,950

Release of the risk adjustment for non-financial risk for risk expired

4,468,442

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

17,409,416

Other amounts (e.g. experience adjustments for premium receipts)

-458,306

Refund of insurance acquisition cash flows

9,557,779

Total

66,825,281

Insurance contracts measured using the premium allocation approach

Insurance revenue

66,825,281

Sava Insurance Group as at 31 December 2022 – life

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

53,070,176

Expected insurance claims, benefits and expenses

34,198,162

Release of the risk adjustment for non-financial risk for risk expired

3,546,349

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

15,719,413

Other amounts (e.g. experience adjustments for premium receipts)

-393,748

Refund of insurance acquisition cash flows

8,734,799

Total

61,804,975

Insurance contracts measured using the premium allocation approach

Insurance revenue

61,804,975

372

Sava Re as at 31 December 2023

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

148,942,159

Expected insurance claims, benefits and expenses

90,884,369

Release of the risk adjustment for non-financial risk for risk expired

14,358,334

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

43,583,041

Other amounts (e.g. experience adjustments for premium receipts)

116,415

Refund of insurance acquisition cash flows

8,889,287

Total

157,831,445

Insurance contracts measured using the premium allocation approach

9,972,681

Insurance revenue

167,804,126

Sava Re as at 31 December 2022

EUR

Total

Insurance contracts not measured using the premium allocation approach (PAA)

Amounts relating to changes in the liability for remaining coverage

136,062,288

Expected insurance claims, benefits and expenses

86,444,668

Release of the risk adjustment for non-financial risk for risk expired

13,790,481

Amount of the contractual service margin recognised in profit or loss to reflect the transfer of services

40,777,966

Other amounts (e.g. experience adjustments for premium receipts)

-4,950,828

Refund of insurance acquisition cash flows

7,250,465

Total

143,312,753

Insurance contracts measured using the premium allocation approach

7,447,982

Insurance revenue

150,760,734

16.8.35.2Insurance service expenses

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total

Insurance service expenses

-76,067,916

-371,851,682

-447,919,598

Insurance service operating expenses

-14,689,617

-148,473,487

-163,163,104

Acquisition costs

-10,785,511

-80,522,287

-91,307,798

Losses on onerous contracts

303,334

-2,814,659

-2,511,325

Administrative expenses

-4,207,440

-65,136,541

-69,343,981

Insurance service expenses

-90,757,533

-520,325,169

-611,082,702

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total

Insurance service expenses

-62,918,772

-292,374,019

-355,292,791

Insurance service operating expenses

-13,166,027

-127,389,059

-140,555,086

Acquisition costs

-9,128,324

-70,883,140

-80,011,464

Losses on onerous contracts

-61,844

-2,061,085

-2,122,929

Administrative expenses

-3,975,859

-54,444,834

-58,420,693

Insurance service expenses

-76,084,799

-419,763,078

-495,847,877

373

Sava Insurance Group as at 31 December 2023 – life

EUR

Insurance contracts not measured using the PAA

Total

Insurance service expenses

-17,554,556

Insurance service operating expenses

-28,488,257

Acquisition costs

-9,557,779

Losses on onerous contracts

424,984

Administrative expenses

-19,355,462

Insurance service expenses

-46,042,813

Sava Insurance Group as at 31 December 2022 – life

EUR

Insurance contracts not measured using the PAA

Total

Insurance service expenses

-13,016,982

Insurance service operating expenses

-28,645,689

Acquisition costs

-8,734,799

Losses on onerous contracts

-2,046,810

Administrative expenses

-17,864,080

Insurance service expenses

-41,662,671

Sava Re as at 31 December 2023

EUR

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total

Insurance service expenses

-114,069,334

-48,638,961

-162,708,295

Insurance service operating expenses

-11,417,291

-365,332

-11,782,623

Acquisition costs

-8,889,287

-182,343

-9,071,629

Losses on onerous contracts

245,208

Administrative expenses

-2,773,212

-182,989

-2,956,202

Insurance service expenses

-125,486,624

-49,004,293

-174,490,918

Sava Re as at 31 December 2022

EUR

Insurance contracts not measured using the PAA

Insurance contracts measured using the PAA

Total

Insurance service expenses

-116,726,011

-6,123,817

-122,849,828

Insurance service operating expenses

-9,447,821

-225,680

-9,673,501

Acquisition costs

-7,250,465

-51,917

-7,302,382

Losses on onerous contracts

318,020

Administrative expenses

-2,515,376

-173,764

-2,689,139

Insurance service expenses

-126,173,831

-6,349,498

-132,523,329

16.8.36Reinsurance revenue and reinsurance service expenses

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-42,824,599

Contracts not measured using the premium allocation approach (PAA)

-36,248,168

Contracts measured using the premium allocation approach (PAA)

-6,576,428

Reinsurers’ share of claims, of which:

85,877,893

Contracts not measured using the premium allocation approach (PAA)

77,909,179

Contracts measured using the premium allocation approach (PAA)

7,968,712

Net reinsurance revenue / service expenses

43,053,294

374

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-38,433,905

Contracts not measured using the premium allocation approach (PAA)

-34,344,981

Contracts measured using the premium allocation approach (PAA)

-4,088,926

Reinsurers’ share of claims, of which:

43,159,658

Contracts not measured using the premium allocation approach (PAA)

41,012,356

Contracts measured using the premium allocation approach (PAA)

2,147,304

Net reinsurance revenue / service expenses

4,725,753

Sava Insurance Group as at 31 December 2023 – life

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-247,179

Contracts not measured using the premium allocation approach (PAA)

-247,180

Reinsurers’ share of claims, of which:

234,348

Contracts not measured using the premium allocation approach (PAA)

234,349

Net reinsurance revenue / service expenses

-12,831

Sava Insurance Group as at 31 December 2022 – life

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-305,005

Contracts not measured using the premium allocation approach (PAA)

-305,007

Reinsurers’ share of claims, of which:

175,432

Contracts not measured using the premium allocation approach (PAA)

175,431

Net reinsurance revenue / service expenses

-129,573

Sava Re as at 31 December 2023

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-30,235,703

Contracts not measured using the premium allocation approach (PAA)

-30,235,703

Reinsurers’ share of claims, of which:

73,904,850

Contracts not measured using the premium allocation approach (PAA)

73,904,850

Net reinsurance revenue / service expenses

43,669,147

Sava Re as at 31 December 2022

EUR

Total

Reinsurers’ share of insurance revenue, of which:

-29,572,834

Contracts not measured using the premium allocation approach (PAA)

-29,572,834

Reinsurers’ share of claims, of which:

39,440,417

Contracts not measured using the premium allocation approach (PAA)

39,440,417

Net reinsurance revenue / service expenses

9,867,583

Sava Insurance Group as at 31 December 2023 – non-life

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-18,608,747

Changes in the risk adjustment for non-financial risk

-4,805,562

Finance income/expenses recognised in profit or loss

-19,410,291

Allocation of reinsurers’ shares of premiums

-42,824,600

Reinsurers’ share of claims and other insurance expenses in the period

89,494,581

Changes in amounts recoverable arising from changes in liability for incurred claims

-3,656,185

Changes in fulfilment cash flows which relate to onerous underlying contracts

39,496

Reinsurers’ shares of insurance service expenses

85,877,892

Net reinsurance revenue / service expenses

43,053,292

375

Sava Insurance Group as at 31 December 2022 – non-life

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-16,925,397

Changes in the risk adjustment for non-financial risk

-4,008,143

Finance income/expenses recognised in profit or loss

-17,500,365

Allocation of reinsurers’ shares of premiums

-38,433,905

Reinsurers’ share of claims and other insurance expenses in the period

44,864,842

Changes in amounts recoverable arising from changes in liability for incurred claims

-1,660,252

Changes in fulfilment cash flows which relate to onerous underlying contracts

-44,935

Reinsurers’ shares of insurance service expenses

43,159,655

Net reinsurance revenue / service expenses

4,725,750

Sava Insurance Group as at 31 December 2023 – life

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-138,846

Changes in the risk adjustment for non-financial risk

4,148

Finance income/expenses recognised in profit or loss

-112,479

Allocation of reinsurers’ shares of premiums

-247,177

Reinsurers’ share of claims and other insurance expenses in the period

124,348

Changes in amounts recoverable arising from changes in liability for incurred claims

110,000

Reinsurers’ shares of insurance service expenses

234,348

Net reinsurance revenue / service expenses

-12,829

Sava Insurance Group as at 31 December 2022 – life

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-173,151

Changes in the risk adjustment for non-financial risk

-3,087

Finance income/expenses recognised in profit or loss

-128,766

Allocation of reinsurers’ shares of premiums

-305,004

Reinsurers’ share of claims and other insurance expenses in the period

147,432

Changes in amounts recoverable arising from changes in liability for incurred claims

27,999

Changes in fulfilment cash flows which relate to onerous underlying contracts

Reinsurers’ shares of insurance service expenses

175,431

Net reinsurance revenue / service expenses

-129,573

Sava Re as at 31 December 2023

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-9,717,955

Changes in the risk adjustment for non-financial risk

-4,227,733

Net loss/gain recognised in profit or loss

-16,290,016

Allocation of reinsurers’ shares of premiums

-30,235,703

Reinsurers’ share of claims and other insurance expenses in the period

77,958,868

Changes in amounts recoverable arising from changes in liability for incurred claims

-4,054,018

Reinsurers’ shares of insurance service expenses

73,904,850

Net reinsurance revenue / service expenses

43,669,147

376

Sava Re as at 31 December 2022

EUR

Total

Reinsurers’ shares of insurance revenue

Expected recovery for insurance service expenses incurred in the period

-10,522,803

Changes in the risk adjustment for non-financial risk

-3,419,272

Net income/expenses recognised in profit or loss

-15,630,759

Allocation of reinsurers’ shares of premiums

-29,572,834

Reinsurers’ share of claims and other insurance expenses in the period

40,069,392

Changes in amounts recoverable arising from changes in liability for incurred claims

-628,975

Reinsurers’ shares of insurance service expenses

39,440,417

Net reinsurance revenue / service expenses

9,867,583

377

16.8.37Investment income and expenses

Investment income by IFRS categories

Investment income by IFRS categories for 2023

Sava Insurance Group

EUR

Interest income

Change in fair value of FVTPL investments

Gains on disposal of FVTPL investments

Gains on disposal of investments of other IFRS categories

Income from dividends and shares of other investments

Exchange gains

Change in expected credit losses (ECL)

Diverse other income

Total

Investments measured at amortised cost

2,640,198

1,518,696

524,179

4,683,073

Debt instruments

1,718,644

30,787

15,999

1,765,430

Cash and cash equivalents

119,718

1,452,543

1,572,261

Deposits and CDs

738,694

35,366

484,259

1,258,319

Loans

63,142

23,921

87,063

Investments measured at fair value through profit or loss

809,053

106,098,756

487,591

434,362

977,080

5,194

2,340,151

111,152,187

Mandatorily measured at fair value through profit or loss, not held for trading

809,053

106,098,756

487,591

434,362

977,080

5,194

2,340,151

111,152,187

Debt instruments

809,053

1,852,682

1,293

5,194

2,668,222

Equity instruments

104,246,074

486,298

434,362

977,080

106,143,814

Investments in infrastructure funds

2,046,833

Investments in real-estate funds

293,318

Investments measured at fair value through other comprehensive income

18,465,996

67,299

664,699

6,768,940

555,405

56,855

26,579,194

Debt instruments

18,465,996

67,299

6,768,940

555,405

7,268

25,864,908

Equity instruments

664,699

49,577

714,276

Other investments

Investment property

1,444,938

Investment property

1,444,938

Total investment income

21,915,247

106,098,756

487,591

67,299

1,099,061

9,264,716

1,084,778

3,841,944

143,859,392

378

Investment income by IFRS categories for 2022

Sava Insurance Group

EUR

Interest income

Change in fair value of FVTPL investments

Gains on disposal of FVTPL investments

Gains on disposal of investments of other IFRS categories

Income from dividends and shares of other investments

Exchange gains

Change in expected credit losses (ECL)

Diverse other income

Total

Investments measured at amortised cost

2,050,389

2,135,335

437,580

4,623,304

Debt instruments

1,660,574

30,443

23,995

1,715,012

Cash and cash equivalents

17,149

2,099,670

2,116,819

Deposits and CDs

305,831

5,153

369,269

680,253

Loans

66,835

44,316

111,220

Investments measured at fair value through profit or loss

1,001,716

80,421,855

624,295

1,164,434

1,655,395

2,940

2,163,885

87,034,520

Mandatorily measured at fair value through profit or loss, not held for trading

1,001,716

80,421,855

624,295

1,164,434

1,655,395

2,940

2,163,885

87,034,520

Debt instruments

1,001,716

-128,249

164,578

8,425

2,940

1,049,410

Equity instruments

80,388,284

459,717

1,164,434

1,646,970

45,469

83,704,874

Investments in infrastructure funds

1,925,727

Investments in real-estate funds

161,820

192,688

354,508

Investments measured at fair value through other comprehensive income

13,789,533

1,307,558

152,871

12,474,113

973,087

191,230

28,888,392

Debt instruments

13,789,533

1,307,558

12,474,113

973,087

147,791

28,692,082

Equity instruments

152,871

49,263

202,134

Other investments

-5,824

Investment property

1,518,594

Investment property

1,518,594

Total investment income

16,841,638

80,421,855

624,295

1,307,558

1,317,305

16,264,843

1,413,607

3,873,709

122,064,810

379

Investment income by IFRS categories for 2023

Sava Re

EUR

Interest income

Change in fair value of FVTPL investments

Gains on disposal of FVTPL investments

Gains on disposal of investments of other IFRS categories

Income from dividends and shares of other investments

Exchange gains

Change in expected credit losses (ECL)

Diverse other income

Total

Investments measured at amortised cost

279,456

1,413,257

18,130

1,710,843

Debt instruments

102,760

102,763

Cash and cash equivalents

12,488

1,413,257

1,425,745

Deposits and CDs

41,806

2,940

44,746

Loans

122,402

15,188

137,590

Investments measured at fair value through profit or loss

230,222

3,903,887

9,388

217,967

672,816

1,008,011

6,042,291

Mandatorily measured at fair value through profit or loss, not held for trading

230,222

3,903,887

9,388

217,967

672,816

1,008,011

6,042,291

Debt instruments

230,222

433,741

663,964

Equity instruments

3,470,146

9,388

217,967

672,816

4,370,316

Investments in infrastructure funds

921,507

Investments in real-estate funds

86,504

Investments measured at fair value through other comprehensive income

4,455,595

12,456

6,521,397

71,790

11,061,238

Debt instruments

4,455,595

12,456

6,521,397

71,790

11,061,238

Investment property

867,573

Investment property

867,573

Total investment income

4,965,273

3,903,887

9,388

12,456

217,967

8,607,469

89,921

1,875,584

19,681,945

380

Investment income by IFRS categories for 2022

Sava Re

EUR

Interest income

Change in fair value of FVTPL investments

Gains on disposal of FVTPL investments

Gains on disposal of investments of other IFRS categories

Income from dividends and shares of other investments

Exchange gains

Change in expected credit losses (ECL)

Diverse other income

Total

Investments measured at amortised cost

252,454

1,882,163

57,206

2,191,824

Debt instruments

134,215

19,374

153,589

Cash and cash equivalents

1,882,163

1,882,175

Deposits and CDs

Loans

118,227

37,832

156,060

Investments measured at fair value through profit or loss

291,402

4,129,770

77,683

458,074

1,000,711

653,583

6,611,224

Mandatorily measured at fair value through profit or loss, not held for trading

291,402

4,129,770

77,683

458,074

1,000,711

653,583

6,611,224

Debt instruments

291,402

222,031

54,611

568,044

Equity instruments

3,907,740

23,072

458,074

1,000,711

5,389,597

Investments in infrastructure funds

602,302

Investments in real-estate funds

51,281

Investments measured at fair value through other comprehensive income

2,435,600

1,163,032

11,763,230

96,720

15,458,583

Debt instruments

2,435,600

1,163,032

11,763,230

96,720

15,458,583

Investment property

829,030

Investment property

829,030

Total investment income

2,979,457

4,129,770

77,683

1,163,032

458,074

14,646,105

153,926

1,482,613

25,090,661

381

Investment expenses by IFRS category

Investment expenses by IFRS category for 2023

Sava Insurance Group

EUR

Interest expenses

Change in fair value of FVTPL investments

Losses on disposal of FVTPL investments

Losses on disposal of investments of other IFRS categories

Exchange losses

Change in expected credit losses (ECL)

Other

Total

Investments measured at amortised cost

767

3,259,089

582,666

5,590

3,848,112

Debt instruments

41,720

24,860

880

67,460

Cash and cash equivalents

3,168,264

Deposits and CDs

767

49,105

550,833

4,710

605,415

Loans granted

6,973

Investments measured at fair value through profit or loss

47,756,284

406,002

1,333,568

14,603

49,510,457

Mandatorily measured at fair value through profit or loss, not held for trading

47,756,284

406,002

1,333,568

14,603

49,510,457

Debt instruments

387,857

16,669

404,526

Equity instruments

46,952,443

389,333

1,333,568

14,603

48,689,947

Investments in real-estate funds

415,984

Investments measured at fair value through other comprehensive income

888,628

10,221,916

158,318

128,471

11,397,333

Debt instruments

888,628

10,221,916

158,318

18,394

11,287,256

Other investments

110,077

Receivables

136,182

Other investments

136,182

Investment property

542,567

Investment property

542,567

Total investment expenses

767

47,756,284

406,002

888,628

14,814,573

740,984

827,413

65,434,651

382

Investment expenses by IFRS category for 2022

Sava Insurance Group

EUR

Interest expenses

Change in fair value of FVTPL investments

Losses on disposal of FVTPL investments

Losses on disposal of investments of other IFRS categories

Exchange losses

Change in expected credit losses (ECL)

Other

Total

Investments measured at amortised cost

187,526

2,586,018

501,356

2,356,989

5,631,889

Debt instruments

14,804

33,280

2,353,629

2,401,713

Cash and cash equivalents

174,572

2,544,928

2,719,500

Deposits and CDs

12,954

1,193

413,401

3,360

430,908

Loans granted

25,093

54,675

79,768

Investments measured at fair value through profit or loss

153,270,544

966,247

1,184,095

1,845

155,422,731

Mandatorily measured at fair value through profit or loss, not held for trading

153,270,544

966,247

1,184,095

1,845

155,422,731

Debt instruments

6,430,158

150,594

6,548

6,587,300

Equity instruments

146,838,256

815,653

1,177,547

1,845

148,833,301

Investments in real-estate funds

2,130

Investments measured at fair value through other comprehensive income

1,736,948

11,217,701

561,270

155,258

13,671,177

Debt instruments

1,736,948

11,217,701

561,270

41,279

13,557,198

Other investments

113,979

Investment property

521,894

Investment property

521,894

Total investment expenses

187,526

153,270,544

966,247

1,736,948

14,987,814

1,062,626

3,035,986

175,247,691

Investment expenses by IFRS category for 2023

Sava Re

EUR

Interest expenses

Change in fair value of FVTPL investments

Losses on disposal of FVTPL investments

Losses on disposal of investments of other IFRS categories

Exchange losses

Change in expected credit losses (ECL)

Other

Total

Investments measured at amortised cost

3,124,503

23,954

3,148,457

Debt instruments

Cash and cash equivalents

3,124,503

Deposits and CDs

23,399

Loans granted

545

Investments measured at fair value through profit or loss

2,692,105

158,893

919,266

3,770,264

Mandatorily measured at fair value through profit or loss, not held for trading

2,692,105

158,893

919,266

3,770,264

Debt instruments

78,616

15,456

94,072

Equity instruments

2,613,489

143,437

919,266

3,676,192

Investments measured at fair value through other comprehensive income

132,904

10,047,293

11,541

6,905

10,198,643

Debt instruments

132,904

10,047,293

11,541

6,905

10,198,643

Investment property

220,196

Investment property

220,196

Total investment expenses

2,692,105

158,893

132,904

14,091,062

35,495

227,101

17,337,560

383

Investment expenses by IFRS category for 2022

Sava Re

EUR

Interest expenses

Change in fair value of FVTPL investments

Losses on disposal of FVTPL investments

Losses on disposal of investments of other IFRS categories

Exchange losses

Change in expected credit losses (ECL)

Other

Total

Investments measured at amortised cost

31,738

2,299,036

34,609

2,365,383

Debt instruments

2,496

Cash and cash equivalents

31,738

2,299,036

2,330,774

Loans granted

32,113

Investments measured at fair value through profit or loss

7,232,854

69,230

753,139

8,055,223

Mandatorily measured at fair value through profit or loss, not held for trading

7,232,854

69,230

753,139

8,055,223

Debt instruments

1,619,214

14,909

1,634,123

Equity instruments

5,613,640

54,321

753,139

6,421,101

Investments measured at fair value through other comprehensive income

965,345

10,167,440

97,494

2,115

11,232,394

Debt instruments

965,345

10,167,440

97,494

2,115

11,232,394

Investment property

197,962

Investment property

197,962

Total investment expenses

31,738

7,232,854

69,230

965,345

13,219,615

132,103

200,077

21,850,963

384

Investment income and expenses by source of funds

The Group records investment income and expenses separately by source of funds, i.e. separately for own fund assets, non-life insurance register assets and life insurance register assets. Own fund investments support the Group’s equity; non-life insurance register assets support (re)insurance contract liabilities relating to non-life business, whereas life insurance register assets support (re)insurance contract liabilities relating to life insurance business.

Investment income – non-life insurance business

Sava Insurance Group

Sava Re

EUR

Liability fund

2023

2022

2023

2022

Interest income

8,393,085

5,715,377

4,091,965

2,607,145

Change in fair value

8,083,070

8,956,377

3,828,337

3,944,088

Gains on disposal of investments

42,381

1,385,397

21,844

1,218,385

Income from dividends and shares – other investments

377,731

624,515

197,197

442,578

Exchange gains

9,092,627

15,787,403

8,605,716

14,644,119

Change in expected credit losses (ECL)

569,613

372,522

84,298

64,565

Diverse other income

3,662,301

3,544,010

1,865,515

1,472,242

Total investment income – liability fund

30,220,808

36,385,601

18,694,872

24,393,121

Capital fund

2023

2022

2023

2022

Interest income

2,469,129

728,762

873,308

372,312

Change in fair value

362,758

384,637

75,550

185,683

Gains on disposal of investments

10,798

61,486

22,330

Income from dividends and shares – other investments

21,520

15,497

20,770

15,497

Exchange gains

1,813

3,577

1,754

1,986

Change in expected credit losses (ECL)

73,818

151,603

5,622

89,361

Diverse other income

119,970

83,101

10,069

10,372

Total investment income – capital fund

3,059,806

1,428,663

987,073

697,540

Total investment income – non-life business

33,280,614

37,814,264

19,681,945

25,090,661

Investment income – life insurance business

Sava Insurance Group

EUR

Assets supporting life business

2023

2022

Interest income

8,917,868

9,174,166

Change in fair value

97,489,188

70,728,654

Gains on disposal of investments

466,971

441,209

Income from dividends and shares – other investments

699,810

675,691

Exchange gains

111,507

424,328

Change in expected credit losses (ECL)

349,494

801,947

Diverse other income

59,673

106,127

Total investment income – life insurance liability fund

108,094,511

82,352,122

Capital fund

2023

2022

Interest income

2,135,165

1,223,333

Change in fair value

163,740

352,187

Gains on disposal of investments

34,740

43,761

Income from dividends and shares – other investments

1,602

Exchange gains

58,769

49,535

Change in expected credit losses (ECL)

91,853

87,535

Diverse other income

140,471

Total investment income – capital fund

2,484,267

1,898,424

Total investment income – life business

110,578,778

84,250,546

385

Expenses for financial assets and liabilities – non-life business

Sava Insurance Group

Sava Re

EUR

Liability fund

2023

2022

2023

2022

Interest expenses

767

78,340

5,012

Change in fair value

5,740,499

15,437,933

2,665,061

6,835,627

Losses on disposal of investments

469,967

1,271,573

276,341

1,026,523

Exchange losses

14,589,799

14,547,581

14,089,188

13,217,805

Change in expected credit losses (ECL)

522,246

553,991

31,242

66,866

Other

549,575

471,861

222,052

195,388

Total investment expenses – liability fund

21,872,853

32,361,279

17,283,884

21,347,221

Capital fund

2,023

2,022

2023

2022

Interest expenses

41,765

26,726

Change in fair value

79,524

1,478,385

27,044

397,227

Losses on disposal of investments

16,315

87,220

15,456

8,052

Exchange losses

2,039

4,275

1,875

1,811

Change in expected credit losses (ECL)

37,295

113,946

4,253

65,237

Other

13,112

61,953

5,049

4,689

Total investment expenses – capital fund

148,285

1,787,544

53,677

503,741

Total investment expenses – non-life business

22,021,138

34,148,823

17,337,560

21,850,962

Expenses for financial assets and liabilities – life business

Sava Insurance Group

EUR

Assets supporting life business

2023

2022

Interest expenses

53,694

Change in fair value

41,866,122

132,341,697

Losses on disposal of investments

572,783

788,149

Exchange losses

146,908

198,983

Change in expected credit losses (ECL)

25,109

219,766

Other

255,806

145,570

Total investment expenses – life insurance liability fund

42,866,728

133,747,859

Capital fund

2,023

2,022

Interest expenses

13,727

Change in fair value

70,139

4,012,529

Losses on disposal of investments

235,565

556,253

Exchange losses

75,827

236,975

Change in expected credit losses (ECL)

156,334

174,923

Other

8,920

2,356,602

Total investment expenses – capital fund

546,785

7,351,009

Total investment expenses – life business

43,413,513

141,098,868

Net investment income from non-life and life business

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Non-life insurance

11,259,476

3,665,441

2,344,384

3,239,699

Life insurance

67,165,265

-56,848,322

Total

78,424,741

-53,182,881

2,344,384

3,239,699

386

The Group’s investment return for 2023 was EUR 78.4 million and includes the return on investments supporting the liabilities of life insurance policyholders who bear the investment risk (direct participating contracts).

The return on the investments supporting the liabilities of life policyholders who bear the investment risk in 2023 was EUR 56.0 million (31 December 2022: EUR -60.9 million. The majority of the return relates to the change in the fair value of unit-linked life insurance mutual funds (31 December 2023: EUR 55.4 million, 31 December 2022: EUR -61.1 million). The majority of this return has no impact on profit or loss, as accordingly finance expenses on unit-linked life insurance contracts have also been recognised.

The return on the Group’s investments for 2023, net of exchange differences and net of the return on investments supporting the liabilities of life policyholders who bear the investment risk, is EUR 27.9 million. The largest part of this is interest income of EUR 21.9 million, reflecting financial conditions that allow for high-yield investments.

The net investment income of Sava Re in 2023 was EUR 2.3 million (2022: EUR 3.2 million). The net investment income was lower in 2023, mainly due to negative exchange differences. Excluding exchange differences, the 2023 return of EUR 7.8 million is higher than the 2022 return of EUR 1.8 million, mainly due to higher interest income and fair value gains on investments at fair value through profit or loss.

16.8.38Operating expenses

The Group monitors operating expenses by nature. Compared to 2022, these expenses rose by 11.9%, or EUR 17.7 million, (2022: EUR 8.4 million).

The Company’s operating expenses increased by 17.2% or by EUR 2.8 million (2022: EUR -1.1 million).

Operating expenses by nature

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Acquisition costs (commissions)

84,253,993

78,674,766

34,982,281

44,149,728

Depreciation/amortisation of operating assets

11,645,260

9,274,469

671,812

543,794

Personnel costs

98,735,179

89,732,838

11,305,985

9,969,809

- Salaries and wages

74,381,931

65,912,267

8,807,034

7,727,933

- Social and pension insurance costs

10,665,861

9,534,333

1,457,342

1,283,969

- Other personnel costs

13,687,387

14,286,238

1,041,610

957,907

Costs of services by natural persons not performing business Total including taxes and contributions

1,210,564

975,695

469,080

327,662

Other operating expenses

55,806,322

49,671,531

6,321,946

5,173,291

Total

251,651,318

228,329,299

53,751,104

60,164,284

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Attributable expenses

200,636,773

183,946,615

39,945,596

48,360,421

Non-attributable expenses

29,432,276

26,979,168

13,805,508

11,803,863

Expenses of non-insurance companies

21,582,269

17,403,516

Total

251,651,318

228,329,299

53,751,104

60,164,284

387

The main items of other operating expenses, excluding audit expenses, are as follows.

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Other operating expenses

54,951,844

48,824,840

6,051,684

4,975,130

Cost of materials

1,952,616

1,579,458

66,464

59,664

Energy costs

2,281,062

2,010,370

138,347

115,384

Lease expenses

4,704,807

3,838,023

1,083,886

902,154

Employee reimbursements and training costs

1,820,193

1,474,085

414,330

242,586

Cost of other services

15,741,976

13,242,214

891,023

681,841

Transaction costs

2,581,785

2,481,845

276,763

260,141

Costs of intellectual and personal services

12,931,395

11,053,127

2,253,531

1,987,393

Insurance premiums

489,718

420,146

171,571

162,757

Cost of advertising, promotion and entertainment

7,735,539

8,669,014

214,010

169,877

Provisions for pensions and other provisions

1,449,206

1,041,039

130,900

109,118

Cost of donations, sponsorship, membership fees

3,263,547

3,015,519

410,858

284,215

Total

54,951,844

48,824,840

6,051,684

4,975,130

Audit fees

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Audit of annual report

709,774

709,487

217,017

145,594

Other assurance services

144,705

137,203

53,245

52,567

Total

854,479

846,690

270,262

198,161

The cost of auditing the annual report includes audit costs incurred by each Group company, and additionally for the Company, in addition to the cost of auditing the separate financial statements, the cost of auditing the consolidated financial statements of the Sava Insurance Group. Other audit services relate to assurance services for reports drawn up by the Company and the Group under Solvency II requirements, and for other reports for which the auditor provides assurance services (related parties report, ESEF compliance report, reporting to the Insurance Supervision Agency, remuneration report, approval of financial statements for foreign regulators and similar).

16.8.39Income and expenses relating to investments in subsidiaries and associates

In 2023, the Group generated income from profit distributions of associates of EUR 2,169,860 (2022: EUR 1,285,731).

No impairment losses on goodwill were recognised in 2022 or 2023.

In 2023, the Company recognised EUR 30.6 million (2022: EUR 51.9 million) of dividend income and profit distributions. There were no impairment losses on shares in subsidiaries in 2023 (2022: EUR 1.2 million of impairment losses on shares in the subsidiary Sava Osiguruvanje (MKD).

388

16.8.40Other operating income and expenses

Other operating income and expenses

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Penalties and damages received

497,291

591,142

18,169

580

Operating income from revaluation

77,611

397,089

Revenue from other services

4,772,343

4,800,360

489,410

592,836

Operating revenue

9,147,731

4,166,143

Insurance revenue outside the scope of IFRS 17

2,441,442

2,793,845

Other income

16,936,418

12,748,579

507,579

593,416

Net exchange differences

-4,743

-457,016

-4,997

-457,013

Operating expenses from revaluation

-119,356

-119,319

Expenses for other services

-4,819,796

-1,913,197

-268,260

-121,426

Expenses of non-insurance companies

-21,582,269

-17,403,516

Other expenses

-26,526,164

-19,893,048

-273,257

-578,439

Net other operating income and expenses

-9,589,746

-7,144,469

234,322

14,977

Income from other services comprises gains on the disposal of items of property, plant and equipment, extraordinary interest income and income from the use of holiday facilities.

Operating income mainly includes income from assistance services.

Expenses for other services include allowances for and impairment losses on other receivables, indirect operating expenses relating to investment property, expenses due to impairment losses on property, plant and equipment assets for own use and other extraordinary expenses.

16.8.41Income tax expense

Tax expense recognised in the income statement

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Income tax expense

13,119,837

9,736,944

2,893,138

364,624

Deferred tax expense

1,836,345

1,841,660

1,221,269

2,216,322

Total tax expense recognised in the income statement

14,956,182

11,578,604

4,114,406

2,580,945

Tax expense recognised in other comprehensive income – items that will not be reclassified to profit or loss

Sava Insurance Group

2023

2022

EUR

Before taxes

Tax

After taxes

Before taxes

Tax

After taxes

Other revaluation surpluses

-845,648

26,777

-818,871

-953,857

-298,198

-1,252,055

Total

-845,648

26,777

-818,871

-953,857

-298,198

-1,252,055

Sava Re

2023

2022

EUR

Before taxes

Tax

After taxes

Before taxes

Tax

After taxes

Other revaluation surpluses

-27,063

624

-26,439

55,903

Total

-27,063

624

-26,439

55,903

389

Tax expense recognised in other comprehensive income – items that will be reclassified to profit or loss

Sava Insurance Group

2023

2022

EUR

Before taxes

Tax

After taxes

Before taxes

Tax

After taxes

Net gains/losses on financial instruments at FVOCI

-50,080,928

7,282,958

-42,797,970

160,519,724

-28,666,296

131,853,428

Finance income or expenses from insurance contracts

33,063,968

-5,032,586

28,031,382

-108,200,503

20,569,657

-87,630,846

Net finance income or expenses from reinsurance contracts

-1,378,743

685,098

-693,645

5,079,988

-2,479,747

2,600,241

Realised net gains/losses on financial investments at FVOCI

-661,574

1,077,839

Other comprehensive income

-19,057,277

2,935,470

-16,121,807

58,477,048

-10,576,386

47,900,662

Sava Re

2023

2022

EUR

Before taxes

Tax

After taxes

Before taxes

Tax

After taxes

Net gains/losses on financial instruments at FVOCI

-9,832,360

1,444,764

-8,387,596

25,259,425

-4,799,291

20,460,134

Finance income or expenses from insurance contracts

3,038,396

-1,096,411

1,941,985

-7,194,951

3,118,767

-4,076,184

Net finance income or expenses from reinsurance contracts

-1,304,240

148,746

-1,155,494

4,949,438

-857,926

4,091,512

Realised net gains/losses on financial investments at FVOCI

-120,448

Other comprehensive income

-8,218,652

497,099

-7,721,553

23,013,912

-2,538,450

20,475,462

Tax rate reconciliation

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Profit or loss before tax

79,613,353

58,502,045

53,589,208

63,931,896

Income tax expense at statutory tax rate (local)

21,521,834

22,441,898

10,181,950

12,147,060

Adjustment to actual rates

-1,187,948

-805,830

Tax effect of income deductible for tax purposes

-6,333,947

-10,474,264

-5,878,076

-9,955,777

Tax effect of expenses not tax deductible

1,478,267

-301,910

94,737

-440,525

Tax effect of income that increases tax base

389,626

688,915

292,976

497,643

Tax relief

-3,104,414

-807,470

-1,798,449

-620,846

Temporarily unrecognised deferred tax

322,597

-1,005,105

Other

1,870,167

1,842,370

1,221,269

953,391

Total income tax expense in the income statement

14,956,182

11,578,604

4,114,406

2,580,945

Effective tax rate

18.79%

19.79%

7.68%

4.04%

390

16.9Contingent assets and liabilities

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Outstanding recourse receivables

35,689,636

30,003,944

Receivables from the cancellation of subordinated financial instruments

37,960,300

10,038,000

Other potential receivables

1,870,961

1,891,582

225,565

244,026

Contingent assets

75,520,897

69,855,826

10,263,565

10,282,026

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Guarantees issued

11,446,639

12,398,533

3,106,691

4,372,752

Civil claims (lawsuits)

60,908

Contingent liabilities

11,446,639

12,459,441

3,106,691

4,372,752

For 2023 and 2022, the Group and the Company recognised contingent assets equal to their cancelled subordinated instruments, in respect of which they continue to take action to protect their interests. In December 2016, claims were filed against the issuing banks of the subordinated financial instruments held by the Group and the Company prior to their cancellation.

Securities given mostly represent potential liabilities arising from investments in alternative funds. At the time of signing the subscription, which represents a commitment to make future payments into the alternative fund, the Company recognises the amount of the commitment as a contingent liability, which is then reduced by the amount drawn at each call.

16.10Related party disclosures

The Group makes separate disclosures for the following groups of related parties:

•owners and related enterprises,

•key management personnel: management board, supervisory board including its committees, and employees not subject to the tariff section of the collective agreement,

•subsidiary companies,

•associates.

Owners and related enterprises

The Group’s largest shareholder is Slovenian Sovereign Holding and the Republic of Slovenia with a 31.6% stake. The ultimate beneficial owner of Slovenian Sovereign Holding is the Republic of Slovenia.

Remuneration of management board members in 2023

EUR

Gross salary – fixed amount

Gross salary – variable amount

Benefits in kind – insurance premiums

Benefits in kind – use of company car

Total

Marko Jazbec

217,800

62,816

421

3,862

284,899

Polona Pirš Zupančič

195,586

139,706

5,486

8,120

348,898

Peter Skvarča

194,850

53,460

5,426

3,842

257,578

David Benedek

153,235

2,726

5,596

161,557

Total

761,471

255,982

14,059

21,419

1,052,931

391

Remuneration of management board members in 2022

EUR

Gross salary – fixed amount

Gross salary – variable amount

Benefits in kind – insurance premiums

Benefits in kind – use of company car

Total

Marko Jazbec

210,586

155,623

426

3,281

369,916

Jošt Dolničar

62,625

140,082

1,750

1,010

205,467

Polona Pirš Zupančič

179,400

53,460

5,442

9,012

247,314

Peter Skvarča

179,400

53,460

5,451

4,696

243,007

Total

632,011

402,625

13,069

17,999

1,065,705

Liabilities to management board members based on gross remuneration

EUR

31 December 2023

31 December 2022

Marko Jazbec

18,000

Polona Pirš Zupančič

16,200

14,850

Peter Skvarča

16,200

14,850

David Benedek

16,200

Total

66,600

47,700

In 2023, EUR 86,246 was paid to Polona Pirš Zupančič, a member of the management board of Sava Re, in respect of deferred remuneration for 2021, 2020, 2019 and 2018.

As at 31 December 2023, the Company disclosed liabilities for potential payment of the variable part of pay of management board members in respect of 2021 and 2022 subject to certain conditions in the amount of EUR 136,763.

As at 31 December 2023, the Company had no receivables due from the management board members. Management board members are not remunerated for their functions in subsidiary companies. They have other entitlements under employment contracts, i.e. an allowance for annual leave of EUR 1,800, severance pay upon retirement and contributions to voluntary supplementary pension insurance. The management board members are not entitled to jubilee benefits for 10, 20 or 30 years of service.

392

Remuneration of the supervisory board and its committees in 2023

EUR

Attendance fees

Remuneration for performing the function

Reimbursement of expenses and training

Benefits in kind – insurance premiums

Total

Supervisory board members

Davor Ivan Gjivoje Jr

chairman

2,695

19,500

77,922

100,201

Keith William Morris

deputy chairman

2,695

14,300

6,679

23,758

Klemen Babnik

member

2,695

13,000

186

15,965

Matej Gomboši

member

2,695

13,000

2,353

18,132

Gorazd Andrej Kunstek(until 12 June 2023)

member

1,375

5,850

7,225

Edita Rituper

member

2,695

13,000

15,779

Blaž Garbajs (from 13 June 2023)

member

1,320

7,150

8,554

Total supervisory board members

16,170

85,800

87,140

504

189,614

Audit committee members

Matej Gomboši

chairman

1,980

4,875

2,161

9,016

Gorazd Andrej Kunstek(until 12 June 2023)

member

1,100

1,462

2,562

Blaž Garbajs (from 13 June 2023)

member

880

1,787

2,667

Katarina Sitar Šuštar

external member

7,725

179

7,904

Dragan Martinović

external member

6,825

Total audit committee members

3,960

22,674

2,340

28,974

Members of the nominations and remuneration committee

Klemen Babnik

chairman

660

4,875

5,592

Davor Ivan Gjivoje Jr

member

660

3,250

23,854

27,764

Keith William Morris

member

660

3,250

2,045

5,955

Matej Gomboši

member

660

3,250

720

4,630

Gorazd Andrej Kunstek(until 12 June 2023)

alternate member

440

1,462

1,902

Edita Rituper (from 13 June 2023)

member

220

1,787

2,007

Blaž Garbajs (from 14 December 2023)

member

157

Total nominations committee members

3,300

18,031

26,676

48,007

Members of the risk committee

Keith William Morris

chairman

1,320

4,875

4,089

10,284

Davor Ivan Gjivoje Jr

member

1,320

3,250

47,707

52,277

Slaven Mićković

external member

11,996

Janez Komelj

external member

3,914

Total risk committee members

2,640

24,035

51,796

78,471

Members of the fit & proper committee

Keith William Morris

chairman

440

4,875

1,363

6,678

Klemen Babnik

member

440

3,250

3,728

Rok Saje

external member

440

3,250

3,690

Klara Hauko

external member

440

3,250

3,690

Total members of the fit & proper committee

1,760

14,625

1,401

17,786

393

Remuneration of the supervisory board and its committees in 2022

EUR

Attendance fees

Remuneration for performing the function

Reimbursement of expenses and training

Benefits in kind – insurance premiums

Total

Supervisory board members

Davor Ivan Gjivoje Jr

chairman

2,915

19,500

38,248

60,744

Keith William Morris

deputy chairman

2,915

14,300

4,909

22,206

Klemen Babnik

member

2,915

13,000

16,043

Matej Gomboši

member

2,915

13,000

1,559

17,555

Gorazd Andrej Kunstek

member

2,915

13,000

244

16,240

Edita Rituper

member

2,915

13,000

15,996

Total supervisory board members

17,490

85,800

45,007

488

148,785

Audit committee members

Matej Gomboši

chairman

2,596

4,875

1,735

9,206

Gorazd Andrej Kunstek

member

2,596

3,250

271

6,117

Katarina Sitar Šuštar

external member

10,625

107

10,731

Dragan Martinović

external member

6,851

Total audit committee members

5,192

25,600

2,113

32,905

Members of the nominations and remuneration committee

Klemen Babnik

chairman

1,100

4,875

5,997

Davor Ivan Gjivoje Jr

member

1,100

3,250

25,258

29,608

Keith William Morris

member

1,100

3,250

2,316

6,666

Matej Gomboši

member

1,100

3,250

735

5,085

Gorazd Andrej Kunstek

member

1,100

3,250

115

4,465

Edita Rituper

member

440

Total nominations committee members

5,940

17,875

28,446

52,261

Members of the risk committee

Keith William Morris

chairman

1,540

4,875

3,242

9,657

Davor Ivan Gjivoje Jr

member

1,540

3,250

25,258

30,048

Janez Komelj

external member

6,254

Total risk committee members

3,080

14,379

28,500

45,959

Members of the fit & proper committee

Keith William Morris

chairman

660

4,875

1,389

6,924

Klemen Babnik

member

660

3,250

3,923

Rok Saje

external member

660

3,250

3,910

Klara Hauko

external member

660

3,250

3,910

Total members of the fit & proper committee

2,640

14,625

1,403

18,668

394

As at 31 December 2023, the Company had no receivables due from the supervisory board members and had no liabilities due to any members of the supervisory board or its committees based on gross remuneration.

Employee remuneration not subject to the tariff section of the collective agreement for 2023

EUR

Gross salary – fixed amount

Gross salary – variable amount

Benefits in kind and other benefits

Total

Individual employment contracts

2,696,157

661,025

162,408

3,519,590

Employee remuneration not subject to the tariff section of the collective agreement for 2022

EUR

Gross salary – fixed amount

Gross salary – variable amount

Benefits in kind and other benefits

Total

Individual employment contracts

2,238,140

746,322

137,366

3,121,829

Average gross salary in Group companies

The average gross salary of Group companies is calculated as the sum of all costs of gross salaries of Group companies (income statement item “personnel costs”) multiplied by the number of months, divided by the total average number of employees based on the hours worked in all Group companies.

Sava Insurance Group

EUR

2023

2022

Average monthly gross salary

2,998

2,768

Subsidiaries

Investments in and amounts due from Group companies

Sava Re

EUR

31 December 2023

31 December 2022

Loans granted to Group companies

gross

2,341,628

1,030,575

Other short-term receivables

gross

75,017

51,397

Total

2,416,645

1,081,972

Liabilities to Group companies

Sava Re

EUR

31 December 2023

31 December 2022

Other current liabilities

183,074

156,624

Liabilities to Group companies by maturity

EUR

Contractual maturity

31 December 2023

Over 5 years

from 1 to 5

Up to 1 year

Total

Other current liabilities

183,074

EUR

Contractual maturity

31 December 2022

Over 5 years

from 1 to 5

Up to 1 year

Total

Other current liabilities

156,624

Income and expenses relating to Group companies

Sava Re

395

EUR

2023

2022

Insurance revenue

63,774,722

57,960,701

Insurance service expenses

-92,996,538

-62,205,842

Finance result from insurance contracts

-1,073,693

-832,641

Other operating expenses

-465,061

-333,877

Dividend income

30,642,415

51,923,025

Interest income

71,052

62,605

Total

-47,103

46,573,972

Associate companies

No material income or expenses from operations with associates are recorded in 2023 and 2022.

Majority state-owned companies

Disclosures relating to state-owned companies are prepared for state-owned companies that are monthly updated on the website of SSH – Equity Investments.

Receivables due from the state and majority state-owned companies

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Interests in companies

2,543,434

3,418,761

2,543,434

3,418,761

Debt securities and loans

61,574,140

61,717,733

15,504,669

14,304,654

Receivables due from policyholders

1,058,180

457,256

Total

65,175,755

65,593,750

18,048,104

17,723,415

Liabilities to majority state-owned companies

Sava Insurance Group

Sava Re

EUR

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Liabilities for shares in claims

3,070

Total

3,070

396

Income and expenses relating to majority state-owned companies

Sava Insurance Group

Sava Re

EUR

2023

2022

2023

2022

Dividend income

90,000

294,171

90,000

290,832

Interest income at effective interest rate

1,186,857

1,350,977

254,769

261,117

Other investment income

3,962

702,964

3,835

36,832

Other investment expenses

-72,572

-473,200

-72,218

-473,200

Gross premiums written

6,230,252

12,173,456

Gross claims payments

-3,007,147

-3,348,982

Total

4,431,352

10,699,386

276,386

115,580

Characteristics of loans granted to subsidiaries

Sava Re

Borrower

Principal

Type of loan

Maturity

Interest rate

Sava Pokojninska (SVN)

1,500,000

subordinated

28 June 2027

6.00%

Sava Osiguruvanje (MKD)

1,300,000

Ordinary

20 October 2038

4.31%

Total

2,800,000

17Significant events after the reporting date

On 22 February 2024, Sava Re signed a contract for the acquisition of 2.5% of the company TBS Team 24. Upon completion of the transaction on 27 February 2024, Sava Re held a 90% stake in the company.

397

Appendices(unaudited)

399

Appendix A – Glossary of selected terms and calculation methodologies for indicators

Adriatic region. Southeast European countries along the Adriatic Sea.

Assets under management. Assets of pension companies’ pension funds, assets of mutual funds managed by the Group’s asset management company and assets of policyholders who bear the investment risk.

Book value per share. Ratio of total equity to the weighted average number of shares outstanding.

Business volume. Gross premiums written and revenue of non-insurance services.

Combined ratio. The sum of the loss ratio and the expense ratio. The Group’s ratio is calculated for the reinsurance and non-life insurance operating segments. Sava Re’s ratio does not include expenses arising from holding activities.

For the transition to IFRS 17, the Group has retained the existing net/net methodology for calculating the combined ratio. During 2023, in line with the approach of other comparable insurance companies, the Group decided to change its methodology to a net/gross calculation of the combined ratio, which is also consistent with the presentation of the income statement in accordance with IFRS 17. The revised methodology has been applied for the first time in this year’s annual report. Under the new methodology, the net reinsurance expenses are included in the numerator, while the denominator includes insurance service revenue net of the deductible reinsurance portion. Calculations using the new methodology slightly deteriorate the combined ratio, but the previous year’s combined ratio is also restated for comparison.

Contractual service margin (CSM). An estimate of the unearned profit on groups of insurance contracts that has not been recognised in the income statement at a reporting date because it relates to future services.

Cost-to-income ratio (CIR). Expense ratio for the pensions and asset management segment. It is calculated as the ratio of revenue to expenses.

Dividend yield. Ratio of dividend per share to the rolling average price per share in the 12-month period.

Emerging risks. New or previously identified risks that arise in new or unknown circumstances and whose impact is not fully known.

Euro Interbank Offered Rate (EURIBOR). This is the average reference interest rate at which banks in the euro area lend money to each other.

Exchange traded fund (ETF). Closed-end investment fund.

Expense ratio. Attributable expenses plus non-attributable expenses plus net operating income or expenses plus net other income or expenses plus net impairment losses and reversals of impairment losses on non-financial assets as a percentage of insurance revenue. The Group’s ratio is calculated for the reinsurance and non-life insurance operating segments. Sava Re’s ratio does not include expenses arising from holding activities.

FVTPL investments. Financial investments measured at fair value through profit or loss.

Gross premiums written. The total premiums on all policies written or renewed during a given period, regardless of what portions have been earned.

Highly liquid assets. These include L1A assets (ECB methodology), investments in US treasuries, investments in sovereign and supranational issuers with a credit rating of at least “AA+”, and cash and cash equivalents.

Interbank Offered Rate (IBOR). This is the average reference interest rate at which banks lend money to each other (e.g. LIBOR, EURIBOR, etc.).

Investment portfolio. It consists of financial investments, investments in associates, investment property, and cash and cash equivalents. It does not include investments of policyholders who bear the investment risk.

Loss ratio. Insurance service expenses, excluding operating expenses, plus net result from reinsurance contracts held as a percentage of insurance revenue. The Group’s ratio is calculated for the reinsurance and non-life insurance operating segments.

Net contractual service margin. Contractual service margin, net of reinsurance.

Net earnings or loss per share. Ratio of net profit or loss attributable to equity holders of the controlling company as a percentage of the weighted average number of shares outstanding. The Company and the Group have no potentially dilutive ordinary shares, therefore basic earnings per share equal diluted earnings per share.

Net investment income of the investment portfolio. The investment result plus the share of profit or loss of subsidiaries and associates. Calculated excluding returns on life insurance policies where policyholders bear the investment risk, the impact of exchange differences and expenses on subordinate debt.

NSLT – health business. Health insurance business pursued on a similar technical basis as non-life insurance.

ORSA (Own Risk and Solvency Assessment). Own assessment of the risks associated with a company’s or the Group’s business and strategic plan, and assessment of the adequacy of own funds to cover them.

Return on equity. Net profit for the period as a percentage of average equity during the period, excluding accumulated other comprehensive income.

Return on the investment portfolio. The ratio of net investment income from the investment portfolio to average invested assets. The investment portfolio position includes the following items of the statement of financial position: investment property; investments in associates and subsidiaries; financial investments, excluding unit-linked assets; and cash and cash equivalents other than those relating to unit-linked life insurance contracts. The average amount is calculated based on figures as at the reporting date and as at the end of the prior year.

SCR. Solvency capital requirement.

SLT – health business. Health insurance pursued on a similar technical basis as life insurance.

Solvency ratio. The ratio of eligible own funds as a percentage of the SCR. A solvency ratio in excess of 100% indicates that the firm has sufficient resources to meet the solvency capital requirement.

Total share return. Ratio of the share price at the end of the period, including the dividend, to the share price at the end of the previous period.

Ultimate loss. Total loss after all claims have been paid. Before the final settlement, the estimate of the ultimate loss includes reported claims and provisions for claims incurred but not reported (IBNR).

400

Appendix B – GRI index139

GRI 1 used

GRI 1: Foundation 2021

GRI 1-07 Publication of GRI list

Appendix D

GRI 2: General disclosures

The organization and its reporting practices

GRI 2-1

Organizational details

2.3, 2.7, 2.6

Sava Re

GRI 2-2

Entities included in the organization’s sustainability reporting

2.5, 2.6, 2.7, 13, 16.2

Sava Insurance Group

GRI 2-3

Reporting period, frequency and contact point

2.3, 13

Sava Insurance Group

GRI 2-4

Restatements of information

Sava Insurance Group. The report does not include corrected statements.

GRI 2-5

External assurance

Activities and workers

GRI 2-6

Activities, value chain and other business relationships

2.5, 2.7, 2.8, 7, 15.2, 16.2, 13

Sava Insurance Group

GRI 2-7

Employees

9, 9.4

Sava Insurance Group

Governance

GRI 2-9

Governance structure and composition

2.7, 5.3, 9.4

Sava Insurance Group

GRI 2-10

Nomination and selection of the highest governance body

Sava Re

GRI 2-12

Role of the highest governance body in overseeing the management of impacts

Sava Insurance Group

GRI 2-13

Delegation of responsibility for managing impacts

Sava Insurance Group

GRI 2-14

Role of the highest governance body in overseeing the management of impacts

Sava Insurance Group

GRI 2-15

Conflicts of interest

Sava Insurance Group

GRI 2-17

Collective knowledge of the highest governance body

GRI 2-18

Evaluation of the performance of the highest governance body

Sava Insurance Group

GRI 2-19

Remuneration policies

5.2.2

Sava Re

GRI 2-20

Process to determine remuneration

5.2.2

Sava Re

Strategy, policies and practices

GRI 2-22

Statement on sustainable development strategy

Sava Re

GRI 2-23

Policy commitments

5, 6.1, 10, 13

Sava Insurance Group

GRI 2-27

Compliance with laws and regulations

Sava Insurance Group

GRI 2-28

Membership associations

Sava Re

GRI 2-29

Approach to stakeholder engagement

3.1, 13

Sava Insurance Group

GRI 2-30

Collective bargaining agreements

9.4

Sava Insurance Group

Stakeholder engagement

GRI 2-29

Approach to stakeholder engagement

3.1, 13

Sava Insurance Group

GRI 2-30

Collective bargaining agreements

GRI 3: Material Topics 2021

Disclosures on material topics

GRI 3-3

Management of material topics

5.4, 5.7, 6.4, 9, 10 13, 16.5

Sava Insurance Group

GRI 3-1

Process to determine material topics

Sava Insurance Group. The materiality matrix has been prepared in cooperation with the stakeholders of the Sava Insurance Group.

GRI 3-2

List of material topics

Sava Insurance Group

ECONOMIC IMPACTS

GRI 201: Economic performance

GRI 3-3

Management of material topics

5.4, 6.2, 9, 13

Sava Insurance Group

201-01

Direct economic value generated and distributed

6.2, 13

Sava Insurance Group

139 GRI 1-07.

401

GRI 1 used

GRI 1: Foundation 2021

201-02

Financial implications and other risks and opportunities due to climate change

8.1, 8.2, 13

Sava Insurance Group

201-03

Defined benefit plan obligations

Sava Insurance Group

201-04

Financial assistance received from government

5.6, 13

Sava Insurance Group

GRI 202: Market presence

GRI 3-3

Management of material topics

Sava Insurance Group

202-02

Proportion of senior management hired from the local community

2.7, 5.3.4

Sava Insurance Group

GRI 203: Indirect economic impacts

GRI 3-3

Management of material topics

Sava Insurance Group

203-01

Infrastructure investments and services supported

Sava Insurance Group

203-02

Major indirect economic impacts

Sava Insurance Group

GRI 204: Procurement practices

GRI 3-3

Management of material topics

Sava Insurance Group

204-01

Proportion of spending on local suppliers

Sava Insurance Group. Proportion not disclosed.

GRI 205: Prevention of corruption

GRI 3-3

Management of material topics

Sava Insurance Group

205-01

Operations assessed for risks related to corruption

Sava Insurance Group

205-03

Confirmed incidents of corruption and actions taken

Sava Insurance Group

GRI 207: Tax

207

Tax

Sava Insurance Group

ENVIRONMENTAL STANDARDS

GRI 302: Energy

GRI 3-3

Management of material topics

Sava Insurance Group

302-01

Energy consumption within the organization

Sava Insurance Group

GRI 305: Emissions

GRI 3-3

Management of material topics

Sava Insurance Group

305-01

direct GHG emissions

Sava Insurance Group

305-02

indirect GHG emissions

Sava Insurance Group

305-03

other indirect GHG emissions

Sava Insurance Group

GRI 306: Effluents and waste

GRI 3-3

Management of material topics

Sava Insurance Group

306-02

Waste by type and disposal method

Sava Insurance Group

GRI 308: Supplier environmental assessment

GRI 3-3

Management of material topics

Sava Insurance Group

308-01

New suppliers that were screened using environmental criteria

Sava Re. Proportion not disclosed.

SOCIAL IMPACTS

GRI 401: Recruitment

GRI 3-3

Management of material topics

Sava Insurance Group

401-01

Employment and fluctuation

Sava Insurance Group

401-02

Work-related injuries

9.4

401-03

Parental leave

9.4

GRI 403: Health and safety at work

GRI 3-3

Management of material topics

Sava Insurance Group

403-01

Occupational health and safety management system

Sava Insurance Group

403-02

Lost days

9.4

Sava Insurance Group

GRI 404: Education and training

GRI 3-3

Management of material topics

9.5

Sava Insurance Group

404-01

Average hours of training per year per employee

9.5, 9.6

Sava Insurance Group

404-03

Percentage of employees receiving regular performance and career development reviews

9.6

Sava Insurance Group

GRI 405: Diversity and equal opportunities

GRI 3-3

Management of material topics

Sava Insurance Group

405-01

Diversity of governance bodies and employees

5.3, 9.4, 13

Sava Insurance Group

402

GRI 1 used

GRI 1: Foundation 2021

405-02

Basic salary factor of women is the same as that of men in all employee categories

9.4

Sava Re

GRI 413: Local communities

GRI 3-3

Management of material topics

Sava Insurance Group

413-01

Operations with local community engagement, impact assessments, and development programs

9.6, 13

Sava Insurance Group

GRI 414: Assessment of supplier in terms of impact on society

GRI 3-3

Management of material topics

Sava Insurance Group

414-01

New suppliers that were screened using social criteria

Sava Insurance Group

GRI 415: Contributions to political parties

405-01

Contributions to political parties

Sava Insurance Group

GRI 417: Marketing and labelling

GRI 3-3

Management of material topics

Sava Insurance Group

417-01

Requirements for product and service information and labelling

Sava Insurance Group

GRI 419: Compliance

GRI 3-3

Management of material topics

Sava Insurance Group

GRI 2-27

Compliance with laws and regulations

Sava Insurance Group

403

Appendix C – Disclosures required by Disclosures Delegated Regulation 2021/2178

Sava Insurance Group

Additional, complementary disclosures: breakdown of denominator of the KPI

Sava Insurance Group

The percentage of derivatives relative to total assets covered by the KPI:

The value in monetary amounts of derivatives:

0.01%

81,019

The proportion of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

32.46%

432,115,097

For financial undertakings:

7.00%

93,147,414

The proportion of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

31.77%

422,952,649

For financial undertakings:

6.28%

83,557,954

The proportion of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

16.61%

221,050,822

For financial undertakings:

8.14%

108,328,136

The proportion of exposures to other counterparties over total assets covered by the KPI:

Value of exposures to other counterparties:

35.80%

476,566,883

The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities:

Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities:

8.07%

107,450,260

The value of all the investments that are funding economic activities that are not Taxonomy-eligible relative to the value of total assets covered by the KPI:

Value of all the investments that are funding economic activities that are not Taxonomy-eligible:

28.51%

379,497,374

The value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned relative to the value of total assets covered by the KPI:

Value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned:

13.63%

181,393,036

404

Additional, complementary disclosures: breakdown of numerator of the KPI

Sava Insurance Group

The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

Turnover-based:

1.57%

20,940,563

Capital expenditures-based:

2.87%

38,223,676

For financial undertakings:

Turnover-based:

0.00%

25,061

Capital expenditures-based:

0.00%

15,265

Turnover-based:

85.61%

17,948,718

Capital expenditures-based:

76.80%

29,367,153

The proportion of Taxonomy-aligned exposures to other counterparties in over total assets covered by the KPI:

Value of Taxonomy-aligned exposures to other counterparties over total assets covered by the KPI:

Turnover-based:

0.00

Capital expenditures-based:

0.00

Breakdown of the numerator of the KPI per environmental objective

Sava Insurance Group

(1) Climate change mitigation

Turnover:

92.76%

Capital expenditures:

96.46%

Transitional activities

Turnover:

8.53%

Capital expenditures:

4.66%

Enabling activities

Turnover:

0.00%

Capital expenditures:

0.00%

(2) Climate change adaptation

Turnover:

0.75%

Capital expenditures:

0.37%

Enabling activities

Turnover:

0.00%

Capital expenditures:

0.00%

405

Sava Re

Additional, complementary disclosures: breakdown of denominator of the KPI

Sava Re

The percentage of derivatives relative to total assets covered by the KPI:

The value in monetary amounts of derivatives:

0.02%

24,886

The proportion of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

14.79%

21,385,441

For financial undertakings:

3.25%

4,698,321

The proportion of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

13.74%

19,873,297

For financial undertakings:

1.96%

2,841,908

The proportion of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

13.24%

19,149,915

For financial undertakings:

21.68%

31,355,237

The proportion of exposures to other counterparties over total assets covered by the KPI:

Value of exposures to other counterparties:

47.05%

68,045,680

12.03%

17,404,067

The value of all the investments that are funding economic activities that are not Taxonomy-eligible relative to the value of total assets covered by the KPI:

Value of all the investments that are funding economic activities that are not Taxonomy-eligible:

24.12%

34,882,288

The value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned relative to the value of total assets covered by the KPI:

Value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned:

7.06%

10,204,781

406

Additional, complementary disclosures: breakdown of numerator of the KPI

Sava Re

The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings:

Turnover-based:

3.36%

4,866,905

Capital expenditures-based:

5.34%

7,717,797

For financial undertakings:

Turnover-based:

0.00%

606

Capital expenditures-based:

0.00%

255

Turnover-based:

100%

4,867,511

Capital expenditures-based:

100%

7,718,052

The proportion of Taxonomy-aligned exposures to other counterparties in over total assets covered by the KPI:

Value of Taxonomy-aligned exposures to other counterparties over total assets covered by the KPI:

Turnover-based:

Capital expenditures-based:

Breakdown of the numerator of the KPI per environmental objective

Sava Re

(1) Climate change mitigation

Turnover:

99.32%

Capital expenditures:

99.85%

Transitional activities

Turnover:

7.67%

Capital expenditures:

2.45%

Enabling activities

Turnover:

0.00%

Capital expenditures:

0.00%

(2) Climate change adaptation

Turnover:

0.00%

Capital expenditures:

0.03%

Enabling activities

Turnover:

0.00%

Capital expenditures:

0.00%

407

Appendix D – Disclosures required by Disclosures Delegated Regulation 2021/2178 (non-life insurance and reinsurance)

Substantial contribution to climate change adaptation

DNSH (Do No Significant Harm)

Economic activities (1)

Absolute premiums, year t (2)

Proportion of premiums, year t (3)

Proportion of premiums, year t – 1 (4)

Climate change mitigation (5)

Water and marine resources (6)

Circular economy (7)

Pollution (8)

Biodiversity and ecosystems (9)

Minimum safeguards (10)

Currency

Y/N

A.1 Non-life insurance and reinsurance underwriting Taxonomy-aligned activities (environmentally sustainable)

484,097,150

69.54%

91.60%

A.1.1. Of which reinsured

93,201,092

13.39%

0.00%

A.1.2. Of which stemming from reinsurance activity

63,110,317

9.07%

0.00%

A.1.2.1. Of which reinsured (retrocession)

11,604,573

1.67%

0.00%

A.2. Non-life insurance and reinsurance underwriting Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

4,162,083

0.60%

0.40%

B. Non-life insurance and reinsurance underwriting Taxonomy-non-eligible activities

207,880,902

29.86%

8.00%

Total (A.1 + A.2 + B)

696,140,135

100%

100.00%

408

Appendix E – Discount rates

The following two tables show the term structures of interest rates for the most important currencies and insurance and reinsurance contract portfolios for the Group and the Company, respectively. These structures are used to calculate the adjustment that reflects the time value of money and financial risks (for the calculation of discount rates).

Time structure of interest rates to be measured under IFRS 17 for non-life and life insurance without a savings component, using the BBA and PAA methods

Time structure of interest rates to be measured under IFRS 17 for life insurance with a savings component, using the BBA and VFA methods

Currency

EUR

USD

MKD

RSD

Currency

EUR

RSD

Measurement date / year

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

Measurement date / year

31 December 2023

31 December 2022

31 December 2023

31 December 2022

3.54%

3.49%

4.91%

5.26%

3.54%

3.49%

5.84%

5.94%

3.64%

3.65%

6.16%

6.34%

2.99%

3.63%

4.32%

4.86%

2.99%

3.63%

5.93%

6.78%

3.14%

3.79%

6.37%

7.26%

2.80%

3.55%

4.00%

4.54%

2.80%

3.55%

6.31%

7.53%

2.97%

3.73%

6.84%

8.11%

2.74%

3.52%

3.85%

4.39%

2.74%

3.52%

6.61%

8.05%

2.93%

3.71%

7.19%

8.70%

2.73%

3.52%

3.78%

4.32%

2.73%

3.52%

6.83%

8.26%

2.93%

3.72%

7.44%

8.93%

2.74%

3.50%

3.76%

4.23%

2.74%

3.50%

7.05%

8.36%

2.95%

3.70%

7.69%

9.05%

2.76%

3.48%

3.77%

4.21%

2.76%

3.48%

7.28%

8.42%

2.97%

3.69%

7.95%

9.12%

2.78%

3.49%

3.78%

4.19%

2.78%

3.49%

7.50%

8.48%

3.00%

3.69%

8.19%

9.19%

2.81%

3.49%

3.81%

4.19%

2.81%

3.49%

7.66%

8.54%

3.03%

3.70%

8.36%

9.26%

2.84%

3.52%

3.84%

4.26%

2.84%

3.52%

7.78%

8.62%

3.06%

3.73%

8.50%

9.34%

2.92%

3.44%

3.96%

4.28%

2.92%

3.44%

7.83%

8.51%

3.15%

3.66%

8.53%

9.20%

2.87%

3.19%

3.99%

4.21%

2.87%

3.19%

7.51%

8.07%

3.10%

3.41%

8.13%

8.68%

2.88%

3.10%

3.89%

3.98%

2.88%

3.10%

7.13%

7.60%

3.10%

3.30%

7.67%

8.13%

2.92%

3.09%

3.81%

2.92%

3.09%

6.79%

7.19%

3.12%

3.27%

7.25%

7.65%

2.97%

3.10%

3.76%

3.61%

2.97%

3.10%

6.50%

6.85%

3.15%

3.27%

6.90%

7.24%

3.02%

3.13%

3.72%

3.43%

3.02%

3.13%

6.27%

6.57%

3.17%

3.27%

6.62%

6.92%

3.06%

3.16%

3.70%

3.31%

3.06%

3.16%

6.07%

6.34%

3.20%

3.29%

6.39%

6.65%

3.09%

3.18%

3.67%

3.26%

3.09%

3.18%

5.92%

6.16%

3.22%

3.30%

6.20%

6.44%

Time structure of interest rates to be measured under IFRS 17 for the reinsurance assumed and ceded, using the BBA and PAA methods

Currency

EUR

USD

KRW

CNY

INR

Measurement date / year

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

31 December 2023

31 December 2022

3.54%

3.49%

4.91%

5.26%

3.69%

4.43%

1.73%

2.15%

8.25%

8.05%

2.99%

3.63%

4.32%

4.86%

3.59%

4.22%

2.06%

2.37%

8.52%

8.27%

2.80%

3.55%

4.00%

4.54%

3.50%

4.13%

2.29%

2.64%

8.62%

8.48%

2.74%

3.52%

3.85%

4.39%

3.50%

4.08%

2.49%

2.84%

8.69%

8.61%

2.73%

3.52%

3.78%

4.32%

3.48%

4.02%

2.65%

2.99%

8.73%

8.69%

2.74%

3.50%

3.76%

4.23%

3.47%

3.98%

2.75%

3.11%

8.77%

8.75%

2.76%

3.48%

3.77%

4.21%

3.47%

3.96%

2.82%

3.21%

8.82%

8.79%

2.78%

3.49%

3.78%

4.19%

3.48%

3.95%

2.89%

3.29%

8.87%

8.83%

2.81%

3.49%

3.81%

4.19%

3.49%

3.94%

2.94%

3.37%

8.93%

8.87%

2.84%

3.52%

3.84%

4.26%

3.49%

3.92%

3.00%

3.43%

8.97%

8.90%

2.92%

3.44%

3.96%

4.28%

3.47%

3.76%

3.26%

3.66%

8.80%

8.72%

2.87%

3.19%

3.99%

4.21%

3.50%

3.68%

3.46%

3.80%

8.42%

8.34%

2.88%

3.10%

3.89%

3.98%

3.52%

3.65%

3.61%

3.91%

8.03%

7.97%

2.92%

3.09%

3.81%

3.52%

3.63%

3.72%

3.99%

7.70%

7.65%

2.97%

3.10%

3.76%

3.61%

3.52%

3.61%

3.82%

4.05%

7.43%

7.38%

3.02%

3.13%

3.72%

3.43%

3.52%

3.60%

3.89%

4.10%

7.21%

7.17%

3.06%

3.16%

3.70%

3.31%

3.52%

3.58%

3.96%

4.14%

7.03%

6.99%

3.09%

3.18%

3.67%

3.26%

3.51%

3.57%

4.01%

4.17%

6.88%

6.84%

409

Appendix F – Fund assets not included in the consolidated financial statements of the Sava Insurance Group

Name and type of fund

Sava Insurance Group company managing the fund

Net asset value as at 31 December 2023

Infond Umbrella Fund

Sava Infond, Družba za Upravljanje d.o.o.

628,604,240

Infond Dividendni, equity sub-fund of developed markets

Sava Infond, Družba za Upravljanje d.o.o.

9,279,123

Infond Družbeno Odgovorni, equity sub-fund of developed markets

Sava Infond, Družba za Upravljanje d.o.o.

22,158,465

Infond Evropa, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

11,102,974

Infond Globalni Defenzivni, mixed sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

30,941,939

Infond Globalni Delniški, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

65,297,706

Infond Globalni Fleksibilni, mixed flexible subfund

Sava Infond, Družba za Upravljanje d.o.o.

20,611,534

Infond Globalni Uravnoteženi, mixed sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

75,748,265

Infond Kitajska, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

3,091,732

Infond Kratkoročne Obveznice – EUR, bond sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

26,155,268

Infond Megatrendi, equity sub-fund of developed markets

Sava Infond, Družba za Upravljanje d.o.o.

2,650,642

Infond Naložbeni Cilj 2040, target date fund

Sava Infond, Družba za Upravljanje d.o.o.

3,892,070

Infond Obvezniški – EUR, bond sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

8,502,518

Infond Razviti trgi, equity sub-fund of developed markets

Sava Infond, Družba za Upravljanje d.o.o.

95,102,387

Infond Select, equity sub-fund of developed markets

Sava Infond, Družba za Upravljanje d.o.o.

17,419,170

Infond Surovine in Energija, bond sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

10,651,108

Infond Tehnologija, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

145,396,112

Infond Trgi v Razvoju, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

28,602,571

Infond ZDA, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

15,029,303

Infond Zdravstvo, equity sub-fund

Sava Infond, Družba za Upravljanje d.o.o.

36,971,353

Sava Penziski Fond Mandatory Fund

Sava Penzisko Društvo a.d.

966,588,349

Sava Penzija Plus Voluntary Fund

Sava Penzisko Društvo a.d.

28,628,715