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page 28 <strong>SEE</strong> TOP <strong>100</strong> Insurers Interview: Slovenian Insurer Triglav Sees Upside in Unfavourable <strong>SEE</strong> Demographics, Underserved Market By Georgi Georgiev (<strong>SeeNews</strong>) Slovenian insurance company Triglav (www.triglav.si), which also is active in reinsurance, pension insurance, wealth management and bancassurance, reported a consolidated pre-tax profit of 2.1 million euro last year on consolidated gross insurance and co-insurance premium income of 1.022 billion euro. Across the <strong>SEE</strong> region, Triglav has units in Croatia, Bosnia and Herzegovina, Serbia, Montenegro and Macedonia. The Slovenian government, through several state-owned funds, owned 62.53% of Triglav as of December 31, 2009. Igor Stebernak, member of the managing board of insurer Triglav Q: How did the Slovenian insurance sector perform in 2009 and what is your outlook for 2010, judging from the market trends in Q1? A: The major factors that influenced last year’s performance of the insurance companies present in the Slovenian insurance market were the extensive weather-related damages and the economic and financial crisis. Due to the expected continuation of last year’s trends, Zavarovalnica Triglav has adopted a series of measures to mitigate the negative impacts of the financial crisis on the operating results, such as streamlining of costs, especially those not directly related to insurance acquisition. Q: In February, Triglav forecast it will collect 1.04 billion euro in consolidated gross premiums this year. Are you sticking to this estimate? A: The financial plans for the end of this year have not been altered; therefore, the forecast remains the same. Q: What do you perceive to be the biggest risk to insurance growth in Slovenia going forward? A: The increase in insurance volume largely To see the full-length interview, go to www.top<strong>100</strong>.seenews.com 28 <strong>SEE</strong> TOP <strong>100</strong> Insurers depends on the general economic and social conditions. The financial and economic crisis also impacts the insurance business after a certain delay. The combined fallout from the economic slowdown, the drop in export and import activities and job uncertainty has undercut demand for insurance products and, with that, the amount of insurance premiums. At the same time, the global financial crisis on the capital markets had a negative impact on the value of some of the investments, which represent a large share of the insurers’ assets. Q: What are the challenges facing the pension insurance market in Slovenia? How is Triglav positioned on this segment and what is your growth strategy? A: Slovenia is no exception when it comes to the unfavourable demographic trends that are putting a strain on pension schemes across the EU. To ensure adequately high and safe retirement allowances that can be maintained from the public and the financial point of view, the existing pension system must undergo some changes. At the moment, the Slovenian Pension and Disability Insurance Act has reduced the rights stemming from the compulsory pension insurance and restricted conditions for retirement. The second pillar of pension insurance, which will stimulate the population to make supplementary savings for future retirement allowances, was also introduced. According to the above-mentioned problems of the Slovenian pensions scheme, a new proposal for the amendments of the Pension and Disability Insurance Act, which will further restrict conditions for retirement and foresees lower retirement allowances within the compulsory pension insurance – raising of the retirement age, reduction of pension rating base for calculation of old-age pension, is currently under public debate. This is foreseen to enter into force in the beginning of 2011. Retirees can no longer count only on their income provided by compulsory schemes and, going forward, people that retire will receive the majority of their income from other sources like pension annuity and life insurance. Therefore the current demographics, however, represent a big opportunity for financial institutions, especially for life insurance companies and pension fund providers. Q: Triglav has signed a letter of intent to acquire Albanian peer Albsig and earlier this year said it was buying a 9.9% stake in the company. Could you provide an update on the process? In late 2009, Triglav said it also planned to enter Kosovo. Could you provide a tentative timeframe for your market entry there? A: The penetration into the Albanian insurance market is being examined through the purchase of a minority equity stake in Albsig, one of the smaller Albanian insurance companies. The time and the method of entering the Kosovo insurance market have not yet been finalised and partially depend on the success of the project in Albania. In all <strong>SEE</strong> and Balkan markets where insurance activity is less developed – Kosovo and Albania included, there are many opportunities for growth and development, especially in the long term. As far as potential goes, there is still a vast area for premium growth in the field of life and property insurance, as well as health and pensions insurance.