BUSINESS OPERATIONS

The Company continued to implement its strategy, set in the medium-term business plan. Following the merger of Zavarovalnica Maribor with Tilia into Zavarovalnica Sava, AS became the third largest insurer on the Slovene market with a 15.1% market share, which increased by 0.1 percentage point over the corresponding period of the previous year. Premium growth was recorded in all three business segments, the highest in the life and pension insurance segments (including pension funds inflows of 6.6%). Non-life insurance excluding health insurance saw a 2% growth. In health insurance, the Company managed to stop the downward trend in complementary health insurance; supplementary health insurance added most to the growth in this segment. 
 
With EUR 11.9 million of net profit in 2016, the Company maintains a high profitability of its operations, achieving the return on equity (ROE) of 12.1% in 2016. 
 
In accordance with Solvency II methodology, the Company maintains excess capital adequacy, which was further improved by issuing subordinated debt in the first half of 2016, when it issued bonds with a total nominal value of EUR 50 million based on an offer to issue securities that was addressed to well-informed investors. The bonds are classified into the multilateral trading facility (MTF) of the Irish Stock Exchange's Global Exchange Market (GEM). The raised funds were used to strengthen the capital adequacy and purchase the shareholdings in KD Skladi. In this way, the Group pursues its strategy to become one of the leading insurance groups based on core insurance business with an additional offering of high-quality asset management and investment products.
 
The Company managed to maintain high financial stability of operations, confirmed by the international rating agency Fitch Ratings, which assigned the Company the "BBB–" insurer financial strength rating. The outlook remains "stable", which shows a strong position on the Slovene insurance market and confirms the appropriate capital adequacy of the Company.
 
In 2016, "Center Zdravje AS" (AS Centre of Health) began its operations, integrating and upgrading the existing assistance services with health services by providing clear and effective solutions to the policyholders' health problems. The Company established its own clinic, which is the first in the future network of own healthcare providers. With their help it will be easier for the Company to achieve distinctive advantages and establish good standards of health services.
 
On foreign markets, the Company succeeded in consolidating the operation of its branch in Croatia. In 2016 it started selling motor vehicle insurance online, in addition to life insurance. The Zagreb Branch began the year with a strong advertising campaign of the Company as a new composite insurer entering the Croatian market and offering new, online sale of motor vehicle insurance. The Branch was quick in establishing the call center to assist clients with taking out motor vehicle insurance. In October 2016, the website www.as-direct.hr counted its thousandth car insurance policy.
 
By the end of 2015, the AS Group sold non-life insurance in Serbia, but in 2016 it decided to exit the Serbian insurance market. With the authorisation of the National Bank of Serbia, it transferred the insurance portfolio of the non-life insurer AS neživotno osiguranje to another Serbian insurer. At the end of May, the voluntary liquidation procedure of AS neživotno osiguranje commenced and is not yet concluded.