AM Best affirms "A" credit ratings with a stable medium-term outlook
Following its regular annual revision, the AM Best credit rating agency (hereinafter: the agency) re-affirmed the Financial Strength Rating of "A" (Excellent) and the Long-Term Issuer Credit Ratings of "a" (Excellent) of Zavarovalnica Triglav and Pozavarovalnica Triglav Re. All individual elements of the ratings are at the same level as last year. Both credit ratings have a stable medium-term outlook.
The agency again assessed Triglav's balance sheet as very strong and its operating performance as strong. The impact of both the business profile and the state's majority holding on the Company's credit rating was assessed as neutral. The agency considers Triglav's enterprise risk management to be developed and appropriate for the Company's risk profile and operational scope. In affirming the high rating of Pozavarovalnica Triglav Re, the agency factored in its strategic importance to the Triglav Group, together with its strong integration into the Group.
Triglav's very strong balance sheet is underpinned by its risk-adjusted capitalisation at the strongest level. The assessment also considers the Group's prudent reserving and good financial flexibility, with access to equity and debt markets. The agency notes that Triglav has steadily reduced its exposure to products with guarantees in its life insurance portfolio in recent years and that their impact is also mitigated by increased investment yield, driven by the rise in interest rates.
The Group's strong operating performance over the years has been driven by excellent non-life technical earnings in the domestic market and by healthy investment income. As the market leader in Slovenia and the wider region, Triglav effectively leverages the benefits of economies of scale and a well-diversified product portfolio. AM Best expects the Triglav Group's full-year results to be impacted by loss in the health insurance segment driven by a price cap on supplemental health insurance in Slovenia and natural catastrophe events (particularly the floods in Slovenia); however, these losses are expected to be within the Group's risk tolerances.