S&P Global Ratings, a credit rating agency known for assessing credit risk and financial strength across markets, upgraded Sava Re Group and its core subsidiary Zavarovalnica Sava from ‘A’ to ‘A+’ on both their long-term issuer credit and financial strength ratings.
The move follows S&P Global’s earlier decision on June 6, 2025, to raise Slovenia’s sovereign credit rating to ‘AA’, which S&P attributes to consistent fiscal management and relatively stable economic conditions.
According to S&P Global, Sava Re is considered a government-related entity (GRE), given its operational importance within Slovenia and a history of close ties to the state.
As such, the insurer benefits from the government’s improved credit standing. While the group’s stand-alone credit profile remains unchanged at ‘a’, S&P Global added a one-notch uplift based on Slovenia’s enhanced credit quality and the assumption that the state would likely provide support if necessary.
In its assessment, S&P Global acknowledged that Sava Re has demonstrated stable operating performance through 2024 and into early 2025.
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The group’s combined ratio—a key profitability metric in insurance—improved from 91.3% at the end of 2024 to 83.7% in the first quarter of 2025. This improvement is attributed to timely repricing efforts across its insurance and reinsurance portfolios, though S&P Global notes this also reflects a favourable pricing cycle, not just internal performance factors.
The group’s return on equity stood at 14.2% in 2024 and increased to 17.2% in the first quarter of 2025. While these results are positive, S&P Global noted they are broadly in line with what is expected for similar insurers in the region, rather than markedly exceeding peers.
Projections for 2025–2027 suggest a return to more moderate ROE levels between 11% and 14%, consistent with Sava’s internal forecasts and not necessarily indicative of outperformance.
Sava Re’s premium growth exceeded €1 billion in gross written premiums in 2024, reflecting a 13.5% increase. However, S&P Global clarified that much of this growth resulted from price increases rather than significant expansion of its client base or service offerings.
In the first quarter of 2025, business growth slowed to 6.8%, signaling a return to more modest levels after several years of upward repricing. The agency expects future growth to be moderate, supported mainly by the underlying economic conditions in Slovenia rather than major shifts in market position or international scale.
S&P Global continues to view the group’s capital position as a relative strength. Regulatory solvency ratios ranged between 211% and 217% at the end of Q1 2025, comfortably exceeding minimum requirements.
The group’s capital adequacy is expected to remain above the 99.99% confidence level under S&P Global’s insurance capital model, aided by solid profits and a cautious dividend strategy.
The issuance of €50 million in hybrid capital during the second half of 2024 also contributed to maintaining sufficient capital buffers, although this was not seen as a transformative step.
Despite these improvements, S&P Global’s decision to assign a stable outlook—rather than a more favorable one—reflects ongoing limitations.
These include Sava Re’s narrow geographic footprint and concentration in Slovenia, which reduces resilience to external shocks or regional disruptions.
S&P Global does not expect a further upgrade in the next 12 to 24 months unless the group significantly expands its international reach or materially diversifies its earnings base, which is not anticipated in the current forecast.
On the downside, S&P Global considers the likelihood of a downgrade as low but possible if Slovenia’s sovereign rating were revised downward, or if Sava Re’s capital adequacy declined significantly and for a sustained period. A shift in the group’s business model or ownership structure that increases risk exposure could also prompt negative rating action.
In its rating analysis, S&P Global continues to score Sava Re’s business risk profile as strong and its financial risk profile as very strong.
Risk exposure is assessed as moderately low, and liquidity as exceptional. The group benefits from one notch of uplift due to government support, leading to the current credit rating of ‘A+’ with a stable outlook.
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