Ljubljana, 07 June (STA) - The chairman of Zavarovalnica Triglav Matjaz Rakovec has told the STA that Slovenia's no. 1 insurance company could do with a capital increase even though it does not have problems with capital adequacy. Making Triglav a Slovenian flagship $requires looking far ahead$, he said, announcing expansion plans and a possible listing abroad.
Commenting on Triglav's 26% year-on-year increase in first quarter profit, Rakovec said that this did not mean the crisis was over.
He pointed to the trend of people terminating their life insurance schemes prematurely, but on the other hand also to a growth trend in company insurance. "Thus production is picking up."
All in all, Rakovec is upbeat about future prospects, revealing that two months ago the management had established it can set itself higher targets than those outlined in last year's strategy by 2013.
"We are extending the strategy period until 2015 and increasing the profit rate from 10% to at least 12%." He also confirmed that Triglav plans to preserve its leading 35% share on the Slovenian market.
The CEO announced a substantial improvement in results: in 2011 he expects a doubling of the EUR 27m profit from 2010, while shareholders can look forward to get dividends in the coming years.
While Rakovec remained tight-lipped about plans for expansion abroad, noting that "all the targets we have in mind are a well-kept secret", he did elaborate on Triglav's expected capital rise.
He confirmed that on 21 June the shareholders would vote on using retained earnings to increase share capital by EUR 50m to EUR 73.7m.
They will also vote on the five-year authorisation to the management for a 15% recapitalisation given three years ago, after the state-owned Capital Assets Management Agency (AKUN) said it would revoke it.
Disagreeing with the AUKN's view, Rakovec said that turbulent times required such a tool. "If the situation for instance deteriorates, if the interest rate drastically deteriorates, in case of inflation and recession, insurance companies need fresh capital."
It is meanwhile a different matter if this institute is then actually used, although "given the wishes for a further expansion of Triglav and stronger capital stability, this intention of course exists".
"We want to expand above all in areas where we are already present. We, as well as foreigners assess that the potential on these markets is big, which is why we need a certain amount of capital."
A capital rise is also demanded by Triglav's A credit rating, "the best among all financial institutions in Slovenia". "According to Standard & Poor's, we actually need additional capital if we wish to preserve this rating."
On the other hand, Rakovec stressed that the existing scope of Triglav's operations does not require additional capital. However, making Triglav "the strongest financial institution under the brand name of Slovenia requires looking far ahead".
Again, Rakovec said he could not speak about concrete expansion plans, noting that "potential investors understand that, while we are also trying to make this clear to the Capital Assets Management Agency".
Triglav's boss moreover confirmed the company was considering listing on a foreign stock exchange, possibly in Warsaw. "If we assess that a listing on a stock exchange abroad means added value for shareholders, we will launch it."
Triglav is also conducting proceedings to become part of the Ljubljana Stock Exchange prime market. "Given the goals of Ljubljanska borza this means a direct inclusion in the Vienna Stock Exchange."
Rakovec moreover commented favourably on Triglav being one of the strategic investments of the state as outlined in the government's strategy for the financial sector. The management "wishes a strong ownership in any kind of form...It is good that we have the support of the main owner".
As regards the announced sale of Zavarovalnica Triglav's 25.61% stake in Abanka, Slovenia's third biggest bank, Rakovec said that Triglav would not sell at any price. However, as other owners have expressed strong interest in selling, "we feel that we can achieve the best possible price together".