Business operations

Business Performance in 2003 - Key Events

	Gross premium written in the amount of nearly SIT 38 billion.
	Allocation of profits to the account of life insurance policyholders in the amount of SIT 1.5 billion, representing a 91 percent increase over the previous year.
	Profit amounting to SIT 2.2 billion.
	Increase in balance sheet total by 18 percent.
	Increase in gross premium written by 12.2 percent.
	Increase in the amount of net technical provisions by 16 percent.
	Increase in investments of assets covering mathematical provisions and assets covering technical provisions by 21 percent.
	An improved approach to paying out damages and preventing insurance fraud resulting in the fact that ZM paid out 1 percent less damages than originally planned.
	Keeping the operating expenses at the same level as in 2002 despite the increase in employees by 78 (out of which 46 are insurance agents).
	Positive total underwriting result of property insurance operations despite a 14.7 percent increase in technical provisions.
	An employee engagement survey carried out by Hewitt Associates consulting firm placed ZM to the third place among "best companies to work for" in Slovenia in 2003.
	Among 224 enterprises included in the Reputation 2003 Public Opinion poll  (Kline&Kline 2003) ZM won 32nd place.

Basic directions for 2004

1.      Considering the premium written in 2003, ZM intends to achieve the following in 2004:

	a 10 percent increase in premium written for all insurance classes, which means gross premium written amounting to SIT 41,560 million;
	an 11 percent increase in gross premium written for non-life insurance, which represents gross premium written amounting to SIT 30,152 million;
	a 7 percent increase in total gross premium written for life insurance, and/or gross premium volume amounting to SIT 11,408 million.

In the field of life insurance operations our attention will be focused on:

	selling our products through our own sales channels by insurance agents specialised for selling life insurance products;
	increase in sales of life insurance products as a result of new criteria for assessing efficiency of insurance agents entered into the new collective agreement;
	setting up telemarketing system;
	expansion of the sales activities over the bank switches of the NKBM bank, which has already been granted a licence for selling insurance products;
	the design of new or re-design of the existing life insurance products:

-         life insurance linked to investment funds;

-         life risk insurance;

-         life risk insurance with decreasing sum insured, which is appropriate especially for customers hiring bank loans, since by paying annuities also the principal is decreasing;

2.      In the field of property insurance claims settlement we will focus on maintaining the amount of claims settled at the level from 2003, despite the fact that number of claims is on the increase;

3.      In the field of operating expenses a 24.9 percent share in the gross premium written will be achieved;

The share in comparison to previous years was increasing especially due to the changes of commissions for full-time insurance agents and intensive recruitment of new agents, which is considered by the management bodies as necessary in order to maintain the ZM market share and future business result. In 2004 the stress will be on hiring insurance agents with a licence.

In 2004 the realized profit will amount to SIT 1,753 million, out of which:

	SIT 939 million from non-life insurance operations;
	SIT 814 million from life insurance operations.

The profit will be allocated for settling losses of previous years. The rate of capital return in 2004 will be 16.58 percent.  

Priority will be given to the investments into the building of a new computer centre and improving working conditions at the ZM head office at Cankarjava 3 in Maribor.

In 2004 the project for setting up the controlling system will be completed; the content of the report on the controlling system will be thoroughly analysed, especially the part dealing with the introduction of a balanced system of performance indicators, and the proper place of the controlling in the ZM organisational structure will be determined.

In connection with the controlling system project, in 2004 a mid-term business plan of ZM will be made with the set critical control points, which will enable us to monitor the implementation of the company's strategy.

In the field of education and training, great attention will be paid to training organisers of sales activities with the aim to improve their level of professional knowledge, so that they will be able to provide full support to sales personnel. Also the plan for further developing of soft skills has been prepared.

In the field of public relations services we will introduce the project of "interviews with employees on an annual basis" with the aim to further improve communication among ZM personnel.

Shareholder' equity and shareholders

In 2003 the Government of the Republic of Slovenia passed an act on the end of privatisation of ZM insurance company - non-nominated capital was used for covering the losses of previous years. The ownership structure was not changed. Also the shareholders' equity in the amount of SIT 6,812,050,000 remains the same, and the shares have been entered in the Central Securities Clearing Corporation register.

The shares have a nominal value of SIT 1,000, and the achieved unaudited book value on 31 December 2003 amounted to SIT 1,421.44.

From 1997 to 2003 the balance sheet total increased by 4.2 times and/or by SIT 63.7 billion, namely from SIT 19.7 billion to SIT 83.4 billion. This is mainly due to the vigorous growth of technical provisions.

In 2003 technical provisions already exceeded the gross premium written by 75 percent. This shows significantly fastest growth of technical provisions (480 percent) in comparison to the growth of gross premium written (180 percent).

Claims ratio is the ratio between gross claims paid and gross premium written. As shown in the graph, in recent years the claims ratio has improved considerably and in 2003 it amounted to 61 percent.

Especially due to the intensive extension of the network of ZM agents in Slovenia, the number of employees in the period from 1997 to 2004 was increasing faster (145 percent) than the gross premium written per employee (121 percent).