Similar to the aftermath of the terrorist attack on the twins in New York on 11 September 2001 and the hurricanes Katarina, Rita and Wilma in 2005, the period from 2007 to 2009 which saw one of the most severe financial crisis ever experienced by mankind left the insurance/reinsurance industry almost unharmed. The industry remained profitable, and its financial strength increased.
Now, at the end of the first decade of the third millennium, the insurance industry finds itself in a very intriguing position.
In many ways, 2010 will be remembered as a year which was supposed to give more. Although the conditions for a drastic change in the market were met, studies show that this did not happen. Twelve months ago, a moderate optimism prevailed, the insurance industry's capital increased, premium rates reached the bottom, and worldwide it was thought that only a large event such as a catastrophe could trigger changes in the market conditions and return the prices to an upward trend.
When we look at the losses caused by nature catastrophes, Mother Nature made the first six months of 2010 the costliest first six months ever. In this period, claims paid reached a historic high of 22 billion USD. Yet, the market did not turn. The capital remained sufficiently strong, and premium rates continued to plummet. Weakened investment returns triggered lower profits, yet some profit was still made. While other segments of financial industry healed their wounds caused by the financial crisis, insurers proudly produced their immaculate balance sheets. It is sad, however, that insurance industry will be punished in future, because it follows suit as the banking sector on new solvency rules. Now is the time when Solvency II introduces new challenges for both regulators and the industry. Due to a very stringent regulatory framework in Croatia and a highly extensive and effective supervision by the Croatian Financial Services Supervisory Agency, or HANFA, insurers in Croatia are more conservative in their business operations, which has sheltered them (us) from the dramatic storm of the financial crisis.
It was hoped that the market would experience a turn in the second half of 2010 as a result of a more active hurricane season. But, this did not happen either. Although the number of hurricanes exceeded the average, hurricanes did not cause losses in the territory of the United States. As a result, the insurance industry enters 2011 in almost unchanged positions as they were twelve months ago. Some analysts see a parallel with the situation ten years ago, when the industry started 2001 after a several months long weakening of conditions.
It is questionable whether the current cycle sank as deeply as the cycle at the beginning of 2001. It seems that the year 2011 will have to give an answer to this question very quickly.
We in Croatia expect that our accession negotiations to the European Union (EU) will be completed in 2011. The final step of joining will most likely happen in 2012, and this might herald an increased number of direct foreign investments. We also expect regular parliamentary elections to be held at the end of 2011. As the implementation of structural reforms is usually put on hold at the time of elections, activities aimed at enhancing the competitiveness of economy will have to be deferred until the post-election 2012. In the meantime, recovery might be spurred by increased foreign demand, with the growth of domestic economy running at a rate closer to the EU average growth rate by the end of 2011 and into 2012.
The absence of a solid and consistent growth strategy and the resulting accumulation of structural problems are the main determinents of Croatia's further economic decline in 2010. Whereas the majority of countries in the region saw a growth of GDP when conditions improved on a global level, Croatia's GDP steadily decreased into the second quarter of 2010 (-2.5%). At the end of 2010, GDP saw a 1.6% decrease on the same period of 2009. The Croatian government forecasts a 1.5.% growth of GDP in 2011 expecting that the growth will be stimulated by favourable developments in the environment, particularly in the EU. If we adopt a serious approach to reforms, implement measures specified in the government's Economic Recovery Programme without delay and achieve a social consensus on the long-term growth strategy in Croatia, we stand a good chance of initiating a new growth cycle, although the anticipated GDP growth will not be high enough to stabilize the overall economic situation given the current levels of budget deficit and external debt.
In the last quarter of 2010, economic activity slowed, which was contributed to by the growth of unemployment. As a result of this, in conditions of slowly weakening positive impact from foreign demand, the weakened domestic demand continued to discourage manufacturing and bigger investments. A major decline in investments coupled with a weak demand are the trigger factors for a GDP decline. At the end of September 2010, the Croatian government adopted a plan involving 30 investments in the energy, transportation, water management and tourist sectors. This plan could provide a boost for a new investment cycle and for the private sector's investments only under the condition that the overall investment climate improves. 2011 should be a year of a mild economic growth.
In contrast to 2009, when positive seasonal effects on employment did not occur, in July and August 2010 seasonal employment led to a decline in the number of jobless and the unemployment rate when compared to the second quarter of 2010. The unemployment figures, however, show a continued two-digit growth on the same period of 2009. Taking into account the negative developments in the real sector, signs of a recovery in the labour market are still not visible. Negative contributions from the unemployment growth in 2010 were reflected on the state budget, both directly, through weakened incoming contributions and income taxes, and indirectly, through weaker demand and decreased VAT-based resources. As in autumn the unemployment continued to grow due to the absence of positive contributions coming from the seasonal employment, more favourable developments in the real sector were expected only at the beginning of 2011. Stronger positive developments in the labour market are not expected earlier than the second quarter of 2011 and they will be a result of the favourable base effects and increased economic activity. Nevertheless, a labour market recovery will not cure the disequilibrium between labour supply and demand, which drove the unemployment rate relatively high even in the pre-crisis period. At year-end the number of persons unemployed rose to a high of 320,000. The crisis eroded jobs, and the unemployment rate touched 12.5% at year-end. A decline of the unemployment rate to 11% is not expected until 2012. The European Commission forecasts an increase in unemployment benefits which will put an additonal pressure on the already imbalanced budget, but also wages reductions are forecast, „more observable in the public than in the private sector“. Only Croatia's accession to the EU and gradually increased labour mobility could diminish disequilibrium between supply and demand, and, consequently, enhance competi-tiveness of Croatia's economy.
Although the number of tourist arrivals and nights declined in the pre-tourist season when compared to the same period in 2009, volume indicators during the peak tourist season were very good, as expected. This is due to the economic recovery of countries such as Germany, Austria, and Slovenia, from which the majority of tourists originate, and the fact that Croatia is well located relative to these countries, offering still relatively low accomodation prices. Accomodation prices are, however, relatively low because of the quality of accomodation facilities offered, which is one of the impeding factors for tourism growth in Croatia. Although the quality in some types of accomodation, e.g. hotels, is improving, the growth dynamics is much slower than in other competitive countries such as Turkey. Other factors that discourage tourism growth in Croatia are seasonality, modest supply, the absence of skilled workforce and incomplete privatization. Tourism revenues in 2010 are expected to increase relative to 2009 on account of very good mid-season results, and this will give a positive contribution to lowering the imbalance in the current account. As tourism made a significant impact on the growth of retail trade in July and August and positively contributed to reducing the unemployment, it can be said that the GDP growth in symbolic terms observed in the second half of the year was on the wings of tourism.
Croatia is a specific country also when it comes to tourism. Unlike other tourist countries in Europe, Croatia had an increase of 5.6% in tourist arrivals in 2010 over the previous year. However, only a small share of tourists were domestic tourists, and this is what makes Croatia specific. Foreign guests achieved 86% of arrivals and as high as 91% of nights.
The expectations are that in 2011 the extremely high liquidity in the money market will dwindle, and the lending activity and exports will pick up, which could also take the exchange rate back to its more reasonable higher levels. A negative risk is seen in the potential introduction of a banking tax which still causes uncertainties. We believe that the government will not put this additional burden on some financial institutions, as no real or justified grounds exist for its introduction. The possibility of its introduction, however, is not entirely excluded given the weaknesses of the state budget and a potentially higher exchequer deficit. Over the course of 2011, the average Kuna/Euro exchange rate is expected to hover around 7.40, with no significant volatility. In 2011, the monetary policy will be consistently focused on the stable Kuna/Euro exchange rate. Monetary policy has its own ways of functioning. It may be of help, but any radical exchange rate intervention, or a single devaluation may cause a series of pronounced negative effects and render debt servicing more difficult; or indirectly, it may put at risk the stability of banks and the financial system as a whole. The resulting impact on exports would be insignificant when the exports structure is considered. Depreciation of the Kuna against the Euro would not be of great use because of the high euroization of the domestic economy, in which up to 60% of products and raw materials are imported. Focusing our actions on the reduction of public consumption and labour costs is more important than devaluation. An example for this is the German automobile industry, where reduced labour costs led to an industrial upswing in the post-recession period. The practice has shown that it is almost impossible to keep inflation under control. Inflation rapidly turns into hyperinflation, in which everything loses its value, and it hits hardest people lower on the income scale.
Over the course of 2010, the Kuna fluctuated against the main foreign currencies, the Euro and the Dollar. The Croatian National Bank intervened on several occasions during the year, with an aim to increasing the quantity of foreign currencies in the market. At year-end the Kuna strengthened. The average Kuna/Euro exchange rate decreased by 0.7% on a year level.
In 2010, the average Dollar rate decreased by 5.2% when compared to a year earlier. The Dollar oscillated throughout the year. This was contributed to by the weakening of the Euro against the Kuna and the concurrent weakening of the Dollar against the Euro, as well as by problems facing the euro zone throughout the year.
In the years before the crisis, a high domestic consumption, which was financed by foreign capital due to insufficient savings and relatively cheap borrowing, led to a disequilibrium on the current account. With the outbreak of the global financial crisis, foreign capital became less available and more expensive, which was reflected on a decline in domestic consumption. As imports also weakened, this led to a lower deficit in the current account for goods. Decreased imports and concurrently increased exports made the greatest impact on reducing the current account deficit, which amounted to € 277.3mio as a result at year end, the lowest deficit ever recorded in the country's history. In contrast to positive developments in the current account, developments seen in the financial account were negative. Namely, as risk aversion rose, investors became more cautious, which reflected on a decreased inflow of foreign direct investments.
Reduced capital inflow, decreased demand and high unemployment are the key factors that caused economic decline. In 2010, the priorities of the government were to complete negotiations with the EU, to fight corruption, and to achieve economic recovery.
However, there were no signs of the long-awaited implementation of reforms.
A status quo policy and the absence of structural changes in the public consumption will not lead to a higher equilibrium between expenditure and income. The basic problem of the budget is seen in expenditures for social transfers, subventions and donations, which are viewed as fixed obligations as the standard of living of a large mass of budgetary users depends on them. On the expenditures side, the needed reform of public finances should be focused on the following: the cutting of administrative costs by restructuring and modernization of the central and, more particularly, of the local administration (one paradox: the civil service has a 20% labour shortage, so, in other words, in some administrative bodies there is a labour surplus, while in others a high labour shortage exists), shifting from granting state subventions to bad performing companies and branches to supporting the growth of good performing companies. Further, the focus has to be on dividing the pension insurance from the social welfare system, in the way that the level of retirement pay depends on the person's total contibutions paid without favouring specific classes of pension fund beneficiaries, and that social welfare is provided only to persons in need. Deeper reforms of the health care system are also required, in which all beneficiaries, with the exception of persons under age, would have the same obligations to pay into the system.
Instead of actions taken towards the implementation of reforms, the government announced a new, more than € 13bn worth, investment cycle primarily involving investments in the infrastructure, energy sector, and tourism. All of these investments have long-term rates of return, and some of them will make only one single effect on the budget. Since budget funds are limited, the financial support for the announced investments is expected to come from private investors. On the one hand, in this way, the investment climate will be improved, and private capital stimulated, although this cannot be accomplished over a short-term period, but involves deep and radical changes in the economic system as a whole. On the other hand, domestic funding sources are limited and a possible entry of foreign investors will undoubtedly contribute to the growth of gross external debt.
Unfavourable trends in the Croatian economy, continuing throughout 2010, made an impact on the activities and the financial results of banks. Assets of the banking sector remained unchanged from 2009 due to a continued trend of growth in household deposits. Concurrently, changes observed in household deposits structure, and the downward trend in interest rates coupled with increased losses in credit portfolio led to lower profitability. Profit made by banks in 2010 was by one fifth lower relative to a year earlier. This was, among other things, attributable to higher expenses on provisions. It appears that banks in Croatia and their owners would have to face up the fact that banks will now make less profit than they have made so far. Beside risks in corporate lending, banks will probably be challenged by heightened risks in household lending. This is bound to happen due to the anticipated decline in employment and the loan servicing problems facing small and mid-sized enterprises.
Due to an exchange rate risk incorporated in loans with a currency clause, clients are exposed to changes in their credit liabilities, and, against a backdrop of oscillating loan repayments, it becomes more difficult for banks to plan their liquidity. Banks, therefore, maintain a higher level of liquidity although the financial market is stable. When bank liquidity is steadily kept high, this affects interest rates movements. While 2009 saw a decrease in interest rates on short-term loans in the money market, in 2010, interest rates on long-term loans also decreased.
And are exports of goods in Croatia robust and competitive enough to hold back negative developments and stimulate growth?
According to a survey of the Croatian exports competitiveness, which has been the focus of the National Competitiveness Council for years, exports of goods in Croatia still mainly consist of labour-intensive and resource-intensive economic activities. In addition to this, the restructuring of manufacturing aimed at increasing the production of higher value added goods and stimulating the exports of more knowledge- and technology-intensive goods is very slow. The restructuring becomes even more a priority if the positive corelation is taken into account, between the growth of knowledge- and technology-intensive goods and higher competitiveness, higher growth of exports, increased employment, increased GDP growth rates, and decreased external vulnarability (lower current account deficits, moderate levels of external debt). It comes as a slight disappointment that, despite its good start shown in one comparative study, Croatia runs now neck-and-neck with Romania, Bulgaria, and Southeastern European countries, which it had kept behind so far. Croatia's biggest competitors in the European market are Romania, Bulgaria, and Slovenia. However, with the exception of Slovenia, labour costs are substantially lower in these countries, and in the production of average- or low-quality standardized products, high labour costs can really create a serious problem.
One-sided currency devaluation cannot increase competitiveness. On the contrary, it could lead to highly increased vulnerability of the financial and real sector and additionally harm the already weak purchasing power. Competitiveness can be achieved by deep changes aimed at improving business environment and education system, by investments made in research and growth, by innovations, by encouraging the growth of entrepreneurship and corporations, and, generally, by creating a new economic and more advanced technological infrastructure.
The Croatian economy needs far-reaching and challenging reforms to improve its slim macroeconomic prospects over the mid-term period. Structural weaknesses, reflected in weak competitiveness and high budget deficits, will lead to a prolonged period of slow growth and rising debt. In conditions of the stable foreign exchange policy, which reflects high levels of euroization and external debt, the required improvement in competitiveness can only be achieved through internal adjustment, which entails maintaining the relation between inflation and/or wage growth and productivity below that of its trading partners for a prolonged period of time.
To accomplish price and cost adjustment, complementary and macroeconomic critical reforms are needed in the labour market, public administration, pensions, healthcare system, and privatization. Successful implementation of these reforms would bring great benefits to the Croatian economy in the form of higher growth, job creation, and improved standard of living.
Not so long ago, the Croatian shipbuilding industry was the world's third shipbuilding power and Europe's first in deliveries. The industry employs around 45,000 people and provides a living for around 200,000 people. It generates an annual income of 580 mio USD in exporting its product, which is around 4bn HRK. With the multiplication factor of 2.91, consisting of equipment manufacturers, suppliers and subcontractors, the turnover is around 12bn HRK, of which 1.9bn HRK is paid to the state budget.
Government subventions, used by every country to support its strategic industry, amount to around 1.6bn HRK for shipbuilding, which means that at least 300mio HRK stay in the state budget. Shipbuilding opens the door to technical, technological, and control innovations, and a ship produced in the Croatian shipyards is a recognizable product on a global level, with 26 „ship of the year“ world awards. Against this historical backdrop, a request was made by the European Commission that the situation in the Croatian shipbuilding be resolved before Croatia joins the EU. In response to this request, the Croatian shipyards prepared restructuring plans in 2010 and are now waiting for the green light and approval from the European Commission, which would enable them to continue shipbuilding. Restructuring has been or will be implemented at most inconvenient times, amid recession and a declining number of ship orders in the world. However, restructuring must be prioritized, capacities need to be reduced and shipbuilding has to become independent of the government budget. With the agreement on decreasing the capacities of the Croatian shipbuilding industry already in place, the number of slipways will be reduced by 40%, in accordance with the limit of viability and sustainability defined in the European practice for shipyards that do not depend on the inflow of budget funds. The aim is to create a viable shipbuilding business dependent only on its performance and its operational quality without budget subsidies. Subsidies can be considered only on strict terms and conditions which are applicable for all EU members.
In 2011, the growth of economy is expected to reach the level of around 1.5%, mainly on account of the recovery of investments and consumption, and with mildly positive contribution from foreign demand for goods and services. Unemployment will remain at a high level over the whole 2011, followed by a continued but slow decline.
Delayed fiscal consolidation might lead to a higher risk premium and higher borrowing costs for the public and the private sector. While the parent banks appear ready to maintain their exposure to local subsidiaries and companies, a change in attitude could make a significant impact on the domestic financial sector and the economy.
The expenditure freeze foreseen for 2011 budget requires additional new fiscal measures worth around 0.7% of GDP, including wage and pension freeze.
A slower-than-expected recovery and the expenditure for guarantees on the shipyards not envisaged by the budget could additionally burden the widening budget deficit. Therefore, contingency measures aimed at expenditure reductions in case of an unforeseen revenue fall should be defined. The aim of the government to narrow the budget deficit to around 2% of GDP by 2013 is mainly appropriate, but implementation of measures for savings and expenditure cuts are needed. For this purpose, the Croatian authorities should determine and implement fiscal measures and continue the consolidation to decrease the overall deficit to zero by 2015 as the output gap decreases.
In the surrounding countries and in the most part of the EU, the economic recovery has begun. The projections that the employment rate will be finally increased over the next years are encouraging. The public sector deficit has started to decline due to consolidation measures and the organic growth. The recovery is, however, uneven and many member countries go through a difficult period of adjustment. Determined continuation of fiscal consolidation and of growth stimulation policy are prerequisites for providing a sound platform for sustainable growth and job creation.
In Croatia, it is very difficult to make any far-reaching conclusions based only on one figure, i.e. GDP growth of 0.2% in the last quarter of 2010. In 2011, mildly positive growth rates between 1.5 and 1.9% are expected. These are forecasts made by the majority of analysts, and confirmed also by The Economist at the beginning of the year. However, we should keep in mind that the recovery path, which is definitely ahead of us considering the developments in the environment and the halting of negative trends, will lack enough vigour and will give way to short lapses with negative growth rates.
An increased growth in the Croatian export markets might also give a boost to the Croatian economy. Analysts see a possible positive contribution coming from the ending of the EU negotiating process, including changes initiated by the adjustment to the EU membership, particularly those in the judiciary and legislative system and the modernization of the public administration, assuming that the closing of the negotiating marathon could increase direct foreign investments. Needless to say, great leaps forward as they were seen by the Central European countries at the close of their negotiating process are not expected.
The construction sector was struggling over the whole 2010. The real estate market in Croatia has a great value and is of great interest to the public due to the high amount of household savings invested in real estate. An accurate analysis of the situation in the Croatian real estate market is inhibited by the lack of official statistics on real estate prices and the fact that residential property prices are not properly monitored. In Croatia, residential property prices did not substantially decline. However, with the decrease of supply and demand, loan placements also went down. While prices saw only a negligent decline, a sharp fall is observed in the residential property sales figures. Banks in Croatia have based their growth on the real estate market growth, with placements in real estate rising by as high as six times over the last eight years.
Last year, the American capital market grew very moderately, experiencing both rises and falls. Rating organizations are, however, warning of high debt levels beleaguering the American economy. China again saw a surplus of goods exchange. In 2010, exports in China rose by 17.9%, and imports by 25.6%. The European Central Bank estimates that in 2011 inflation will be bigger than anticipated, primarily due to an upward trend in prices in the energy sector. At year-end, the oil price stood at 90$ per barrel. The World Bank predicts that in 2011 the global economy growth will be 3.3%, which is below the growth of 3.9% achieved in 2010. Developing markets are expected to grow at an average rate of 6%. In addition to rising energy prices, the World Bank is concerned that food prices might also go up.
The Zagreb Stock Exchange, or CROBEX, rose by 5.3% in 2010 (turnover of € 593mio). Throughout 2010, most active investors sought short-term opportunities in bigger markets, which are marked by higher liquidity and which emerged from the crisis more swiftly. This trend was reversed when INA Industrija Nafte d.d. started trading its shares at the end of the year.
Low liquidity is the main problem of the market. Liquidity should be increased by attracting more foreign investors. Croatia's approaching entry to the EU will certainly lead to increased interest from foreign investors.

What happened in insurance and reinsurance industry in Croatia and worldwide in 2010
950 natural disasters were registered in 2010, exceeding the annual average of 785 over the past ten years. Of the total number of losses, nine-tenths were losses caused by natural catastrophes, with earthquakes dominating (Haiti 12 January, Chile 27 February, Central China 13 April), which was not the case over the last ten years.
Losses soared to 130bn $, of which 37bn $ were insured, which makes 2010 the sixth year viewed by the amount of paid claims since 1980.
Losses caused by bad weather and floods in Pakistan (from July to September) and high temperatures, both globally and in regions such as Russia (from July to September), show that the climate is definitely changing.
Severe earthquakes and hurricane season exceeded the average number of registered events, calling for greater efforts to identify and individually elaborate risks and provide adequately priced coverage.
The insurance industry in Croatia was run in 26 companies in 2010. It is a huge number considering the size of the market in which they operate. The market is confined by the size of the population, declining standards of living, the absence of new investments, decreased liquidity, and it is professionally encumbered by the lack of underwriting discipline and, first and foremost, by unfair competition.
In these circumstances, a 1.8% decrease in premium income in Croatia's insurance industry in 2010, which was a crisis year, is not an unusual performance. Concern is, however, caused by the fact that health insurance, which, although not accounting for a large share in overall premium income, is a good indicator, saw a decline by as high as 4.6%. Health insurance is the basic need of citizens, who are forced to save even when it comes to health.
Among other non-life insurance lines, motor hull insurance stands out with a 11.5% decline in premium income. This is easily understood if insurance is viewed as a cost due to austerity measures and declining standards of living, people cut costs where they are least obligatory. Insurers, however, claim that competitors pushed the price in motor mull insurance down to a non-economic level, and there is no reason nor desire to press the price more downward. For the sake of objectivity, it should be noted that a decline in car sales over the previous two years also contributed to the premium decline in this line of business. If we take into account that motor car liability accounts for one third of overall premium earned in the market, the decline in overall premium income comes as no surprise.
In absolute terms, total gross written premium stood at 9.244bn HRK in 2010. Of total written premium, premium in non-life business accounted for 6.786bn HRK, or 73.41%, while in life business it stood at 2.457bn HRK, or 26.59%. The insurance company Croatia osiguranje still holds the greatest market share amounting to 31.37%, or 37.64% in non-life, and 14.05% in life business. The first five insurers hold more than 65% of the total market share, while only in non-life business their share exceeds 76%.
The number of insurance contracts concluded was 7,852,250, of which 82.34% in non-life and 17.66% in life business.
Insurance companies paid a total of 693,500 losses, of which 3.351bn HRK in non-life, and 1.040bn HRK in life business.
Following the crisis, which did not hit the insurance industry as severely as the remaining financial sector, insurance is confronting the challenge to position and represent itself as an ethical alternative to the banking sector.
Insurers have to make a great effort to point to significant differences that exist between banking and insurance sector and to show their specific approaches to risk management.
A study showed that only few people understand the functioning of insurance industry. Unfortunately, it is little understood even by high-ranked risk managers in companies which buy insurance services. Has the industry missed its opportunity? Banking sector saw a slight recovery, and the insurance market is hardening.
We in the Croatian market have an additional problem of pronounced generosity against our clients/insureds. This problem is created by the so called naďve capacity and the lack of understanding of possible outcomes of underquoting or offering reduced premium rates only to keep the cash flowing. This kind of practice appears in the Croatian market due to excess capacity. The capacity is in the hands of people who have not seen or experienced the market cycles, and who hardly know or understand the effects of inadequate, low premium rates in operating a business (following the principle of it is important to make a deal). The conditions in the market, however, do not allow insureds themselves to distinguish between a reliable (long-term) and a naďve, or opportunistic, fly-by-night capacity.
We should, therefore, endeavour to raise the understanding of (re)insurance industry and enhance the existing market criteria so that the market is set on the course rather make smaller but reliable returns, than make one big return every several years, or, in other words, never put at risk the operating infrastructure of our business.
Claim settlement and claim payment are of critical importance and they are what insurance industry is all about. It is, therefore, important for insurers to have financial strength and to develop willingness to pay claims. These are the two most important criteria according to which users of insurance services (policyholders or insureds) decide what insurance company they will approach for the conclusion of insurance contract. The third criterion is price stability (which often weighs more than price itself). Other criteria include innovative approach to new risk undertaking and business administration.

Croatia Lloyd's targets in 2011
1. to maintain a relatively solid, well-balanced and diversified portfolio employing a large share of the Company's capital
2. to keep the existing clients and increase the number of new clients and markets
3. to make continued efforts towards improving the already high standards in providing services
4. to maintain profitable premium income per employee.

We will continue focusing on the maintainance and improvement of our strong business performance to the benefit of our shareholders.
We remain thankful for the business support from our main cedant Croatia Osiguranje as well as from our other cedants. In return, as a token of our gratitude, we continuously endevour to improve our services and maintain profitability to the satisfaction of all those who participate in the Company's business operations.
Unreserved thanks to the Company's staff for their professional skills in the accomplishment of all tasks, as well as to the management, who, in respect of their knowledge and commitment, make a great and positive contribution toward enhancing the Company's sustained comparative advantage.