21/03/2022

February 2022 Monthly Report

Overview of supervised entities’ activities in the financial services sector for February 2022

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of February 2022, mandatory pension funds (MPFs) had 2,119,135 members, i.e. 3,585 (0.17%) members more than in the previous month. Category B funds had 89.44% of all MPF members, while category A and category C funds had 7.56% and 3.0% of all MPF members respectively. Out of 4,517 new members, 4,360 (96.52%) were automatically assigned by Regos. Termination of membership due to retirement or death was recorded with respect to 932 insured persons. Total net contributions paid to MPFs in February amounted to HRK 634.3m or 3.7% more compared to the previous month. At the same time, total payments from all the MPFs due to personal account closures reached HRK 116.6m, dropping by 15.4% compared to January.

Rising macroeconomic uncertainty in the first half of February led to an increase in global risk premium, which had a negative effect on valuations on financial markets, both domestic and foreign. The escalation of geopolitical tensions in the second half of February caused an additional shock to stock and bond prices on international markets. As a consequence, net assets of MPFs decreased by HRK 3.1bn (2.35%) in February and stood at HRK 129.99bn at the end of the month. Negative financial market trends also had an impact on monthly Mirex returns, which reached -3.92 % for category A, -2.76 % for category B and -1.90 % for category C. Annual Mirex returns reached 6.88% for category A, 2.89% for category B and -2.03% for category C, while annualised returns since the beginning of MPFs’ operation reached 7.04% for Mirex A, 5.30% for Mirex B and 4.06% for Mirex C[1].

At the end of February, bond investments of MPFs totalled HRK 83.6bn (64.25% of total assets), making their share increase by 2.3 p.p. on a monthly basis. The share of equity investments in MPFs’ assets decreased in February, by 1.08 p.p. on a monthly basis, amounting to HRK 26.5bn or 20.37% of MPFs’ assets. Investments in domestic shares accounted for 12.18%, while investments in foreign shares accounted for 8.20% of MPFs’ assets. Investments in investment funds amounted to HRK 15.4bn (11.85% of the assets) at end-February, making the proportion of these investments in total assets rise by 0.77 p.p. relative to the previous month. Investments in cash and deposits amounted HRK 4.0bn (3.08% of the assets).

THIRD PILLAR PENSION FUNDS

In February 2022, the number of members of 8 open-ended voluntary pension funds (OVPFs) rose by 0.64% on a monthly basis, while the number of members of 20 closed-ended voluntary pension funds (CVPFs) decreased by 0.03%, making the number of members of these funds reach 355,599 and 46,024 respectively. Total monthly payments made to voluntary pension funds (VPFs) in February 2022 amounted to HRK 64.7m, decreasing by 17.0% compared to the previous month.

Total payments made from these funds in February reached HRK 32.53m, decreasing by HRK 1.2m (3.66%) compared to total payments made from VPFs in January. Total payments from VPFs made due to retirement and other reasons accounted for 67.9%, payments made due to the change of fund reached 22.07%, while those made due to death accounted for 10.02% of total payments in February. As regards total payments made due to retirement, the amount of HRK 8.96m was paid in the form of lump-sum payments, HRK 6.50m was paid through a pension company (fund), while HRK 6.63m was transferred for payment to pension insurance companies.

Negative market valuations made VPFs’ net assets decline by HRK 209.8m (2.68%) and reach HRK 7.62bn. Monthly returns of VPFs ranged from -5.53% to -1.65%, while returns on an annual basis ranged from -2.56% to 5.27%. As regards the investment structure of VPFs, the largest part of the portfolio was made up of bonds and amounted to a 54.49% share in total net assets, followed by stocks with a 24.83% share and investment funds with a 12.01% share. The share of bonds in VPFs’ investments rose by 2.45 p.p. on a monthly basis, while the share of investments in investment funds and in equities fell by 0.44 p.p. and 0.92 p.p. respectively.

INSURANCE COMPANIES

In February 2022, there were 15 insurance companies operating on the market. Their total gross written premium in the first two months of 2022 amounted to HRK 2.24bn, of which HRK 0.46bn (20.45%) related to life insurance premium and HRK 1.78bn (79.55%) to non-life insurance premium. Gross written premium in January and February increased by 6.29% relative to the same period in 2021, with the increase in non-life insurance premium totalling 9.40%, and the fall in life-insurance premium reaching 4.28%. The structure of the gross written premium in non-life insurance is dominated by motor vehicle liability insurance (26.46%), insurance of land vehicles (14.15%), insurance against fire and natural disasters (13.56%) and other property insurance lines (12.54%). The amount of claims settled in the first two months of 2022 reached HRK 1.17bn, increasing by 5.73% on an annual basis. HRK 0.49bn of this amount related to life insurance (a 7.58% increase on an annual basis), while HRK 0.68bn related to non-life insurance (a 4.44% rise on an annual basis). In the total amount of claims settled in non-life insurance in February, the largest amounts relate to motor vehicle liability insurance (36.40%), insurance of land motor vehicles (18.57%), insurance against fire and natural disasters (9.67%) and other property insurance lines (8.96%).

CAPITAL MARKET

In February 2022, the Zagreb Stock Exchange total turnover reached HRK 339.16m, decreasing slightly (by 0.77%) on a monthly basis. Market capitalisation fell by 2.16% relative to the previous month and stood at HRK 267.79bn, of which stocks amounted to HRK 137.08bn, bonds to HRK 130.65bn and ETFs to 62.54m. Unfavourable global market trends had an impact on the domestic market as well, with basic stock and bond ZSE indices recording a monthly value decline: CROBEX fell by 6.23% and CROBIS by 3.16%. Increasing geopolitical tensions and macroeconomic uncertainties had a heterogeneous effect on the value of domestic stock issues, reflecting different effects exerted by those uncertainties on individual economic activities. For instance, the stock index CROBEXtransport recorded a 3.11% monthly rise, while CROBEXindustrija fell by 10.61% in February 2022. HT d.d. was the stock most traded in February, with its turnover amounting to HRK 24.0m (12.60% of the overall trade in stocks) and a 0.27% price decrease.

INVESTMENT FUNDS

In February 2022, there were 95 UCITS operating on the market, with their total net assets amounting to HRK 18.97bn at the end of the month and decreasing by HRK 2.1bn or 10.05% compared to the previous month. This was due to a fall in unit values following negative market trends, but also to net fund outflows. Net outflows were recorded in February 2022 by all UCITS, with bond UCITS, balanced UCITS and equity UCITS recording net outflows reaching HRK 1.28bn, HRK 107.0m and HRK 102.42m respectively. Funds categorised as “other funds” and feeder UCITS recorded net outflows totalling HRK 46.21m and HRK 14.35m respectively. Bond funds’ net assets accounted for 69.1% of the total net assets of all UCITS at the end of February, while equity and balanced funds accounted for 11.4% and 6.8% of the total UCITS’ net assets respectively. As regards asset-weighted average monthly returns, all types of UCITS recorded negative monthly returns in February as well, as a result of a price decrease on global stock and bond markets: stock UCITS, balanced UCITS, other UCITS, feeder UCITS and bond UCITS recorded negative returns totalling -6,88%, -3.94%, -2.53%, -2.37% and -2.06% respectively.

Net assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 987.0m (a 0.43% monthly increase), with the monthly return of the fund reaching -0.32%.

The full report is available at here.

 

[1] Beginning of operation: MPF category B: 30/4/2002; MPFs category A and C: 21/08/2014

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