May 2021 Monthly Report

Published: 25 June 2021

Overview of supervised entities’ activities in the financial services sector for May 2021

PENSION FUNDS

SECOND PILLAR PENSION FUNDS

At the end of May 2021, mandatory pension funds (MPFs) had 2,070,165 members, i.e. 1,823 more than in the previous month. The vast majority of new members still do not actively participate in selecting their MPF, but are instead assigned to the funds by Regos, which assigned 3,613, i.e. 95.5% of new members in May 2021. Following legislative amendments that entered into force in October 2019 (Official Gazette, No 115/2018), all new members who have more than 10 years of work left until the reference day (when they meet the retirement criteria) are assigned by Regos to category A OMFs, instead of category B MPFs, which is why category A MPFs recorded the largest inflow of new members. In the last 12 months, the average growth rate of members for category A MPFs was 5.9%, for category C it was 2.0%, while for category B it was slightly negative (-0.1%), mainly due to the regular transition of insured persons to category C. At the same time, termination of membership due to retirement or death was recorded with respect to 1,959 members, as many as 1,068 more than in April. Total net contributions paid to MPFs in May amounted to HRK 607.3 m, slightly decreasing (-1.0%) compared to the previous month. At the same time, total payments from all the MPFs due to personal account closures reached HRK 254.7 m, rising by 202.2% compared to April 2021, which is in line with the monthly increase in the terminations of memberships in MPFs.

In May 2021, net assets of MPFs increased by 0.6% relative to the previous month and stood at HRK 125.3 bn. Monthly Mirex returns reached 1.1% for category A, 0.3% for category B and - 0.1% for category C. Year-to-date Mirex returns stand at 0.1% for category C, 3.5% for category B and 6.5% for category A, continuing the recovery trend of unit value in 2021. Annualised Mirex returns since the beginning of MPFs’ operation reached 7.5% for Mirex A, 5.5% for Mirex B and 4.8% for Mirex C at the end of May[1].

Bond investments of MPFs reached HRK 79.8 bn (63.7% of total assets) at the end of May, making their share by 0.6 percentage points lower than in April. At the same time, investments in shares increased by 0.6 p.p. and amounted to HRK 24.8 bn (19.8% of mandatory pension funds’ assets) at the end of May 2021. Investments in domestic shares accounted for 11.1%, while investments in foreign shares accounted for 8.7% of MPFs’ assets. Viewed by categories, category A MPFs have 37.2% of their assets invested in shares, category B MPFs have 20.9% of their assets invested in shares, while category C MPFs do not invest in shares due to their risk-averse investment strategy. As regards other investment types, the most common were investments in investment funds, reaching HRK 13.5 bn (10.8% of assets), which is an increase of 7.0% at the monthly level, so the proportion of these investments in assets increased by 0.7 percentage points compared to April. At the same time, investments in money and deposits amounted to HRK 5.7 bn (4.6% of assets), which is by 1.13% less than in the previous month.

THIRD PILLAR PENSION FUNDS

At the end of April 2021, 8 open-ended voluntary pension funds (OVPFs) had 340,332 members, an increase of 0.6% on the monthly level. The number of members of 20 closed-ended voluntary pension funds (CVPFs) remained relatively unchanged, with CVPFs having 44,730 members at the end of May 2021 (20 less than in April).

Total monthly payments made to voluntary pension funds (VPFs) in May amounted to HRK 54.4 m, decreasing by 3.6% compared to April. At the same time, total monthly payments from these funds amounted to HRK 29.3 m, a 22.1% increase compared to the previous month. Out of all payments in May, 23% were due to death, 22% due to change of fund and the rest of 55% due to retirement. The largest share of payments (HRK 6.2 m) due to retirement was paid in the form of lump-sum payments, the amount of HRK 5.2 m was paid through a pension company (fund), while HRK 4.6 m was transferred via pension insurance companies.

Net assets of VPFs grew by 1.1% in May, reaching HRK 7.1 bn, with monthly returns of individual funds ranging between -0.2% and 1.3%. Annual rates of return ranged from 1.1% to 13.5%, while year-to-date returns ranged from -0,2% to 6.6%. As regards the investment structure of VPFs, the largest part of the portfolio is still made up by bonds with the share of 56.3% in total net assets, followed by shares with 25.7% and investment funds with 10.9%. The share of bonds in VPFs’ investments decreased by 1.4 percentage points on the monthly level, the share of investment in investment funds decreased by 0.3 percentage points, while the share of stocks increased by 0.2%.

INSURANCE COMPANIES

In May 2021, there were 15 insurance companies operating on the market. Total gross written premium for the first five months of 2021 amounted to HRK 5.4 bn, of which HRK 1.4 bn related to life insurance premium and HRK 4.0 bn to non-life insurance premium. The structure of the gross written premium of non-life insurance is dominated by motor vehicle liability insurance (30.3%), insurance of land vehicles (14.6%), insurance against fire and natural disasters (10.5%) and other property insurance lines (13.1%). On an annual basis, life insurance premiums increased by 14.9%, non-life premiums by 12.6%, while the total gross written premium increased by 13.2%. The gross amount of claims settled totalled HRK 3.0 bn, increasing by 9.4% on an annual basis. HRK 1.3 bn of this amount relates to life insurance (a 3.9% decrease on the annual level), while HRK 1.7 bn relates to non-life insurance (a 21.8% increase on the annual level). The most significant contribution to the above-mentioned increase in payments of claims in the non-life insurance segment of 6.9 p.b is made by earthquake insurance, while the contribution of compulsory car insurance was 6.5 p.b., which is related to the recovery of road traffic in 2021, from the suppressed levels in the previous year. In the total amount of claims settled in non-life insurance in the first five months of 2021, the largest amounts relate to motor vehicle liability insurance (34.3%), insurance of land vehicles (18.2%), insurance against fire and natural disasters (16.6%) and other property insurance lines (9.5%).

CAPITAL MARKET

The total turnover on the Zagreb Stock Exchange reached HRK 224.3 m in May 2021, increasing by 29.9% compared with the previous month. Although regular trading in bonds decreased by 70%, trading in shares and ETFs increased on the monthly level, by 53.8% and 45.8% respectively. The order book turnover recorded a monthly increase of 23.3%, while the OTC market turnover decreased by 78.1%. Market capitalisation decreased on the monthly level by 5.1%, and stood at HRK 262.5 bn at the end of May. As for stock indices, the largest monthly rise was recorded by CROBEXtransport (6.2%) and CROBEXnutris (3.8%), while the largest monthly fall was recorded by CROBEXkonstrukt (-36.1%), CROBEXindustrija (-7.4%) and CROBEXplus (-6.2%). A significant decrease of CROBEXkonstrukt index is the result of a strong price correction of one component of the index in the second half of May, following the publication of news on the model and the course of financial restructuring of the company with limited negative spillover to evaluations of other components of the index. Atlantska plovidba stock was most traded in May, with its turnover amounting to HRK 31.8 m (18.2% of the overall trade in stocks) and a monthly increase in price of 36.3%.

INVESTMENT FUNDS

In May 2021, there were 92 UCITS operating on the market and 3 UCITS undergoing winding up-proceedings, making the number of UCITS in May unchanged relative to the previous month. Total net assets of UCITS amounted to HRK 19.8 bn at the end of May, growing by 0.7% compared to the previous month. Positive net payments to all categories of funds again contributed to this (equity funds with HRK 43.9 m, bond funds with HRK 40.2 m and other funds with HRK 38.4 m of net payments). In addition to net payments, positive market trends also contributed to the growth of net assets of UCITS. In May 2021, the highest monthly returns of 2.13% were recorded by equity funds, while monthly returns of bond, balanced and other funds ranged between 0.07% and 0.24%. Net assets of bond funds at the end of May 2021 accounted for 74.7% of the total net assets of all UCITS, while equity and balanced funds accounted for 10.1% and 5.8% of the total net assets of UCITS, respectively.

Assets of the Fund for Croatian Homeland War Veterans and Members of their Families amounted to HRK 1.03 bn at the end of May, a slight monthly increase of 0.8%, with the monthly returns of this fund amounting to -0.6%.

The full report is available at Publications/Monthly reports

[1] Beginning of operation: MPF category B: 30 April 2002; MPFs category A and C: 21 August 2014