Who Will Mount Triglav?

Sunday’s elections will not only be about choosing a new president. The good, the bad and the ugly will also have us vote on a referendum concerning privatisation of Triglav Insurance company, which is at the moment state owned: a good 66 % of it are owned by KAD and SOD managed – but not owned.

HQ of Triglav Insurance

Triglav Insurance Company was namely another socialist/self-management attempt at reaching past capitalist concept. It was basically a mutual insurance company, with insurees becoming owners as well. Uppon the dissolution of (and disisllusionment with) socialism, Triglav became a typical incorporated-but-government-owned company, so typical for transitional economies. But there was a catch. Noone really knew how much the company was actually worth, because noone exactly knew how much money people have put into the company in the past fourty years.

So, when privatisation began after 1990, it soon became clear that a) Triglav is a goldmine and b) the topic of its value is as explosive as a truckload of natrium soduim near a hydro-power plant. So no government wanted to touch it until it was absolutely necesary. This burden thus fell on the former government of Tone Rop, who (curiously enough) began his carrer in top governmental ranks as state secretary (underminister) in charge of privatisation. So he knew exactly that all hell will break loose eventually. And so it did. His government prepared what was then considered a half-baked attempt at privatising a portion of Triglav, but they did it so late in the game (it was just prior to elections) that noone took it seriously. Most of us even though that they’re just trying to stuff their pockets just in case they lose the elections. Which they did. Lose the 2004 elections.

The plan called for actuall transfer of government owned portion of Triglav to KAD and SOD (which until now only managed but did not own this share), the idea being that the dividends would be used to keep the pension system solvent.

The new government immediately pulled out of the plan, saying that it needed to reevaluate Triglav’s value. And sure enough, they came up with a more than double the value. The mathematics of both calculations are somewhat fuzzy, though. Anyways. The incumbent government basically came up with the exact same plan, but what it failed to include was a provision forbidding KAD and SOD to sell Triglav on.

The government obviously says that it has no intention of selling Triglav, but history teaches that if something can be done, it will be done. And selling the biggest insurance company is not a smart idea.

EDIT: Just so that there’s no misunderstanding – I don’t have a problem with KAD and SOD owning Triglav. I do, however, have a problem with selling family jewels. There is more than enough competition in the market and I strongly support the idea that Triglav’s profits should be partly used to finance the pension system. And I’m not sure that the previous government didn’t want to sell Triglav, either.

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Agent provocateur and an occasional scribe.

7 thoughts on “Who Will Mount Triglav?”

  1. I’m not proud of it, but am way confused on the options here. Will need to read up on the issues thoroughly before making a mark on the ballot this Sunday.

  2. natrium = sodium

    Sorry, pet peeve. In fact, more of a professional deformation.

    Of course this insurance company is great. If there’s an earthquake or a flood in SLO, the taxpayers foot the bill anyway.

    But if it’s so hard to value, is it really such a cash cow?

  3. Thanks! Dully corrected.

    From what I understand, the problem is in how much the taxpayers have actually put into Triglav over the years and what should become of that money.

    Having done some additional research, there does appear to be a general agreement that taxpayers’ share is about 35 percent (estimated at 1 bln euros).

    Now, as you have already seen I’m not good with numbers, so feel free to correct me, but: In 2006 Triglav’s capital gain was about 10 percent. This means that the above 1 bln EUR would account for some 100 milion euros in capital gain which would be injected into the pension system on a yearly basis. It would be a shame to waste that.

  4. Ahhh. Lazy, lazy:


    Wishful thinking, same as the valuation. The total pre-tax profit was EUR 43,9 million. They further say that this is 10.3 ROE. In that case, the total average capital is 426.2 million EUR.

    It seems that the state already takes about 30% of the profits through taxes. If all the profits will be “injected” directly in the pension system, what’s the motivation for the employees and management to keep increasing profits? Why not just sit on their ass in a cushy quasi-government job?

  5. Heh, silly me… thanks for the link.

    No wonder I couldn’t find the info. Slovenian version takes ages to open….

    I think only KAD’s portion (the said 35%) of profits would go directly to pension fund. As that is KAD’s purpose anyhow, noone argues about that.

    Catch is that until now KAD only managed (but didn’t own) those shares. If the law was to be passed (i.e.: more people would vote YES than NO), KAD would start owning those shares and there is no safeguard to prevent it from selling the shares at the first opportunity, cutting a steady trickle of cash into the pension system.

    At least, the opposition says so. The government obviously says noone is thinking about selling Triglav at all.

  6. Well, KAD already owns a huge amount of many other SLO companies and doesn’t seem to be selling them, either.

    See, if a private investor comes in, you get the same amount of money out through taxes, plus you get the money from the sale 🙂 If for some reason somebody would really fork over money as if Triglav was worth a billion euros, I think the sale would be justified.

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