Vienna Insurance Group in the first half-year of 2010

“After its successful start into the year, Vienna Insurance Group also reports a sound result for the first six months of 2010. We continue growing consistently and profitably”, Günter Geyer, CEO of Vienna Insurance Group, explained the current business figures. “These figures indicate an interesting trend. Since the beginning of the year, we have observed our customers’ strong hesitancy in consumption, which is reflected in sluggish growth in the motor insurance segments. But at the same time, we benefit from this trend as the pronounced desire to save is leading to double-digit growth in life insurance. Thanks to the consequential increase in premiums – combined with the slight relaxation of the financial markets compared to last year –, we report an increase in profit (before taxes) of 11 percent despite the high expenses caused by natural disasters. Thus business in the current financial year is developing according to plan.“

I. OVERVIEW OF KEY GROUP DATA FOR THE FIRST SIX MONTHS OF 2010 (BASED ON IFRS)
With premiums written (consolidated) totaling EUR 4.6 billion in the first six months of 2010, Vienna Insurance Group achieved a plus of 7.9 percent compared to the same period of the previous year. The Group recorded an increase of 10.7 percent in net earned premiums.

In the first six months of 2010, the Group profit (before taxes, consolidated) amounted to EUR 255.6 million. Despite the natural disasters, a remarkable growth of 11.0 percent was achieved.

The combined ratio of the Group (net, i.e. after reinsurance, excluding investment income) remained below the 100-percent threshold. In the first half of 2010, it climbed to 98.3 percent due to the natural disasters of the current year. This damage (before reinsurance) – in particular in Austria, the Czech Republic, Poland and Romania – caused expenses of a total of about EUR 100 million.

In the first six months of 2010, the financial result of the Group totaled EUR 646.6 million, surging by 37.1 percent compared to the same period of the previous year due to the stabilisation of the capital markets.

The investments of the Group amounted to EUR 26.8 billion as at 30 June 2010; this corresponds to an increase by 3.6 percent compared to the year-end level of 2009.

II. GROUP DATA BY SEGMENTS FIRST SIX MONTHS OF 2010 (CONSOLIDATED)

Property/casualty insurance
In this segment, Vienna Insurance Group recorded premiums written of EUR 2.4 billion, achieving a plus of 1.3 percent. Net earned premiums in this segment grew by 4.7 percent.

In the CEE markets, the Vienna Insurance Group companies reported premiums written in property/casualty insurance of a total of EUR 1.4 billion, corresponding to a plus of 2.0 percent.

In the non-CEE countries, premiums in this segment increased slightly, totaling about EUR 1.0 billion. With EUR 966.2 million, premiums in Austria remained on the prior-year level. In Germany, premiums rose by 1.9 percent to EUR 37.6 million.

Life insurance
The Group companies of Vienna Insurance Group reported premiums written in this segment of a total of more than EUR 2.0 billion. s Versicherung Group made a major contribution to the strong growth of 17.5 percent.

In the CEE markets, the life insurance segment posted a substantial growth of 16.1 percent, increasing premiums written to EUR 728.4 million.

In non-CEE markets, premiums written amounted to EUR 1.3 billion; this corresponds to a plus of 18.2 percent compared to the same period of last year.

Health insurance
With premiums written of EUR 164.9 million, Vienna Insurance Group records a growth of 1.3 percent in this segment.

III. GROUP DATA BY REGIONS FIRST SIX MONTHS OF 2010 (CONSOLIDATED)

Austria
In the first six months of 2010, the Vienna Insurance Group companies reported premiums written of a total of EUR 2.3 billion in Austria, achieving an increase by 6.2 percent. In the property/casualty insurance segment, premiums written amounted to EUR 966.2 million. Growing by 12.2 percent, premiums in life insurance went up to EUR 1.2 billion.

Profit (before taxes) amounted to EUR 138.1 million in the first six months of 2010; compared to the same period of the previous year, a plus of 4.3 percent was achieved.

The combined ratio amounted to 95.1 percent.

Czech Republic
The Group companies of Vienna Insurance Group increased premiums written in the Czech Republic to a total of EUR 869.3 million; this corresponds to a plus of 11.9 percent.

In the non-life insurance segment, premiums written amounted to EUR 519.3 million, going up by 2.3 percent.

With a significant increase by 30.1 percent, premiums written in life insurance rose to EUR 350.0 million.

Profit (before taxes) increased by 20.1 percent to EUR 67.6 million compared to the same period of last year.

Despite damages paid due to storms, the combined ratio amounted to 95.7 percent in the first six months of 2010.

Slovakia
In Slovakia, the Group companies reported a total of premiums written of EUR 326.3 million (plus 0.6 percent). A clear increase by 5.8 percent was achieved by the Group in net earned premiums.

In the non-life insurance segment, premiums written of EUR 167.2 million were registered. Growing by 13.6 percent, premiums written in the life insurance segment climbed to a total of EUR 159.1 million.

Profit (before taxes) rose from EUR 7.7 million to EUR 12.9 million.

The combined ratio improved to 95.2 percent.

Poland
In Poland, the Vienna Insurance Group companies increased premiums written by 31.8 percent to EUR 346.5 million in the first half of the current year.

In the non-life insurance segment, Vienna Insurance Group achieved an increase by 59.0 percent to EUR 270.9 million.

With premiums of EUR 75.7 million, a decline of 18.2 percent was reported in life insurance, which can be attributed exclusively to the strong downward trend in the single premium business.

The combined ratio rose to more than 100 percent due to flood-related damage.

Profit (before taxes) amounted to EUR 10.2 million in the first half of the current year.

Romania
In the non-life insurance segment, premiums of EUR 225.7 million were written. Due to the revenue-oriented portfolio restructuring, a decline in premiums was reported.

In the life insurance segment, premiums went up by a remarkable 39.8 percent to a total of EUR 48.3 million. This significant increase is mainly due to the strong selling power of BCR life insurance.

In the first half of 2010, the Romanian Group companies achieved premiums written of a total of EUR 274.0 million (minus 12.5 percent).
Profit (before taxes) rose by 18.7 percent to EUR 14.3 million.

Due to the development of damages, the combined ratio exceeded 100 percent.

Other CEE markets
The segment “Other CEE markets“ comprises the Group companies of Vienna Insurance Group in the following countries: Albania, Bulgaria, Croatia, Macedonia, Serbia, Turkey, Ukraine, Hungary as well as the three Baltic states.

Premiums written totaled EUR 289.8 million, of which EUR 194.5 million were attributable to non-life insurance. In the life insurance segment, premiums of EUR 95.3 million correspond to a plus of 4.4 percent.

Profit (before taxes) amounted to EUR 3.6 million, compared to a loss of EUR 2.3 million in the first six months of 2009.

Other markets
In Germany and Liechtenstein, the Group companies succeeded in more than doubling their premiums, earning premiums written of a total of EUR 162.8 million. Profit (before taxes) amounted to EUR 8.8 million.

IV. RESTRUCTURING OF THE GROUP COMPLETED SUCCESSFULLY
On 3 August 2010, the restructuring of Vienna Insurance Group took legal effect after approval by the Austrian Financial Market Supervisory Authority. Besides exercising the usual international control functions of a listed group, VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe is also active in the reinsurance and international wholesale insurance business.

"I was highly impressed by the general agreement to approve the Group’s new organisational structure, which was based on a unanimous resolution of the Annual General Meeting “, stated Günter Geyer. “I am particularly proud of the fact that restructuring was implemented quickly and efficiently thanks to the firm commitment of our entire staff.“

WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group – the Group’s largest individual company in Austria – will therefore continue to be active in the property/casualty, life and health insurance business.

V. LAUNCH OF THE MOTOR LEGAL EXPENSES INSURANCE IN CEE
Continuously expanding its product portfolio, Vienna Insurance Group will offer legal expenses insurance for motor vehicles in Poland, the Czech Republic as well as in Slovakia. The Group companies insure about 5 million vehicles in these three countries already now. On this sound basis, the Group envisages excellent opportunities to expand customer relations by introducing motor legal expenses insurance. This step paves the way for a significant growth potential in the future.

VI. NEW CORE MARKET UKRAINE
With more than 45 million inhabitants, Ukraine is one of the most heavily populated countries of the CEE region. Vienna Insurance Group has been active in the life insurance segment in this market already since 2004, in the year 2005 it expanded its portfolio also in the non-life insurance segment. One of the most important consequences of the take-over of the TBIH shares, was the inclusion of UIG in the Group. This fast-growing non-life insurer with a strong future potential has optimally taken advantage of the favourable economic trend recorded in Ukraine since spring 2010. In view of this economic dynamism, the management of Vienna Insurance Group decided to make Ukraine the tenth core market of the Group and seeks to improve its strong position as one of the leading insurance groups in this country.

“We are always looking for new business opportunities. To this end, we examine our portfolio on an ongoing basis and adjust it to the needs and to demand. We have realised that the time is ripe for motor legal expenses insurance in selected CEE markets and have therefore started to expand our range of products in line with customer requirements. In Ukraine, the economic setting has improved considerably, and by making this country one of our core markets, our Group aims at achieving a leading position also in this insurance market”, Günter Geyer explained the reasons for intensifying the engagement.

The listed Vienna Insurance Group (VIG) is one of the leading insurance groups in CEE headquartered in Vienna. Outside of its home base in Austria, Vienna Insurance Group is also active, through subsidiaries and insurance holdings, in Albania, Bulgaria, Germany, Estonia, Georgia, Croatia, Latvia, Liechtenstein, Lithuania, Macedonia, Poland, Romania, Russia, Serbia, Slovakia, the Czech Republic, Turkey, Hungary, Ukraine and Belarus. It also has branches in Italy and Slovenia.

On the Austrian market, the Vienna Insurance Group (VIG) positions itself with Wiener Städtische Versicherung, Donau Versicherung and Sparkassen Versicherung.