VIENNA INSURANCE GROUP WITH A SOLID START INTO 2015

“In a very challenging market environment, Vienna Insurance Group managed successfully to achieve positive results in all countries and business lines. Our strong regional ties which give us a close relationship with the markets resulted in certain parts in a significant premium growth.”Peter Hagen, CEO Vienna Insurance Group 

In the first quarter of 2015, Vienna Insurance Group wrote consolidated premiums of about EUR 2.8 billion, representing an increase of 0.9 percent despite the marked decline in single premium policies in life.

Profit (before taxes) reached EUR 130.9 million in the first quarter of 2015. All countries and business lines contributed positively to this result. The historically low interest rates adversely affected current income in the financial result and also made a precaution for personnel provisions in Austria necessary. In addition, interest expense for the subordinated bond issued in March 2015 was recognised for the first time. Furthermore, notably higher expenses were registered in weather related claims than in the same quarter in the prior year. Overall, this led to a decreased result of 15.2 percent.

The combined ratio improved further and stood at 96.3 percent, a very good level.

Vienna Insurance Group’s investments (including cash and cash equivalents) rose by 4.0 percent and amounted to EUR 32.4 billion as of 31 March 2015. The Group’s financial result amounted to EUR 273.4 million.

All countries and business lines make positive contributions to VIG’s result

At the beginning of the financial year 2015, Vienna Insurance Group’s strategy of strong regional diversification proved to be successful. All countries and business lines contributed positively to profit (before taxes). Despite the difficult market conditions, the positive earnings performance in Romania, Croatia and Ukraine, among others, should be emphasised. A significant double-digit premium growth was achieved in the Remaining Markets of Vienna Insurance Group.

Stable development in the Austrian market – VIG number 1

In Austria, the Group companies achieved premiums of EUR 1.3 billion. In property and casualty, the strong growth of Wiener Städtische Versicherung offset the further decline in premiums written by Donau Versicherung in Italy. In life, the single premium business declined, while a slight increase was recorded in regular premiums. Profit (before taxes) amounted to EUR 39.6 million; it was adversely affected by the precaution for personnel provisions due to the low interest rate environment, increased expenses for weather related claims and the high reserve ratio and charges in Italy. The trend in the combined ratio was positive, improving to 98.1 percent.

Highest earnings contribution from the Czech Republic

In the Czech Republic, the Group wrote total premiums of EUR 457.8 million. An increase of 6.6 percent was achieved in motor casco and regular premiums in life grew by 2.7 percent. With profit (before taxes) of EUR 45.8 million, the Group companies in the Czech Republic again made the highest earnings contribution to Vienna Insurance Group in the first quarter of 2015, in spite of increased expenses for weather related claims. The combined ratio stood at an excellent 89.7 percent.

Slovakia – Sustained demand in life insurance

In Slovakia, the Group companies increased premiums to EUR 214.7 million. The success of bank distribution through the local Erste Group subsidiary resulted in a 4.7 percent increase in life premiums. Growth of 2.7 percent was achieved in regular premiums and single premiums increased by 5.8 percent. Profit (before taxes) rose to EUR 9.7 million, while the combined ratio improved to very good 94.5 percent.

Poland – Success in a competitive environment

Vienna Insurance Group’s performance in Poland was particularly influenced by the decline in single premiums in life. Without this factor, premium growth of 17.6 percent was achieved. With a plus of 4.3 percent to EUR 16.6 million, profit (before taxes) turned in very encouraging. The combined ratio stood at 98.1 percent.

Positive trends in Romania

The overall improvement in conditions in the Romanian insurance market enabled intensified sales activities for the first time in years. With a strong increase of 21.7 percent, premiums written grew to EUR 100.3 million.

An increase in premiums of 21.8 percent was achieved in property and casualty.
Premiums in life also rose by 21.1 percent to EUR 16.6 million, demonstrating the success of the strong partnership in bank distribution with the local Erste Group subsidiary BCR for unit-linked insurance products.

The restructuring measures in Romania are having an effect and resulted in a profit (before taxes) of EUR 1.8 million. In 2015, we will continue to work on the improvement of the combined ratio which is still above the 100 percent mark.

Remaining Markets – double-digit growth

The Remaining Markets region again proved its sustainable potential in the first quarter of 2015. The positive trend in premiums resulted in a climb in business volume of 15.9 percent.

In property and casualty, premiums increased by 8.5 percent to total of EUR 183.2 million, and in life the Group recorded a 29.4 percent rise in premiums to EUR 169.6 million.

The region showed particularly strong growth for the companies in Serbia (+23.7 percent), Turkey (+23.6 percent) and Albania (+17.8 percent).

Successful bond issue strengthens capital structure

In March, Vienna Insurance Group issued a subordinated bond in the amount of EUR 400 million. In addition, shares of the 1st tranche of the EUR 500 million hybrid bond, issued in 2008, and the supplementary capital bond 2005-2022, issued in January 2005, were repurchased. These measures contributed to the further strengthening of the Group’s capital structure.