VIG, 2018: top results for premiums and profit before taxes
"The preliminary results for 2018 show that we have significantly exceeded our forecasts for all key figures. I therefore see this as a renewed confirmation of our ambition to position ourselves as a stable, reliable partner. This also applies to our focus on Central and Eastern Europe, where we are the leading insurance group today. In large parts of the CEE region we see stable growth and falling unemployment. The markets where we operate are growing, on average, twice as fast as the Eurozone countries," said Elisabeth STADLER, CEO of VIG.
Gross written premiums (GWP): For year 2018, VIG's GWP totaled at group's level EUR 9,657 mil. (+2.9% compared to 2017). This represents an increase in GWP volume by EUR 271 mil. . The most successful regions for VIG in terms of premium income were Czech Republic, with an increase in GWP of EUR 81 mil. (+5.0%) and Baltic States, with an increase of EUR 48 mil. (+14.7%). Around 56% of the GWP volume was generated by the Group companies in the CEE region.
Profit: In 2018, VIG's profit (before taxes) reached EUR 485 mil. . This result marks an increase of EUR 43 mil. (+9.7%). Largest gains were recorded in Baltic States, Bulgaria, Czech Republic and Hungary. Romania recorded a loss of around EUR 74 mil., primarily due to a goodwill impairment of EUR 50 million in the second quarter of 2018 and a provision for the Romanian Competition Council proceedings. Overall, the companies in the CEE region contribute around 53% of the total profit (before taxes). The result after taxes and non-controlling interests was EUR 268.9 mil. .
Combined Ratio (P&C): VIG Combined Ratio stood at 96.0%, which shows and improvement, the indicator decreasing with -0.7%p compared to 2017. For most regions, the y-o-y change for Combined Ratio stood between -3.5%p and +2.4%p. The biggest changes were seen in Czech Republic, where Combined Ratio decreased by -4.8%p, and Romania, where the Combined Ratio climbed by +9.0%p mainly due to the tariffs on motor business.
Solvency ratio: The solvency ratio stood at 239% by 31 December 2018. VIG was the only Austrian insurance company to take part in the EIOPA stress test, where it passed all three quantitative test scenarios with levels of between 158% - 215% after volatility adjustment, showing that it is solidly above the required minimum solvency of 100%.
M&A highlights until Q1 2019:
- Poland: VIG has obtained an interest in mutual insurance association TUW "TUW" through InterRisk and purchased multiple Gothaer units; Merger of Compensa Life and Polisa Life was completed in May 2018;
- Baltic States: Purchase of Seesam Insurance AS signed in Dec. 2017 (closed in September 2018);
- Romania: Merger of BCR Life and AXA Life completed in June 2018;
- Bosnia and Herzegovina: VIG purchased Merkur Osiguranje and rebranded it into Vienna osiguranje dd.;
- Successful completion of mergers for strengthening bancassurance in Austria, Czech Republic, Slovakia, Hungary and Croatia.
Dividend: The Managing Board will propose to the Annual General Meeting to increase the dividend for the financial year 2018 from EUR 0.90 to EUR 1 per share. This corresponds to an increase of +11% and a dividend payout ratio of 48% (2017: 38.7%). The dividend yield amounts to 4.9%.
Full report over VIG 2018 activity can be found here.