Elisabeth Stadler, General Manager of VIG, commented on the results:
"In view of the COVID-19 situation, Vienna Insurance Group shows a solid performance. Operationally, we continue to see ourselves in a position to manage the impact of the pandemic on the group. Generally speaking, it has been confirmed that our business model, with its broad diversity across countries, brands, distribution channels and products, is proving successful even in difficult times. This enables us to make the best possible use of the opportunities that arise and to continue our long-term growth ambitions."
After the first three quarters of 2020, total premium income reached EUR 7,986 million (+1.7%). With the exception of life insurance, where premium income fell slightly by around 1%, all lines of business reported gains during the first three quarters of this year, especially other property (+5.3%). The rise in premium income was mainly driven by the segments Austria and Poland. The segments Turkey/Georgia, Romania and Hungary also show above-average increases in premium income.
Profit before taxes stood at EUR 266.3 million in the first nine months of 2020, a decline of 29.2% compared to the same period last year. This result was significantly influenced by the lower financial result, as well as by the goodwill impairments for Bulgaria, Croatia and Georgia which were conducted at half-year 2020.
The financial result (including the result from at equity consolidated companies) stood at around EUR 513 million (-18%), decrease attributable to the negative developments on the capital markets due to COVID-19, as well as one-off effects.
Profit after taxes and non-controlling interests amounted to EUR 175 million (-22.7%) at the end of the first three quarters of 2020. The Czech Republic, Romania, and Slovakia made the highest absolute contributions to the growth in pre-tax profit.
The combined ratio is slightly improved to 96.1%, down 3 percentage points than in the previous year (9M2019: 96.4%). This was partly due to improved claims ratios resulting from the pandemic. As already forecast at the first half of 2020, an increase in claims expenses was registered at the same time after the loosening of restrictions in the respective countries, and higher claims reserves were increasingly formed.
On 25 November 2020, international rating agency Standard & Poor's (S&P) confirmed its A+ rating with stable outlook for VIG. The agency still sees VIG's business risk profile as strong and its financial risk profile as very strong. According to the rating report, the group's excellent capital base is one of its key strengths. VIG's prudent underwriting standards and earnings generation capabilities will enable it to maintain - at the least - very high capital buffers in 2021.
Due to the current COVID-19 situation, the group considers difficult to forecast the medium to long-term macroeconomic impact of the pandemic and in turn its effect on the insurance business.
VIG notes that the CEE region got off better in the first wave of COVID-19 than Austria and Western Europe. This situation has changed, however, during the second wave and very high infection rates have been recorded in many of VIG's markets. "The revised current economic forecasts for the region predict a recession in the fourth quarter of 2020, with the recovery seen as weaker than anticipated just a few weeks ago," the group mentions.
Elisabeth Stadler added:
"Taking into account the latest developments and depending on the unforeseeable level of volatility on the capital markets, we expect pre-tax profit for the full year to be in the region of EUR 300 million - EUR 350 million."