VIG, 1Q2018: improved results driven by the group's large markets, Czechia, Poland and Romania

Czechia, Poland and Romania, VIENNA Insurance Group's largest markets in the CEE were the main drivers of its good 1Q2018 results. VIG targets for year-end GWP of about EUR 9.5 billion and profit before taxes of EUR 450 - 470 million.

"We have succeeded in our goal of achieving sustainable growth. This is particularly important to us during the current economic upswing in Central and Eastern Europe. Our long-term business strategy is based on leveraging synergies in our markets to systematically strengthen our market position, increase diversification and improve efficiency," stated Elisabeth STADLER, General Manager of Vienna Insurance Group, who feels justified in the pursued business strategy and results.



Significant growth in premiums

Total premium volume reached EUR 2.83 billion in the first three months of 2018. This corresponds to a 3.9% y-o-y increase. Without the ongoing decline in the single premium life insurance business, premiums y-o-y rose by 7.1%. Considering exclusively the CEE markets, the growth rate stood at 7.5%. "It is particularly noteworthy that our large CEE markets in the Czech Republic, Poland and Romania were the driving engine for growth in premiums and our profit (before taxes) in the first quarter of 2018. These are also the markets where we started the pilot project to optimize our business model as part of the 'Agenda 2020' and where initial positive effects on profits and the combined ratio have already been achieved," explained Elisabeth STADLER.



On business lines, the best growth rates were achieved for the motor insurance lines (Motor Hull 9.3% y-o-y; MTPL 11.3% y-o-y). Health insurance premiums saw a 8.5% increase over last year's first quarter, while for the property lines GWP went up by 7.1%. VIG has deliberately reduced its business on the life single premiums line (-21.7% y-o-y).

Clear increase in profit (before taxes)

Profit (before taxes) was EUR 117.3 million. This corresponds to a y-o-y increase of +7.0%. In addition to the markets in the Czech Republic, Poland and Romania mentioned above, Hungary and Bulgaria have also recorded significant increases in the result (before taxes). In the CEE, VIG recorded a profit growth of 10.4%.



Combined ratio further improved

The pursuit of a sustainable growth path is also being reflected in a steady improvement in the combined ratio, which improved significantly again by 0.7 %age points to 96.2%, from 96.9% in 2017. "This represents another step towards achieving our target of 95% in 2020," stated Elisabeth STADLER. Claims ratio improved to 63.3%, while cost ratio slightly went up to 33.0%.



The financial result was of EUR 238.4 million in 1Q2018, decreasing y-o-y by 3.8% primarily due to seasonal fluctuations in property maintenance costs.

Group investments including cash and cash equivalents were EUR 37.5 billion as of 31 March 2018.

"Agenda 2020" - successful expansion of the reinsurance business

"We can grow on a sustainable basis only if we modernize Group structures and operational processes over the long term. For this purpose, we have defined measures as part of our 'Agenda 2020' management program which we keep implementing according to schedule since the last year," explained Elisabeth STADLER. The reinsurance business is one area that VIG aims to expand under "Agenda 2020" through its Group company VIG Re, located in Prague.

VIG Re (including the affiliated Serbian reinsurance company Wiener Re) generated a consolidated premium volume of around EUR 460 million in 2017 (+10.2%). Premiums from reinsurance contracts not concluded with VIG companies (third party business) increased very significantly to around EUR 125 million in 2017 (+31.2%). The number of external customers increased further from 304 to 331 in the first quarter of 2018.

First steps for the planned controlled market entry into Western Europe have been successfully taken. A VIG Re branch focusing on customers in Austria, Germany and Switzerland was opened in Frankfurt in autumn of 2017. The new branch currently serves 48 reinsurance customers with a premium volume of EUR 40 million. Another branch is planned to be opened in Paris in autumn of 2018 to serve customers in France, Belgium and Luxembourg. In these markets, VIG will focus primarily on regional direct insurers relying on long-term cooperation.

In terms of business segments, the focus will be on those lines of business that are in line with VIG Re's risk strategy and where VIG Re has a high level of underwriting expertise.

The interim report for the 1st quarter of 2018 will be available on the website http://www.vig.com on 29 May 2018.

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