CEE Growth Leads to 10% Profit Hike for Vienna Insurance Group in 2011

Vienna Insurance Group said preliminary results for 2011 show a pretax consolidated profit of nearly 560 million euros (US$725 million), up 10% from the previous year, on premium growth in both its life and nonlife insurance segments in the face of difficult economic conditions.

The Austrian multiple-line insurer said unconsolidated premiums written rose 3.4% to about 9 billion euros. Nonlife premiums rose 4.9% to 5.1 billion euros, and life premiums rose 1.4% to 3.9 billion euros.

Group Chief Executive Gunter Geyer said Vienna continued to expand in Central and Eastern European developing markets despite economic conditions that fostered unfavorable exchange rates in some instances.

"Our market entry in Bosnia and Herzegovina will allow us to take advantage of existing opportunities in this new market," said Geyer in a statement. "We have strengthened our presence in interesting markets by acquiring Intersig in Albania as well as the life insurance company Polisa in Poland. Taking efficiency-boosting measures, we optimize the profitability of our group on an ongoing basis. Our goal is to gain a clear competitive edge as the leading insurance Group in Central and Eastern Europe through the best customer service."

The 10% profit growth is in line with the target Vienna had set for itself early last year, when it reported 2010 results (Best's News Service, April 4, 2011).

Vienna also said its nonlife combined ratio for 2011 was about 97.

On the investment side, Vienna said it has minimal exposure to the peripheral European Union countries that have had recent debt problems. Its total investment exposure to the sovereign debt of Portugal, Ireland, Italy, Greece and Spain is 84 million euros, or about 0.3% of total investments.

Premiums in Austria remained stable at about 4 billion euros, as nonlife premiums rose 10.2%, offsetting a decline in life premiums. "The decline in the life insurance business may be attributed to the changed legislation on the minimum lock-up period for single-premiums. In contrast, regular premiums were increasing," Vienna said.

In the Czech Republic, premiums rose 5.7%, led by a surge of more than 13% in life premiums. Vienna said its companies in the country have an overall market share of about 30%.

Premiums in Slovakia rose 4.2%, again led by strong growth in life insurance. In Poland, premiums rose 27.7% as life insurance premiums nearly doubled.

In Romania, nonlife premiums fell 4.7% as the group restructured its portfolio. Life premiums rose more than 7% on increased use of banks as sales channels.

In Vienna's other markets, including Albania, <location value="LC/bg" idsrc="xmltag.org">Bulgaria, Bosnia-Herzegovina, Germany, Georgia, Croatia, Liechtenstein, Macedonia, Montenegro, Russia, Serbia, Turkey, Ukraine, Hungary, Belarus and the three Baltic states, total premiums fell 2.2% to 887.1 million euros. "A favorable development of premiums was observed in Ukraine and the Baltic states," the group said.

Vienna plans to release final 2011 results on March 29.

(By David Pilla, international editor, BestWeek: David.Pilla@ambest.com)