Prague-listed Vienna Insurance Group (VIG) reported 2010 consolidated earnings results on Thursday showing a pre-tax profit of €508 million with net income of €380 million, up 15.1 percent and 11.5 percent year on year, respectively. VIG reiterated a proposed dividend €1 per share (2.4 percent dividend yield) as well as the outlook for the year 2011 (growth in pre-tax profit by 10 percent).
“Overall, we consider the figures neutral and do not expect a major market reaction. The company again confirmed the stability of its earnings, in spite of very adverse weather conditions during the past year,” Atlantik analyst Milan Lávička said in a note to clients.
Gross written premiums grew by 7.2 percent y/y to €8.593 billion. The life-insurance segment in particular showed positive development (up 12 percent y/y to €3.905 billion), Lávička said, considerably helped by insurers acquired from Erste Bank in 2008. Non-life insurance premiums recorded lower increase (up 3.5 percent to €4.688 billion). Net earned premiums reached €7.860 billion (up 8.5 percent y/y).
“Expenses for claims incurred increased by 11.3 percent (€6.541 million), more than earned premiums. This is given mainly by unfavourable weather conditions (floods and storms) in the Czech Republic and partially also in Poland and Austria,” Lávička said. Operating expenses rose by 6.7 percent to €1.76 billion. ‘The structure of the investment portfolio shows no major changes, with bonds constituting 62 percent of all investments.’
Investment income was up 20.2 percent at €1.164 billion, bolstered by the growth of the investment portfolio (up 8.7 percent y/y to €28.2 billion) and lower impairments and losses from disposal of investments. “The structure of the investment portfolio shows no major changes, with bonds constituting 62 percent of all investments. Within the bond portfolio there has been shift from the bonds of financial institutions (decrease from 36 percent to 30 percent of the total bond holdings) in favor of government bonds, whose share rose from 44 percent to 52 percent,” the Atlantik analyst said.
The dividend corresponds to a long-term dividend policy of the company to pay at least 30 percent of the profits. The record date for the dividend is May 13. Management also confirmed that it expects low single-digit growth in gross written premium and profit before tax increase by approximately 10 percent in 2011, according to Lávička.
Gross written premiums
Net investment income
Expenses for claims incurred
Profit before tax
Source: VIG, Atlantik