The Vienna Insurance Group is a successful composite insurer operating in the property/casualty, life insurance and health insurance segments. The Group’s area of activity extends over 23 countries and is divided into the following seven geographic segments: Austria, Czech Republic, Slovakia, Poland, Romania, Other CEE markets, and Other markets.
Premiums grow to EUR 6.91 billion
The Vienna Insurance Group generated an outstanding premium volume of EUR 6,911.93 million, representing an increase of EUR 1,030.42 million or 17.5% over the previous year. EUR 6,068.60 million of the gross premiums written were retained by Vienna Insurance Group and EUR 843.34 million were ceded to reinsurance companies. Major contributions to this premium growth came especially from the outstanding rates of increase in the new segments Poland (+62.1%) and Romania (+74.5%), added in 2007.
Net earned premiums rose from EUR 5,038.68 million in 2006 to EUR 5,941.69 million in 2007, representing an increase of 17.9%. Deferred premiums were EUR 139.44 million, and deferred reinsurance cessions amounted to EUR 830.80 million.
Expenses for claims and insurance benefits
Not including the EUR 492.03 million allocated to reinsurance companies, expenses for claims and insurance benefits were EUR 5,031.51 million in 2007. This represents an increase of EUR 818.19 million, or 19.4%, in the expenses for claims and insurance benefits incurred by the Vienna Insurance Group.
The increase in expenses for claims and insurance benefits is primarily due to the expansion of the scope of consolidation and an increase in storm losses in 2007.
Operating expenses
After including commissions and other acquisition expenses and deducting reinsurance commissions received, 2007 operating expenses for all consolidated companies of the Vienna Insurance Group amounted to EUR 1,345.11 million, representing a moderate increase of 18.4% over the previous year. Commissions and other acquisition expenses were EUR 1,194.07 million in 2007.
Profit before taxes rises 36.2%
The Vienna Insurance Group earned a profit before taxes of EUR 437.30 million in 2007. This result was a remarkable 36.2% increase compared to the year before, that is, EUR 116.33 million above the profit before taxes earned in 2006. All three of the Group’s business areas and all seven geographic segments of the Vienna Insurance Group made positive contributions to this result.
Earnings per share
The earnings per share, representing the ratio of consolidated net profit afterminorities to the average number of shares outstanding, rose to EUR 2.98 in 2007. The increase in net profit thus caused earnings per share to increase sharply, by 20.2% (2006: EUR 2.48).
Combined ratio significantly below 100%
The combined ratio, a classification figure of the property/ casualty insurance, representing the ratio of operating expenses and insurance payments to earned premiums, was significantly below 100% in 2007. To be precise, the combined ratio of the Group after reinsurance (not including investment income) was 95.5% in 2007. This is a considerable achievement, even when compared with other insurance groups, particularly in view of the many natural catastrophes throughout all of Europe (primarily storms and flooding in 2007).
Financial result
The Vienna Insurance Group had a financial result of EUR 1,002.64 million in 2007. The growth of 39.9%, or EUR 286.20 million, in the financial result validates the conservative investment policy followed by the Vienna Insurance Group. Changes in investment structure to adjust for current capital market developments and maintenance of discipline in the investment process both contributed to this growth in the financial result.
Investments already over EUR 20 billion
The Vienna Insurance Group had total investments of EUR 20,171.39 million as at 31 December 2007. This represents an increase of EUR 2,911.02 million, or 16.9%, compared to the previous year. These investments include all Vienna Insurance Group land and buildings, all shares in affiliated and associated companies and all financial instruments. They do not include investments for unit-linked and index-linked life insurance, which rose by 31.0% from EUR 2,340.58 million to EUR 3,065.99 million.
Investments reached EUR 3,253.43 million (–16.5%) in the property/casualty area, and an increase of 29.4% from EUR 12,398.13 million to EUR 16,047.24 million was recorded in the life insurance area. Vienna Insurance Group investments were EUR 870.74 million (–9.7%) in the health insurance area as at 31 December 2007. The slight decrease in investments in the property/casualty and health insurance segments is due to a regrouping of free assets.
Shareholders’ equity
The Vienna Insurance Group’s capital base was strengthened by 14.6% to EUR 2,615.56 million in 2007 (2006: EUR 2,283.21 million).
Underwriting provisions
Underwriting provisions of EUR 17,092.13 million existed as at 31 December 2007. The level of underwriting provisions for the Vienna Insurance Group at the end of 2007 was therefore 16.8% higher than the level of EUR 14,628.42 million as at 31 December 2006. Underwriting provisions in the property/casualty area increased 17.4% over 2006, to EUR 3,738.67 million, while underwriting provisions in the life insurance area rose 17.3% over the previous year, to EUR 12,585.46 million, as at 31 December 2007. Underwriting provisions for unit-linked and index-linked insurance were also increased by 31.7%, from EUR 2,238.86 million in 2006 to EUR 2,948.52 million.
RoE (Return on Equity)
In spite of the capital increase carried out in 2005, return on equity was an outstanding 18.0% in 2007 (2006: 14.8%). The RoE equals consolidated profit divided by the average total shareholders’ equity of the Vienna Insurance Group.
Cash Flow
Cash Flow from operating activities rose by EUR 375.62 million, or 22.8%, to EUR 2,020.98 million in 2007. The Vienna Insurance Group’s Cash Flow from investing activities was EUR –1,959.04 million in 2007 (2006: EUR –1,474.79 million). The largest items in the Cash Flow from investing activities resulted from the acquisition of available for sale securities and the acquisition of affiliated and associated companies. The Vienna Insurance Group’s financing activities produced a Cash Flow of EUR –62.80 million as compared to EUR –247.32 million in 2006.
The Vienna Insurance Group had cash and cash equivalents of EUR 277.70 million at the end of 2007. This represents a net increase of 22.6% in cash and cash equivalents over the balance of EUR 226.44 million at the beginning of the reporting period. The Vienna Insurance Group received a total of EUR 763.91 million in interest and dividends in 2007.
