Effects of the COVID-19 pandemic expected starting in Q2 2020, in spite of the good start of the year
- Premiums rise to EUR 3.1 billion (+7.2%)
- Profit (before taxes) decreases to EUR 121.9 million (-4.4%)
- Net result increases to EUR 85.8 million (+2.8%)
- Combined ratio 95.1% (-1.7 percentage points)
Vienna Insurance Group (Wiener Versicherung Gruppe) achieved a positive business development in the first quarter of 2020. “We recorded a very good start into the year, with a significant increase in premiums. This was due to strong performance in the months of January and February 2020 that significantly compensated for the initial effects of the restrictions implemented starting in the middle of March in the battle against COVID-19. Premium losses due to a decrease in new business will primarily be noticeable starting in the second quarter of 2020 and are expected to continue for the remainder of the financial year,” explained CEO Elisabeth Stadler. Branch offices in the countries where the VIG Group operates gradually began to re-open starting in the beginning of May. Service locations are once again available to customers with no restrictions, subject to compliance with appropriate safety measures.
Increase in premiums
Total premium volume reached EUR 3.1 billion in the first three months of 2020. This corresponds to an increase of 7.2% compared to the first quarter of 2019. Premium increases were achieved in all lines of business in the first quarter of this year. Single premium in life insurance recorded double-digit growth (+29.8%). The Austria and Poland segments recorded the highest absolute premium increases.
The first quarter of 2020 closed on a positive note, with a somewhat lower profit (before taxes) of EUR 121.9 million (-4.4%) and a slightly higher net profit (after taxes and non-controlling interests) of EUR 85.8 million (+2.8%), despite initial dampening effects of the COVID-19 pandemic.
Combined ratio improves by 1.7 percentage points
The claims ratio was significantly lower year-on-year in the first quarter of 2020, leading to a combined ratio of 95.1% (Q1 2019: 96.8%). The Baltic states, Slovakia and Turkey/Georgia segments showed major improvements in the combined ratios.
The financial result (excl. the result from at-equity consolidated companies) amounted to EUR 136 million in the first quarter of 2020, 25% less than the same period in the previous year. This was primarily due to deconsolidation of the non-profit housing societies on 31 July 2019, and increased impairment of investments. Group investments including cash and cash equivalents were EUR 34.7 billion as of 31 March 2020.
VIG Group gradually returning to the “new normal”
In May, a gradual start was made, taking into account the locally applicable provisions and requirements, to enable limited office operations again for the employees, most of whom work in home offices. The main focus is on providing customer service while observing strict health and safety regulations. Furthermore, a regular exchange on the current situation in the VIG countries takes place with the local management of the VIG Group companies. Capital market developments are also being closely monitored. The coronavirus crisis is mainly affecting the VIG Group due to its effects on capital market performance. There have also been some decreases in new business that could not be compensated by a simultaneous increase in online business.