Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Insurance service revenue increased by 10% to EUR5.9 billion, driven by growth in the P&C segment.
- Profit before taxes rose by 3.9% to EUR481 million.
- Net combined ratio for P&C improved to 93.3%, with a better claims ratio of 61% and a stable cost ratio of 32.2%.
- Solvency ratio remains strong at 265%, indicating robust financial health.
- Standard & Poor's reaffirmed VIG's A+ rating with a stable outlook, highlighting the group's solid capital buffer and financial leverage below 40%.
Negative Points
- Weather-related claims remain unpredictable and could impact future results.
- Insurance service result for reinsurance health declined significantly from minus EUR22 million to minus EUR320 million due to lower weather-related claims coverage.
- The Czech Republic segment saw a decline in profit before taxes due to higher claims ratio in P&C and lower results in life insurance.
- Higher property and weather-related claims in Austria and Czech Republic affected the combined ratio.
- The Turkish market remains volatile, which could impact the sustainability of improvements in the special markets segment.
Q & A Highlights
Q: How do you see the year-to-date 2H developments, pricing claims in July and August?
A: There haven't been tremendous changes in pricing in July and August. Weather-related claims in Austria were significant, but we don't expect them to have a substantial impact on the overall 12-month development. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: With the S&P review now done, how do you think about excess capital that you hold any usage forward?
A: We aim to use the excess capital mainly for organic growth and future M&A activities. (Liane Hirner, Chief Finance and Risk Officer)
Q: Could you comment on the status of the internal restructuring and streamlining of activities in Poland?
A: We received official approvals for the merger of non-life companies on July 1 and expect approvals for the life company merger soon. Initial restructuring efforts have shown positive results, aided by a favorable market environment. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: How do you see the life and health segment developing in the second half of the year?
A: We expect stable production volume and a stable development in the life and health segment, despite some increased volatility in capital markets. (Liane Hirner, Chief Finance and Risk Officer)
Q: Could you provide a breakdown of the strong insurance revenue growth in the P&C business?
A: The growth is driven 60% by pricing and inflationary effects and 40% by an increase in the number of risks. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: Could you provide some color on the higher property and weather-related claims in Austria and Czech Republic?
A: The increase is mainly due to higher frequency of smaller claims rather than severity. Our conservative reinsurance program covers severe events, but the higher frequency of smaller claims has impacted our self-retention. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: Can you provide an update on the CO3 program?
A: The CO3 program is progressing well, with cooperation synergy plans developed country by country. We have also implemented a group-wide technical tool for know-how exchange, showing first successes. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: Is the improvement in the special markets' combined ratio to 93% sustainable?
A: While we are optimistic, the volatility and uncertainty in the Turkish market make it difficult to provide a clear guidance for sustainability. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: How much of the increase in Austria and Czech Republic's combined ratio is due to weather-related claims versus structural changes?
A: Approximately 2-3 percentage points are due to structural changes, with the rest attributed to weather-related claims and an unusual accumulation of small- to medium-sized fire claims. (Peter Hoefinger, Deputy Chairman of the Managing Board)
Q: Can we expect a stable CSM release in the second half of the year?
A: Yes, we expect a stable development for the CSM release, assuming no major changes in variable fees or interest rates. (Liane Hirner, Chief Finance and Risk Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
