Vienna Insurance Group (VIG) Announces Strong Financial Performance for 2024
Vienna Insurance Group AG (WBO:VIG) has reported a solid financial performance for the full year 2024, overcoming several market challenges. The company saw considerable growth in key financial metrics, including gross written premiums, insurance service revenue, and profit before taxes. Despite this, the company acknowledged the impact of weather-related claims and geopolitical events.
Key Financial Highlights
- Gross Written Premium: Reached EUR 15.2 billion, an increase of over 10% compared to the prior year.
- Insurance Service Revenue: Rose by 11% to EUR 12 billion.
- Profit Before Taxes: Increased by 14.1% to EUR 881.8 million.
- P&C Net Combined Ratio: Increased to 93.4% from 92.6%.
- Earnings Per Share: Increased to EUR 4.98.
- Operating Return on Equity: Improved to 16.4%.
- Dividend Proposal: The company proposed a 10.7% increase to EUR 1.55 per share, resulting in a dividend yield of 5.1%.
- Goodwill Impairment: A EUR 116.3 million impairment was recorded in Hungary due to additional insurance tax.
- Tax Ratio: The tax ratio decreased to 24.4% from 25.4%.
- Investment Portfolio: Total investments experienced a 3.4% increase, reaching EUR 36.5 billion.
- Solvency Ratio: Stands at 261% when taking transitional measures into account, or 238% excluding these.
Positive Points
VIG’s strong performance was driven by significant growth in gross written premiums, which exceeded EUR 15 billion, representing a growth of over 10% from the previous year. Insurance service revenue also rose, driven primarily by the Property & Casualty (P&C) business.
The company’s profit before taxes reached EUR 881.8 million, a 14.1% increase, despite the effects of events like Storm Boris. Furthermore, the company has proposed a dividend of EUR 1.55, per share, which marks a 10.7% increase. The dividend provides investors with an attractive yield of 5.1%.
VIG’s diversification strategy across its markets and business lines, especially within Central Eastern Europe, has provided a stable base for future growth.
Negative Points and Challenges
The P&C net combined ratio increased slightly, which was affected by weather-related claims. A goodwill impairment of EUR 116.3 million was recorded in Hungary due to additional insurance tax. While the solvency ratio remains strong, it experienced a slight decrease.
The life business, with profit participation, did not see double-digit growth as some other business lines did. The overall macroeconomic and geopolitical environments are still challenging for future performance.
Q&A Highlights from the Earnings Call
During the earnings call, executives addressed several key topics:
- 2025 Guidance: CEO Hartwig Löger stated that the company is focusing its strategic growth on Central Eastern Europe, particularly in Poland and Slovenia. Peter Höfinger, Deputy Director General, explained that growth is projected due to rising insured sums, higher investment yields, and GDP growth in the CEE.
- Dividend Policy: Liane Hirner, CFO, noted that the dividend policy remains unchanged, adhering to a minimum dividend set at the previous year’s level. They view the current dividend yield as appealing.
- Outlook for 2025: Poland, Austria, and the Czech Republic show growth potential in life and health insurance, with Extended CEE including Romania and Bulgaria showing particularly strong potential.
- Hungary Impairment: Regarding the impairment in Hungary, Liane Hirner noted that the remaining goodwill is limited, so further impairments would not impact results much. The company expects sound operational results in the country when excluding the tax impact.
- Life and Health Segments: Both Peter Höfinger and Liane Hirner expressed optimism about the prospects for the life and health segments. They saw heightened awareness of the value of old-age savings and health insurance in Central Eastern Europe. They also reiterated that no special dividend is planned.
The full earnings call transcript provides complete details of the discussion.
