Vienna Insurance Grp Ord

Ladies and gentlemen, welcome to VIG Key Figures and Updates First Quarter 2025 Conference Call and Live Webcast. I am Yusuf, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode in that this conference is being recorded. The presentation will be followed by a Q&A session. To ask a question, please press star followed by 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Peter Herfinger, Deputy CEO of VIG. Please go ahead.

Thank you very much and a very warm welcome this afternoon. I'm happy to present together with my colleague, Liane Hirner, our first quarter results. We can present quite solid results in the first quarter with a growth in insurance service revenue by more than 8% and profit growth before Texas. of 7.5%. We also have been able to place successfully a Tier 2 sustainability bond and repurchasing part of our subordinated debts. Additionally, we have additions in Albania to our two non-life insurance companies, a life insurance company, where we will realize with synergies and also exploring the live market in Albania, which is still at a very early stage. On top, we bought a stake in Finanze. Finanze is the largest financial broker in Poland, which will support our growth of our Polish companies. And we are currently in the pits of taking over MoldoSig, which is one of Moldova's leading non-life insurance companies. and the government has invited us to participate in this bid to then further develop the Moldavian insurance market. On the next slide, you see our diversification, which we have reached until today, and we believe this diversification is important and supports our resilience. And you see on cross-written premiums, also in insurance service revenues, that there is a very nice percentages divided by our countries and region. And the same is true for the results before taxes. We're having Austria with 35%, extended CE with 26%, and Czech Republic with 23%. On the next slide, you see the economic forecast for our regions. We feel to be currently in the right area of Europe, having projected GDP growth between 3% for next year in Poland to 2.5% in Czech Republic. Comparing this with the Euro era in the year 2025 with 0.7%, we are quite in and very active environment and benefiting from the internal growth and consumption of Central Eastern Europe. On the next slide, as I have mentioned, we have been able to issue a Tier 2 bond with a principal amount of 300 million. An amount equivalent to the net proceeding is used for a combination of eligible green and social assets in line with VHE's updated sustainability bond framework 2025. The very strong order book of above 1 billion at peak was finally three times oversubscribed and led to the lowest spread over any subordinated nodes of VHE with 195 basis points. At the same time, VHE repurchased a total volume of around 126 million of subordinated nodes issued in 2015 and 2017. With this introduction, I'm happy to hand over to Liane Hirner. Liane, please.

Thank you, Peter. As Peter already mentioned at the beginning of his presentation, we are very pleased with the solid business performance we achieved in the first three months of 2025. To summarize, the insurance service revenue increased by 8.1% to 3.1 billion euros. Profit before tax rose by 7.5% to 261.1 million euros, which is driven primarily by double-digit growth rates in Poland and the extended CE segment, with Romania and Bulgaria contributing significantly to the profit growth. The net P&C combined ratio improved from 92.7% to 92.3%. This reflects a lower claims ratio thanks to fewer weather-related claims and positive developments in the motor business in the Czech Republic and Poland. Our solvency ratio as of end of March this year stood at robust 271%. up from 262% in Q1 last year. This was supported by increased own funds of about €10.8 billion, driven by the positive operating performance and by positive interest rate developments. The SCR remained relatively stable at close to €4 billion. Please note that the dividend payment for the business year got fully considered in the first quarter in line with our dividend policy. Excluding the transitional, the solvency ratio stood at 252%. Now let's move to slide nine, and let's have a closer look at the top line development in the first three months, 2025. starting on page 9, with the gross written premiums over 2. Premiums were up 8.3% to overall 4.7 billion euros. Here, Austria and the Czech Republic both did well in the Q1 with premium growth rates of above 6%. In Poland, the extended CE and the special market segments, we saw a double digit growth rate. Apart from Poland, with plus 54 million euros additional premium volume in the first quarter, the markets, Turkey, Romania, and the Baltic states significantly contributed to the premium growth in absolute terms. This very favorable development gets also reflected in the insurance service revenue figures, which we show on the next slide. Overall insurance service revenue increased by 8.1% to 3.1 billion euros. Austria's growth of 6% was mainly driven by the non-motor and health business. Czech Republic posted 7.3% growth and Poland was up 8.2%, both benefiting from sound motor and other property business as well as growth in life. In extended CEE, nearly three quarters of the segment's 90 million euros growth came from Romania, Slovakia, and the Baltics. In special markets, it was again the dynamic development in Turkey pushing the insurance service revenue in this segment to roughly 290 million euros, up by 38%, or 80 million euros. These strong developments underscored abroad based momentum across all our markets. Summarize, we have a look at page 11. We had a strong start in 2025 with robust business performance and all key metrics. At our AGM last Friday, shareholders approved a dividend of €1.55 per share, which we will pay out tomorrow, May 28th. Given our sound Q1 performance with broad written premium and insurance service revenue both up 8% and the profit before taxes increase of 7.5%, we remain confident in reaching our targeted profit before taxes range of €950 million to €1 billion for the full year 2025. Our capitalization remained strong with a solvency ratio of 271%. The SSCR reports for the full year 2024 are available on our website and we have added two overview slides including the sensitivities on the slides 13 and 14 in this presentation. I have come to the end of my presentation and we are now welcome your questions.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star 1 at this time. The first question comes from Yudish Shiroche from Autonomous Research. Please go ahead.

Good afternoon, everyone. Can you hear me?

Yes, we can hear you.

All right, thank you. So I'll kick start with two questions first. Firstly, just on your guidance, judging from your pre-tax profits, it seems quite a solid start to the year, but you have maintained your full year guidance unchanged. So I'm just wondering, is that just because it's too early in the year? or is that a reflection of some increase in certainty, or maybe some slowdown that we should be aware of further down the line? That's my first question. My second question is on solvency, actually. Just looking at your most recent sensitivities, it seems that your sensitivity to increase of 50 basis points in your incorporate bond spreads is now minus 6%, but last year I think it was closer to 15%. So I was just wondering what has driven this change, please. Thank you.

So I'm happy to answer your question. The first one regarding the guidance, the guidance remains unchanged. Usually our first quarter changes or we start with a good first quarter, and also we did that in the last year. There is no increase of uncertainties, but for the moment it's too early, and we stay with our outlook as presented. All right, thank you. Yeah, the second question was regarding solvency. The the spread of corporate bonds 50 basis points compared to last year. This year you would have to add spread corporate bonds and spread government bonds. This was shown in one figure last year, 14.9% minus. And this year we split it so you can see 55% downward sensitivity for corporate bonds and 8.96% downward sensitivity for corporate bonds.

Okay, that makes sense. Right, okay, that makes sense. Thank you very much.

Somehow unchanged.

Okay, great. Thank you very much.

You're welcome.

As a reminder, if you wish to ask a question, please press star followed by one. The next question comes from August Markan, UBS. Please go ahead.

Hi, Leanne. Hi, Peter. Congrats on a solid set of results. My first question is on P&C. How are you seeing pricing versus inflation trends in your major geographies and how do you see it developing in near medium term? Any color there would be helpful. Then my second question is on your strategic plan, your current strategic plan since this year. Are there any updates, any plans on an update for the market or anything there? And then my final question is on excess capital. Again, you're still trending well above your target range. Now you have a bit more debt than you did before as well, so that also helps. Any thoughts about how do you see your capital? Do you see potential for any inorganic growth distributions? Anything you can tell me here would be helpful. Thank you.

Thank you. Thank you for your questions. I will take the first two questions. The first question is rate increases versus inflation. You have to separate between Austria and Central Eastern Europe. In Central Eastern Europe we have annual contracts, therefore we are adopting our contracts also to the claim costs and needs, and therefore we are reflecting quite pretty the inflation and are able to increase WIP inflation. In Austria, specifically in the retail book, we have long-term contracts with indexes. Indexes which are not CPI, but for example, in the household property, it's a construction price index. Or in casco business, it's a repair cost index, which is generally... higher than the CPI. We are having here the effect that the indexation is always done at the inception, at the original inception date of the policy. Therefore, quite a large part of our books gets inflated with the inflation rate from last year, increased this year, whereas the inflation in Austria is quite stable, even maybe a bit lower than last year. If I come to your second question, which is more about the topic about our strategy, you know that we are currently still having our strategy VHE25. We are in the middle of the process making our new strategy for the next three years, As soon as there is something to deliver and to inform, we're happy to do so. I would expect this to be in the second half of the year. I'll hand over to Liane.

Thank you. Your last question related to the capital position of VIG. We have a very solid solvency ratio I already mentioned, which has been positively influenced by the interest rate development. So our capital is well above the target range that we published between 100 and 200%. As Peter already started in his presentation, our M&A activities are ongoing. So we have explained some M&A activities in Albania, in Poland, and in Moldova. So the active capital or the capital is used for inorganic growth and also for organic growth. So the growth rates in the gross written premium and insurance service revenue both amount to 8% in the first quarter 2025 also need capital. This would be my answer.

Ladies and gentlemen, for any further questions, please press star followed by one. The next question comes from Thomas Ugner, Aster Group. Please go ahead.

Yes, hello, good afternoon. Thank you also for taking my question. I'd be interested in your expectations for the combined ratio with a 92.3 in Q1. Do you expect, I mean, presumably you would expect weather-related claims to go up in the coming quarter or in the coming quarters. Do you expect any positive developments on the cost ratio? It increased a bit year over year, while the claims ratio was quite a bit better than last year in Q1. And staying with the combined ratio, if you could just maybe talk about the individual segments and their development in Q1. I know you touched very briefly on Czech Republic and Poland. Maybe you can go into some more detail on the regions. Thank you.

Okay. Thank you for your question. Combined ratio, 92%. You know it's the first quarter. You know that principally in the first quarter there is low weather related claims activity. The same is true for this first quarter. If there would be something like a nut cut season in our region then it lies ahead of us. I would expect that we will stay In the region of our combined ratio where we are today, there will be a certain smoothing out of the cost ratio over the year. And let's see how the NAPCAT and weather-related claims will develop. But if it would be not something very unexpected, one can expect that we will be in this range of the combined ratio. To go more into details of the region, we see and you see by our figures that we are able from the beginning of the year to have again an attractive growth dynamic in Poland. We had the mergers and the reduction of complexity last year in emerging companies. The growth ratio which we are showing here is clearly a sign that we are again very much focused on the market development. Market development is very much supported by other properties. GDP growth in Poland is quite outperforming and there is a large economic activity there where we are benefiting. I mentioned, I think, Czech Republic, where we also do have a decent gross property as well as in motor business. We are growing quite significantly in Romania. In Romania, on one hand side, we are growing in... motor business, CASCO and motor TPL, but also in property. Also in Romania, we see a favorable economic environment currently there, also driven by a certain number of repatriation of Romanian citizens back to Romania in the last years. and a certain increase of forex direct investment. Maybe to have a word about Bulgaria. In Bulgaria we are growing with 9.9%. Over here it is mainly driven by property business. Also Bulgaria does have a nice GDP growth which is supporting our premium growth there. Again, generally, we are able to reflect in our rates the inflation of our claims costs. There is a certain automatic driver of the premium growth by inflation adaptation. But on the other hand side, The markets, which I mentioned, we also had an increase of a number of... I hope this gave you a bit more details.

Thank you very much.

As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Thomas Cheeser, Hold AM. Please go ahead.

Good afternoon to everyone. Hi. I would have a question related to the interest rate environment. So it's quite a recent topic on the bond markets globally that loan rates are going up. And would be curious on your opinion, how is it affecting VIG currently and whether, of course, it's more happening maybe in the US and Japan, but might have an effect also on the European rates and German rates are also higher due to the fiscal situation. So General, can you mention a little bit how is it affecting, is it benefiting VIG or not? What is a kind of a sweet spot of long rates for your business in your mind and whether the current market rates we are seeing it will continue to support the financial profits of the company or not? Okay, thank you.

Thank you. I'm happy to take your question regarding interest rate developments. For VIG, interest rate developments of our countries are relevant. So, euro, tax ground, Turkish lira, foreign currency, in the main yield curve. And in the first quarter, we saw an increase. So, this has had a positive effect on our results, also on the foreign currency ratio. In April, we, in the meantime, see a decrease again. the interest rate environment outside our markets do not have a huge impact on our business. Does this answer your question?

Yeah, maybe that part I would ask again is what do you think is an optimal level of euro interest rates for your business?

An optimal, I didn't catch your question, optimal net level?

Optimal level of long Euro rates for your business or is this current environment is kind of optimal for VIG or higher rates would be more beneficial or not?

For us, low interest rate environment as for every insurance group I think is not the best situation but as it is currently, And a smoothly increasing interest rates curve is positive and is something that we would be happy. But on the other hand, as we saw in the past years, we could manage very well all the interest sensitivities that we saw in the last years in various crisis times. So it could be quite well matched and very well diversified. So this makes... our group very resilient also in this respect.

Okay, thank you.

Ladies and gentlemen, once again, to ask a question, please press 4, star, followed by 1. That was the last question. I would now like to turn the conference back over to Nina for closing remarks.

Thank you. Thanks to everyone listening in and for your question and interest. We will publish the half-year results of Vienna Insurance Group on the 27th of August. If you have any questions in the meantime, please do not hesitate to contact the investor relations team. We are happy to help. Thank you and goodbye.

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