Vienna Insurance Misses Estimates as Premium Growth Stalls

Vienna Insurance Group AG (VIG), the biggest insurer in eastern Europe, missed profit estimates as payments for hail, rain and storm damages hurt fourth-quarter earnings and growth outside Poland stalled.

Pretax profit rose 5 percent to about 585 million euros ($780 million) in 2012, according to preliminary results, the Vienna-based company said in a statement today. That implies fourth-quarter profit fell 2 percent to about 142 million euros, according to Bloomberg News calculations. The average estimate of 13 analysts was for profit of 588.5 million euros, with 11 predicting earnings of more than 585 million euros.

“We still had some late claims for natural catastrophe damage claims in the fourth quarter,” Chief Executive Officer Peter Hagen told journalists in Vienna. Low interest rates also had an effect on the company’s results, he said.

Vienna Insurance, which makes more than half of its revenue in the former communist part of Europe, expects its growth to be driven by that region because people are still spending a smaller share of their income on insurance than in western Europe. While its life-insurance revenue benefits from increasing savings in Poland and the Czech and Slovak republics, products like car insurance are suffering from the slowdown in countries including Romania.

Romania Loss

Hagen declined to give a profit forecast for 2013, saying the economy is too volatile to make a prediction, though the company targets revenue growth that outpaces the market.

Unconsolidated premiums written rose 9.5 percent to 9.87 billion euros last year, driven by life-insurance premiums that more than tripled in Poland, and by growth with corporate customers in Austria, the company said in slides presented to investors today.

Premium growth will slow in Poland this year, Hagen said. Premiums slid in Romania, where Hagen said the group probably lost money last year, and the Czech Republic.

Vienna Insurance shares recovered after falling in early trading. They were up 1.3 percent to 39.515 euros at 2:45 p.m. in Vienna trading, outperforming the 14-member Euro Stoxx Insurance (SXIE) index.

Hagen said Vienna Insurance will continue to pay about 30 percent of its net income as a dividend, and may raise the payout if net income increases in line with pretax income. He declined to be more specific ahead of the final audited results, which are due April 3.

Vienna Insurance paid 1.10 euros a share for 2011. The Bloomberg dividend estimate is 1.20 euros for 2012.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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