Vienna Insurance Group AG (VIG) Deputy Chief Executive Officer Franz Kosyna will quit after taking responsibility for losses in Italy that reduced third-quarter profit by 30 percent at Austria’s biggest insurer.
Net income for the three months through Sept. 30 fell to 77 million euros ($105 million), from 110 million euros a year earlier, the company said in its quarterly report today. The decline was caused by a “massive increase” in claims expenses in the Italian motor insurance business and an “intense price war” in Romania, Vienna Insurance said.
The company’s performance “has been characterized by a series of ups and downs,” CEO Peter Hagen said in the report. In view of the “highly negative performance” of the Italian motor insurance business, Kosyna, 59, will resign by Dec. 31, the company said late yesterday.
Kosyna’s resignation is an “example of our corporate culture,” where executives take responsibility for developments at the units they oversee, Hagen said at a press briefing in Vienna today. A company spokeswoman said Kosyna declined to comment.
Vienna Insurance, located in the Austrian capital, said on Nov. 11 that due to the situation in Romania and Italy, its goal of keeping “volatility in the development of results as low as possible” won’t be met this year. Analysts expect full-year net income to decline to 334.3 million euros from 446.2 million euros a year earlier, according to data compiled by Bloomberg.
The company may have a “high double-digit million-euro” loss in Italy this year, Hagen said at the press briefing. More losses in Romania also can’t be ruled out, he said. In the first three quarters, Vienna Insurance’s pretax loss in the eastern European country widened to 36.1 million euros from 9.5 million euros a year earlier.
The shares fell as much as 2.6 percent in Vienna today, the biggest intraday decline since Nov. 13 and traded at 38.42 euros, down 1 percent, at 1:25 p.m. local time.
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