Edited Transcript of VIG.VA earnings conference call or presentation 17-Mar-20 1:30pm GMT

Ladies and gentlemen, this is the first conference call where the VIG board members are not sitting together in one room in their office. We are all sitting at home doing home office, and we are not connected with our eyes and face-to-face. So this is an examination we will do together with you.

Please move to Slide 4, showing the key facts of 2019. We have succeeded in this — we are very proud of the EUR 10 billion premium threshold for the first time, increasing total premiums by 7.7% to EUR 10.4 billion.

The successful bancassurance cooperation with Erste Bank contributed EUR 1.3 billion in premiums, which is 5.2% more compared to 2018. Especially noteworthy is the double-digit growth in non-life business by 10.9%, reflecting our announced focus, which is also shown in the 24.2% increase of health business included in the non-life growth.

Net profit after taxes and noncontrolling interest is up 23.2% to EUR 331 million, leading to earnings per share of EUR 2.59, which means an increase of 27% compared to last year. Our combined ratio is down to 95.4%. This strongly supports our combined ratio development in all of our countries, and this is, of course, supported by the initiatives of our Agenda 2020. And I will provide more to this Agenda 2020 in a minute.

Given these excellent figures for 2019, management board decided to propose a dividend per share of EUR 1.15 to the Annual General Meeting, which is up by 15% compared to the dividend of last year. This is the fourth consecutive dividend increase, and in line with our dividend policy, represents a payout ratio of 44%. We exceeded the targets we have set for 2019. And hopefully, you’re understanding that also originally planned, we are not providing concrete target figures for 2020 at the moment.

As mentioned in my opening remarks, the consequences on our business from the coronavirus and the far-reaching precautionary measures are not predictable for the time being. I have already mentioned our strategic management program, Agenda 2020, and we have summarized the status as of the year-end 2019 on Slide 5.

Here, I want to highlight the ongoing digitalization efforts throughout the whole group represented in more than 180 projects. In 2019, we continued our cooperation with the Digital Impact Labs Leipzig, and started a new partnership with Plug and Play, a global innovation platform based in Silicon Valley. The digital transformation of the group not only aims at improving customer experience, but also target the simplification and automatization of processes as well as the intelligent use of data and the application of advanced analytics.

Regarding the optimization of our business model, we have very much focused on anti-fraud management and closed file review. I think I talked about this a lot in our last calls, increasing in both projects, number of countries and companies participating. The savings from these 2 Agenda 2020 initiatives in 2019 nearly fully offset the NatCat impact in the size of roughly EUR 50 million, supporting our favorable combined ratio development. This management program remains on our agenda also, in this year, 2020. Also, priorities in the current situation are, of course, moving. We still plan to present a follow-up agenda at the end of this year, but we would want to have a little bit more clarity over the further developments and outcome from the crisis. What for sure will be part of our new strategic program, our ESG aspect, that we and our group companies are already now considering in various ways in our business.

You can see this on the next page, on Page 6 of the presentation. Some examples are given, and we are proud that VIG share is not only a constituent of the Austrian sustainability index, VÖNIX, since the start of the index, but also listed in the FTSE4Good Index. We will publish on 16th of April 2020, together with the annual report, our sustainability report. And of course, all information will be available online via our address, www.vig.com.

Our climate change strategy that was set up last year in cooperation with our major group companies is shown in more details on the next page, Page 7. The binding regulations are addressing investments and underwriting in coal power energy. The reason for me to highlight this is the fact that we achieved a common understanding for this important topic and put it in a group-wide policy. You know that in general, based on our management principle of local entrepreneurship, it’s the responsibility of local group companies to decide based on the agreed asset split, in which assets they invest and also underwriting decisions are taken locally.

With this new policy, VIG Insurance Group will decrease direct investments in inappropriate industry until 2035 to 0, and we are not providing insurance to any new coal mining or coal power plant construction.

This is just one example that underpins our general ambition to integrate ESG in our core business, combining economic objectives with social and environmental sectors.

With this, I hand over to Liane. She will now focus on the operative business and present the details in figures of our full year results 2019.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [4]

——————————————————————————–

Thank you, Elisabeth, and a warm welcome to our listeners also from my side as well, sitting at home.

On Slide — Page 9, we show the highlights of our 2019 results. Elisabeth already mentioned the strong premium growth, the favorable combined ratio development as well as the proposed 15% increase of the dividend per share. Regarding the profit before taxes, being up by 7.4% to EUR 521.6 million, I want to highlight that we achieved this despite the change of consolidation method of the Austrian housing societies and despite the entire Romanian goodwill impairment in the size of EUR 108.8 million. The group solvency ratio of 210% at year-end 2019 developed in line with our expectations. We are closely monitoring the turbulences on financial markets today.

Due to the high volatility, we are not giving any updates yet as development and markets would prove as strong probably the next minute.

Werner Matula, our Chief — Group Chief Actuary, will present the details of our embedded value calculation and the new business margins in a couple of minutes.

Thus, I want to move on Slide 10 and our consolidated income statement for the full year 2019. The main items I would like to highlight here are other income and other expenses. Both substantially increased, mainly due to foreign exchange effects, the already mentioned Romanian goodwill impairment of EUR 108.8 million and the amortization of the right-of-use assets amounting to EUR 30 million. Further down the income statement, both the results before taxes as well as the result after taxes and noncontrolling interests were up by 7.4% and 23.4%, respectively, on the back of strong premium growth and profitable business development, especially in motor, supported by the improved combined ratio.

Due to a positive one-off, especially driven by Austria in the course of the finalization of the tax adjustment, the tax ratio of 20.8% in 2019 is lower compared to 2018, and thus, also below our original expectations.

Turning to Page 11 and the strong premium growth of our group, we especially appreciate the double-digit premium increase of 10.6% in CEE. The main premium growth drivers being Poland, the Baltics, Austria, and Remaining CEE. Premium decline in Romania is a result of our planned reduction of the motor third-party liability business, which declined by nearly EUR 70 million.

On the next slide, Page 12, we look at growth in gross written premiums by lines of business, with all showing solid increases, including a plus of 5.5% in life single premium business, which, as expected, did not further decline in 2019.

Health business grew by 11.5% group-wide. I would like to highlight our 5 focus markets: Poland, Romania, Bulgaria, Hungary and Turkey, that together increased health premiums by 42%, underpinning the success of this specific emphasis in the course of our Agenda 2020.

Over the page, we provide on Slide 13, an overview of group profit before taxes by segment with solid growth rates, except for Romania and the Other Markets segments. In the course of the annual impairment test, management reduced the earnings expectations for Romania due to the sustained difficult market situation, and after the EUR 50.1 million goodwill impairment in 2018, wrote down the entire outstanding goodwill for Romania in the size of EUR 108.8 million.

Without this goodwill impairment, Romania would have a positive result. The 5.7% decrease in Other Markets segment was driven by less financial results in Liechtenstein.

Moving on to Slide 14. A few more remarks regarding the 0.6 percentage points decreased combined ratio of 95.4%. We are well on track to reach our combined ratio of 95% and are satisfied with the positive impacts of our Agenda 2020 initiative.

The claims ratio improved despite higher weather-related claims by 1 percentage point to 63.7%, helping to offset cost pressure from mergers and rising wages, being reflected in a slightly increased cost ratio of 31.7%.

Before I hand over to Werner Matula for his remarks on the embedded value development, let’s have a look on the investment split and financial result.

On Page 15, we show the composition of our investment portfolio by asset classes on the left, with further details on bond ratings and issuers on the right, a rather stable picture compared to last year with one big difference. Due to the consolidation change of the nonprofit housing society, the roughly 10% real estate from housing societies which amount to approximately EUR 3.8 billion, are no longer included.

You will not be surprised to hear that more than 50% of the government bonds in our portfolio are coming from our major markets: the Czech Republic, Poland, Austria and investments in supranational.

The financial result on the next page. Excluding at equity, consolidated companies was down by EUR 16.3 million or 1.6%, with the housing societies finally contributing EUR 72.1 million in 7 months 2019. Given the consolidation change of the nonprofit housing societies, we expect the current income in 2020 to further decrease due to the low interest rate environment. Especially to mention is the income from disposal of investments. Due to the sale of the S IMMO stake in 2019, we recorded, especially in life, has substantially increased by EUR 92.1 million. Nevertheless, the net impact of profit from S IMMO after profit participation in the end amounted to EUR 19 million.

With this, I would like to hand over to Werner Matula for presenting the details on the life and health embedded value. Werner, please go ahead.

——————————————————————————–

Werner Matula, ZAD Bulstrad Vienna Insurance Group – Member of Supervisory Board [5]

——————————————————————————–

Thank you very much, Liane. Good afternoon to everyone. It’s my pleasure to do a deep dive into the life and health business, which we are usually doing by presenting the embedded value separately for the regions, Austria and Germany and Central and Eastern Europe. We are also disclosing this supplementary to the IFRS statement in April. If we start with the Austrian-German segment, then we see immediately a material drop of the embedded value of EUR 363 million or minus 17.9%. This is mainly driven by the interest rate environment, with minus EUR 556 million, and it’s pretty much in line with the sensitivities, which we have seen last year.

Interest rate, especially the euro region dropped by roughly 100 basis points. On the other hand, this was offset by an optimized reinsurance structure in Austria, which you can see in the experience variance of EUR 267 million. It’s still worth mentioning that we have managed to sell new business in 2019 despite a very challenging market environment with a margin of 1.7% compared to 2.7% previous year. If you look, obviously, new region on Slide 19, the picture is very different. We see a very positive return in this region with EUR 211 million or 11.9%. This was mainly driven again by a new business with EUR 67 million new business value and a margin of 5.8%. Also the new business margin in the CEE region dropped from 6.6%. This was mainly caused by a change of the contract boundary treatment in the Czech Republic, which has now been implemented according to the Solvency II compliance asked by the national regulator.

For the same reason, we also see a significant positive experience variance, which includes now the renewals of our contracts with short contract boundaries, and the economic variance in this region is small due to the nature of the business, which is mainly driven by biometric risks.

On the total, on Slide 19, we can see also the restatement from last year’s value in the amount of EUR 206 million. This is exactly the revaluation of the contract boundaries in Czech Republic.

After dividends paid by the life and health segment and there’s other opening adjustments such as currency, currency exchange rates, the total return on the group is minus 4% caused, obviously, mainly by the development in Austria. We are happy to report on overall new business written in 2019, with a margin of 3.2% and a value of more than EUR 100 million. This is a quick overview on the life and health embedded value, economic balance sheet view. And I’m happy to hand over to Elisabeth.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [6]

——————————————————————————–

Thank you, Werner. Ladies and gentlemen, it’s my pleasure to end our 2019 results presentation on Slide 20, with the already mentioned increase of the dividend per share by 15% to EUR 1.15.

In line with our dividend policy, this means a 44% payout ratio, and based on the share price at year-end 2019, a 4.5% dividend yield. Also we are not giving guidance due to the unknown outcome and impact of the coronavirus. I want to highlight some of the strengths that characterizes VIG Insurance Group. We have proven — we have a proven, well-diversified business model, which, in combination with a strong balance sheet, build a solid basis also for 2020, especially in times like this. The [monitored] implementation of our Agenda 2020 initiative will support our profitable business development. We are staying committed to profitable growth organically and via selective acquisitions, not paying strategic prices. We already built a unique footprint in Austria and Central and Eastern Europe, making us a top player in this region.

We will further leverage on this position, being a reliable partner for all our stakeholders. With this, I want to end our presentation, and we are now ready to take your questions.

================================================================================

Questions and Answers

——————————————————————————–

Operator [1]

——————————————————————————–

(Operator Instructions) The first question comes from the line of Thomas Neuhold with Kepler Cheuvreux.

——————————————————————————–

Thomas Neuhold, Kepler Cheuvreux, Research Division – Head of Research of Austria [2]

——————————————————————————–

I have 3 questions basically. I know we’re pretty early in the corona crisis, but can you shed some light on the potential impact on your premium generation? How strong are your online channels? Where do you see potential for rising games due to corona impact? Do you see also areas where you actually might benefit from impact?

For instance, I could imagine that people are driving less with the cars now, you might have less claims in the motor business. And then I was wondering, if I look at your share price development, the share price is now down below the levels we have seen in the trough, the 2009 financial crisis. It’s trading 0.4x book value only. Are you considering a share buyback at current price levels or not?

And the last question would be on the impact of the rising market volatility on the solvency ratio. I know it’s very difficult to give a detailed answer here, but maybe you can give us some sensitivities and shed some light on the impact of the strong increased volatility in asset markets.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [3]

——————————————————————————–

Thank you, Thomas. I would like to start with the second point, talking about the share price. We historically is down, and this is not fine. During this year, the Austrian stock index has gone down by 45%. So it’s quite clear that we have gone the same direction. And if you are better than this, I think this is not something with which you can be happy. Looking at the share buyback, I have seen that some of our competitors already announced things like this. We will prove this at the moment, and we are at the moment, checking all the possibilities, and we are looking at that — as you mentioned, the volatilities for the future, and we’re trying to get a better overview before we take decisions like this.

And concerning the first question, you are right, we are really early in the corona crisis. I think we can’t give any information about the premium development in how much it will be enrolled or not it depends on how long will the crisis take. It depends on the different situations in the different countries. We are represented in 25, 30 countries so this means we are quite well diversified. We see at the moment, of course, a decrease in Austria. I would say, Austria was one of the first countries which really set up these radical measures and Austria has come nearly really down to 0.

We say it’s quite quiet here, and we are quite quiet at the moment. So we also see this in the interest of the clients in buying insurance products at the moment.

On the other hand, yesterday, we have sold 25% more motor policies in Poland through our digital company. So you see that there is also a positive impact on this situation.

And you mentioned how the situation is in online. You know we are working really very intensive on the digitization on the different projects already since years. And especially in the CEE countries, we see that the clients are really interested in buying contracts online or via app or taking all the modern medias and not really waiting for the face-to-face contact with our intermediaries.

So I can’t give you an answer at the moment. We will see the outcome in the next weeks, I would expect. We had really to very fine first month in this year. And I’m quite sure that the need for insurance products will still be the same. And what we miss now during time of the crisis, maybe we can take this up after the crisis again.

Concerning claims and claim situation, maybe I can hand over to Peter Höfinger, but I think he will give you a little bit the same information. There is no exact information and no details at the moment. Peter, can you take over?

——————————————————————————–

Peter Franz Höfinger, Vienna Insurance Group AG – Member of the Managing Board [4]

——————————————————————————–

Yes. Thank you very much. I think on one hand side, one has to be aware, very different to other financial institutions. We are a cash flow generator. So if out of this crisis, somebody is not paying the claims, we are handling the coverage. Very different maybe to banks where people will stop paying their credit back. We have to be aware about our business all in relation to our — to the business models in the financial industry.

In claims, on one hand side, what we will see, and we don’t see it now in the figures. It’s too early, but this is an assumption, there will be less frequency, specifically in motor business. As we are in Central Eastern Europe, mainly in the obligatory insurances, like motor TPL, people will not cancel immediately their policies (inaudible) drive differently to insurance companies in Western Europe, where the portfolio is much more also on voluntary products, we will see immediate cancellations.

In property

(technical difficulty)

but with all the actions from [those] weeks, there will be a certain increase of fraud cases. We are quite experienced to the topic of fraud due to the region where we are acting. So also here, we feel well prepared to make sure to protect our company.

And one has to say, being in Central and Eastern Europe, people do have different resilience to crisis than maybe in some other regions in the world as our colleagues in Central and Eastern Europe, the last 30 years had already a very volatile environment.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [5]

——————————————————————————–

Yes. Thank you, Peter. And looking at maybe benefits for the future, I think you are quite right. We have seen that during the last years, the need or the ask for safety and security for the clients is getting bigger and bigger also in very challenging times, as we have seen in the last years. So I think maybe this could be an outcome after the crisis again. And there for sure, we will see more awareness of the topics, safety, security and, of course, therefore, insurance is the best product you can have. Concerning your third question, the rising market volatilities and the impact on solvency ratio, I would hand over to Liane.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [6]

——————————————————————————–

As I already mentioned, the group solvency ratio amounted to 210% at year-end. And this is very much in line with our expectations. So we have good starting point from our solvency position. Under the current unique situation resulting from this corona crisis and the exceptional market conditions we are facing, the significance of sensitivities, which are always calculated under normal market conditions is quite limited.

With regard to sensitivities, we will publish this in our SFCR report. And we’ll present this data for the year-end 2019, with our first quarter results, as we did in previous years. You mentioned our comfort zone, which is between 170% and 230% is our self-defined comfort zone. And currently, we estimate the group solvency ratio to be at the lower end of our comfort zone. But as I mentioned before, the situation is very volatile here, closely monitoring the market and trying to update our estimations daily and regularly.

——————————————————————————–

Operator [7]

——————————————————————————–

The next question comes from the line of Oliver Simkovic with RCB.

——————————————————————————–

Oliver Simkovic, Raiffeisen CENTROBANK AG, Research Division – Financial Analyst [8]

——————————————————————————–

I just have 1 follow-up question regarding the current crisis. So do you expect any — or do you see a potential for any impairment of goodwill in additional regions? I mean you have impairment now in Romania. Do you see something similar in Czech Republic as a result of on the current environment?

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [9]

——————————————————————————–

So this is Liane. I would like to comment …

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [10]

——————————————————————————–

Thank you.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [11]

——————————————————————————–

Currently, you see we do not see any goodwill impairments rate in other countries out of the crisis. But this is from today, today’s point of view.

——————————————————————————–

Oliver Simkovic, Raiffeisen CENTROBANK AG, Research Division – Financial Analyst [12]

——————————————————————————–

(inaudible)

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [13]

——————————————————————————–

The reason why you are mentioning Czech here, because this is one of our most stable countries.

——————————————————————————–

Oliver Simkovic, Raiffeisen CENTROBANK AG, Research Division – Financial Analyst [14]

——————————————————————————–

Yes. I mean you have the most goodwill there as well. That’s why I just mentioned it there.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [15]

——————————————————————————–

But the colleagues are not here from the Czech Republic. But there, we really have 2 very — 2 excellent companies doing great business there, and I think this is really absolutely not the case.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [16]

——————————————————————————–

The profitability of the Czech business although results in a comfortable and very high kind of headroom when we do the goodwill impairment test, so enough space there.

——————————————————————————–

Operator [17]

——————————————————————————–

The next question is from the line of Thomas Fossard with HSBC.

——————————————————————————–

Thomas Fossard, HSBC, Research Division – Co-Head of European Insurance and Analyst [18]

——————————————————————————–

I got a couple of questions. The first one will be related, again, to the Solvency II ratio, and you potentially could help us to understand the walk between the 238% reported at the end of H1 ’19 to 10% reported at the end of ’19? The second question will be related to Romania again. I’m not sure to have understood if there were remaining goodwill to be taken in 2020. If you could clarify this point?

And also, one additional thing is, I’m not sure yet that you have commented on any remittance ratio and how cash was generated in the group. Actually, here you’re raising the dividend quite substantially, increasing 7%. Maybe you could share a bit of your view how we should think the dividend policy of the group going forward in terms of current environment.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [19]

——————————————————————————–

Okay. Thank you. I hand over to the CFO to start with the answer of the question, solvency ratio.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [20]

——————————————————————————–

Okay. Regarding to Solvency II ratio, as you correctly mentioned, last year, we had 238.6% in 2019, this reduced to 210%. The main reason is the reduction of loss-absorbing capacity of our technical provisions. And this is — mainly comes out of the Austrian guaranteed life business as a result of the market situation.

Regarding Romania, I had some noise in the line, but I think you asked if there is still some goodwill open. This is not the case. The goodwill impairment of EUR 108.8 million is the entire goodwill, so there is no goodwill left anymore.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [21]

——————————————————————————–

And concerning the third question, I think you asked about the cash generated and the dividend policy. Of course, we are monitoring the cash topic at the moment very closely. We are in close contact with all our companies in the different countries. Until now, this is not a problem.

But concerning the dividend policy, we think we can stick to our dividend policy. And of course, we would like to stay on our dividend policy, which we have shown over the last years also for the next years to let the dividend follow the result after taxes and minorities.

And of course, it’s our clear target to increase the dividend steadily.

That’s all in my mind. Or have we forgot something?

——————————————————————————–

Thomas Fossard, HSBC, Research Division – Co-Head of European Insurance and Analyst [22]

——————————————————————————–

No. It’s fine.

——————————————————————————–

Operator [23]

——————————————————————————–

The next question comes from the line of Thomas Unger with Erste Group.

——————————————————————————–

Thomas Unger, Erste Group Bank AG, Research Division – Analyst [24]

——————————————————————————–

I have 3 or 4 from me. First of all, on the financial results and the extraordinary gain that you had on at S IMMO, you mentioned the net impact. But could you mention the gross impact on the disposal of the investments and also what’s deducted for policyholder participation? That will be interesting. And then also, if you could specify all material extraordinary effects that you had in Q4 of 2019?

And then before, you also talked about the impact on your capital from the asset fluctuations in Q1 now. But could you also give us an estimation or expectation of the IFRS impact, P&L and equity that will be coming up from the dropping equity prices and also other assets now in the last 2 weeks?

And then lastly, on the combined ratio and especially the development in the fourth quarter. If my calculations are correct, then the claims ratio was below 60% — below 58% actually and the cost ratio above 34%. Both values are really outliers in — for the last few years. And can you give us an explanation of what has led to these developments?

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [25]

——————————————————————————–

Okay. Thanks, Thomas, for the questions. Again, I will hand over to Liane to start.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [26]

——————————————————————————–

Okay. Regarding the financial result, the extraordinary gain from S IMMO amounted to approximately EUR 130 million. The policyholder dividend participation is, according to local debt, 80% or 85% approximately. You asked for the Q4 extraordinary effect in the financial statement. We had, in slide, some one-offs regarding the optimization of market risk and reinsurance of the state-funded life insurance products.

And in P&C, there is a reduction of [passes] we built in Q3 for long-term strategic projects like, for example, of IFRS 17, which is or will be delayed by another year.

Regarding the equities…

——————————————————————————–

Thomas Unger, Erste Group Bank AG, Research Division – Analyst [27]

——————————————————————————–

I’m sorry, could you just quantify these effects in Q4 that you just mentioned in life and P&C?

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [28]

——————————————————————————–

In life, it’s approximately EUR 45 million. And in P&C, around EUR 50 million in the other direction. But the equity ratio is around 4.5% currently. So the asset fluctuations in the first quarter do not really have a big impact up to now. There might be some impairment, but no big amount currently estimated out of the dropping of the equity prices.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [29]

——————————————————————————–

Thank you. And concerning your question about the combined ratio in Q4. I think you know that this combined ratio is sometimes a little bit volatile over the — sorry, the split between claims ratio and cost ratio is sometimes a little bit volatile over the different quarters and there are some seasonal effects. And of course, in the last quarter, a lot of colleagues and a lot of companies do their reserving activities and we had 2 bigger companies who had some special reserving activities in the fourth quarter.

Therefore, the claim ratio got down. And concerning the cost ratio, we had costs for some bigger projects in the last quarter of 2019. And we also could hear some reserves for future projects like IFRS 17 over the next years.

——————————————————————————–

Thomas Unger, Erste Group Bank AG, Research Division – Analyst [30]

——————————————————————————–

Okay. So nothing to read into from that for the next few quarters?

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [31]

——————————————————————————–

No. No.

——————————————————————————–

Peter Franz Höfinger, Vienna Insurance Group AG – Member of the Managing Board [32]

——————————————————————————–

Maybe, maybe. Maybe not…

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [33]

——————————————————————————–

Nothing which we will see again next year or future years.

——————————————————————————–

Peter Franz Höfinger, Vienna Insurance Group AG – Member of the Managing Board [34]

——————————————————————————–

Yes. I think on one hand side, looking on the combined ratio of all, one has to see that we had a reduction of our claims ratio due to disciplined underwriting, also by increased prices in our region, specifically corporate business, but also in motor business, which is reflected in it even though we had quite higher weather-related claims. If you look on the claims ratio, you also have to in mind that we are also a bit changing our portfolio, going more to property business, which has a higher commission loading than the pure motor business. So also, this is one of the effects why you’ve seen shift, but this is due to also a certain change of our portfolio mix. Okay?

——————————————————————————–

Thomas Unger, Erste Group Bank AG, Research Division – Analyst [35]

——————————————————————————–

Copy.

——————————————————————————–

Operator [36]

——————————————————————————–

(Operator Instructions) There are no further questions at this time. I hand back to Nina for closing comments.

——————————————————————————–

Nina Higatzberger, Vienna Insurance Group AG – Head of IR [37]

——————————————————————————–

Thank you, Emma. And thank you, ladies and gentlemen. Also thanks from the management team for your time and your interest. The next scheduled call, let’s see how the developments move on, is on the 20th of May for the first quarter results 2020.

And in Austria, the new farewell is stay home and stay safe. I say goodbye. And as mentioned, stay home, stay safe and all the best. Good luck to you. Bye.

——————————————————————————–

Peter Franz Höfinger, Vienna Insurance Group AG – Member of the Managing Board [38]

——————————————————————————–

Bye.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [39]

——————————————————————————–

Thank you. Bye. All the best. Stay healthy.

——————————————————————————–

Liane Hirner, Vienna Insurance Group AG – Member of the Managing Board & CFO [40]

——————————————————————————–

Bye.

——————————————————————————–

Elisabeth Stadler, Vienna Insurance Group AG – Chairwoman of the Managing Board, GM & CEO [41]

——————————————————————————–

Thanks. Bye.

——————————————————————————–

Werner Matula, ZAD Bulstrad Vienna Insurance Group – Member of Supervisory Board [42]

——————————————————————————–

Goodbye.

——————————————————————————–

Operator [43]

——————————————————————————–

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.