Austrian Vienna Insurance Group(VIG) net profit fell last year the most since 2009, by 67 percent, after writedowns at its Romanian and Polish businesses added to earlier impairments of computer systems, the company announced recently.
“Apart from the decreased current financial income and the impairment done in the third quarter 2015, additional impairments of intangible assets impacted this result,” Vienna Insurance said in the statement. “They evolved from changes of the cash-generating units in the course of the extension of the management board, from a more cautious view on developments in Romania and from tax changes in Poland.”
The preliminary profit (before taxes) for the financial year 2015 amounts to around EUR 172 million. In addition to the extraordinary depreciation, announced in November 2015, further measures were included in the results. In Romania, the management made a more cautious estimate regarding the development of claims despite the improving market environment.
Insurers are struggling with record-low interest rates, which are a particular challenge for their life insurance businesses. Total premiums declined 1.4 percent in the full year, Vienna Insurance said. It didn’t elaborate further on the fourth-quarter writedowns.
The company is targeting pretax profit of EUR 400 million this year and will propose to reduce the dividend payout to 60 cents a share, compared with EUR 1.40 for 2014.
We still have an appetite for further growth”, Elisabeth Stadler, Chairwoman of the Managing Board of Vienna Insurance Group announced at a press conference.