VIG has just posted weaker numbers compare to market expectations due to precautionary measures of 50 mln. EUR taken in Romania and Italy in addition to 75 mln. EUR goodwill impairment in Romania. We expect a negative market reaction, nevertheless as we await a continuing accretion in regional fixed income yields in coming months, we recommend VIG shares to ACCUMULATE, despite a subdued growth over the next quarters in CEE markets expected by us.
VIG - 2Q13 Results
| Premium written gross | 2 536 | 2 324 | 2 392 | -8% | -3% |
| Net earned premium | 2 426 | 2 209 | 2 267 | -9% | -3% |
| Profit before taxes | 150 | 46 | 66 | -69% | -30% |
| Profit after minorities | 114 | 17 | 30 | -85% | -45% |
| EPS | 0,89 | 0,13 | 0,24 | -85% | -45% |
VIG cons. (8)
Conference call: 29th August at 15:00 (CET);
Consolidated premiums written amounted to 2.3 bln. EUR (-8 % y/y) influenced by the restraint in the short-term single-premium business in Poland. Adjusted for the Polish effect, premiums grew by 2.2 %. Earnings were hit by one-off charges related to impairments and floods.
VIG paid approx. 230 mln. EUR to its customers in compensation for weather damage. This means that damages were three times as high as in the same period of the previous year. The net impact – after reinsurance – accounted for more than 70 mln. EUR for VIG that, the company succeeded in keeping the combined ratio below 100 %.
All in all, short-term negative message in our view. On the other hand, a potential negative reaction could be a good chance to accumulate VIG shares, especially if overall European financial sector sentiment is to improve soon.