Press | Ad-hoc Announcements | Ad hoc -Announcements 2003 | AMB Generali Group has overcome the bottom
AMB Generali Group has overcome the bottom
First quarter 2003: positive pre-tax result / combined ratio notably reduced / fitness programme is showing effect
In the first quarter 2003, AMB Generali Holding AG reached a notable upward tendency in its business operations. The pre-tax Group result increased to euro 148 m (preceding year's quarter: 67 m). That positive result, however, is substantially strained by extraordinarily high tax burdens currently to be expected as a result of write-downs and realized capital losses on equities not being tax deductible. The result after tax therefore amounts to euro - 87 m (preceding year's quarter: euro 56 m). "AMB Generali has overcome the bottom", stated the Group's Chief Executive Dr. Walter Thießen. "Our fitness programme is showing effect. The first positive results are becoming perceptible." Among the good news is an operative improvement of the combined ratio by close to 5 percentage points. Also the planned reduction by 1,250 full-time job equivalents in administrative services all over Germany by 2005 is making good headway. By the end of the first quarter 2003 about 290 jobs had already been cut.
The fitness programme initiated also includes the pruning of motor business and the withdrawal from unprofitable industrial business. In both areas the development is proceeding as planned. In industrial insurance more than 4,000 contracts with a premium volume of close to euro 50 m have been cancelled since autumn 2002. Another 3,500 contracts will be cancelled by year-end. This targeted pruning is the decisive factor for the decrease of the total premium income of AMB Generali over all lines of business by 0.5 percent to euro 3.5 bn in the first quarter. The premium income in life and health insurance, on the other hand, went up.
In private old-age provision we have further stabilized our strong market position in the field of the so-called 'Riester' pension. Since the launch of the product a total number of more than 630,000 policies has been sold by the life insurers of the AMB Generali Group.
The investment result of the first quarter was severely strained by additional price drops on capital markets. The EURO STOXX, for instance, decreased by 12.5 percent and the DAX by 16 percent. The AMB Generali Group went on with its strict interpretation of IAS impairment rules and in addition it reduced its share of equity investments to about 5 percent as at March 31, 2003. Mainly as a result of write-downs of euro 536 m on shares, participating interests and funds units there was a negative investment income of euro - 259 m (preceding year: 616 m). Despite further price drops it was possible, as a consequence of the write-downs, to reduce unrealized losses from shares, participating interests and investment funds to euro 918 m (Dec. 31, 2002: 1,125 m). On the other hand, interest-bearing securities experienced a positive development with hidden reserves amounting to euro 2.18 bn (Dec. 31, 2002: 2.05 bn) which enabled the AMB Generali Group to increase its hidden reserves in respect of investments available for sale to about euro 1.3 bn in the first quarter 2003 (year-end 2002: euro 925 m). As a whole the prudent write-down policy of the AMB Generali Group leads to hidden reserves being built up very quickly once stockmarkets take a positive development. This upward tendency is already recognizable in the second quarter 2003. In fact, as at April 30, 2003 unrealized capital losses from shares, participating interests and fund units improved from euro 918 m to euro 408 m.
The described decrease of premium income by 4.1 percent in property/casualty insurance had been foreseen as a consequence of the consistent pruning of motor business in all the property/casualty insurers of the Group and of the withdrawal from industrial business. A positive feature is the improvement of the combined ratio from 99.0 percent to 92.3 percent. After adjustment for extraordinary influences the improvement represents close to 5 percentage points. This is in line with the declared target of becoming more profitable in underwriting business.
The life and health insurers of the AMB Generali Group continue to steer a growth course. In the first quarter 2003 the total premiums of the life sub-segment went up by 1.7 percent to euro 1.68 bn. Looking at that figure it has to be taken into consideration that in the preceding year's quarter a major single-premium contract had been concluded. In the health sub-segment gross premiums written increased by 9.9 percent to euro 337 m mainly due to the very good new business and to premium adjustments.
Outlook for the result of the business year 2003 as a whole
For the full business year 2003 the AMB Generali Group expects a premium growth above the market average for its life and health segment. For the property/casualty insurers, however, the initiated measures of reorganization will lead to a decrease of premium income. As a consequence of the persistently pursued measures of reorganization and cost reduction it is to be assumed that there will be perceptible improvements in operative business for 2003 in comparison to the preceding year. The Group result will still very much depend on the development of capital markets. Provided there are no extraordinary claims events and no further capital-market turbulences, the AMB Generali Group expects to reach a positive pre-tax result.
The complete Group Report for the first quarter 2002 is available at our website www.amb.de, section: share, interim report.
In the first quarter 2003, AMB Generali Holding AG reached a notable upward tendency in its business operations. The pre-tax Group result increased to euro 148 m (preceding year's quarter: 67 m). That positive result, however, is substantially strained by extraordinarily high tax burdens currently to be expected as a result of write-downs and realized capital losses on equities not being tax deductible. The result after tax therefore amounts to euro - 87 m (preceding year's quarter: euro 56 m). "AMB Generali has overcome the bottom", stated the Group's Chief Executive Dr. Walter Thießen. "Our fitness programme is showing effect. The first positive results are becoming perceptible." Among the good news is an operative improvement of the combined ratio by close to 5 percentage points. Also the planned reduction by 1,250 full-time job equivalents in administrative services all over Germany by 2005 is making good headway. By the end of the first quarter 2003 about 290 jobs had already been cut.
The fitness programme initiated also includes the pruning of motor business and the withdrawal from unprofitable industrial business. In both areas the development is proceeding as planned. In industrial insurance more than 4,000 contracts with a premium volume of close to euro 50 m have been cancelled since autumn 2002. Another 3,500 contracts will be cancelled by year-end. This targeted pruning is the decisive factor for the decrease of the total premium income of AMB Generali over all lines of business by 0.5 percent to euro 3.5 bn in the first quarter. The premium income in life and health insurance, on the other hand, went up.
In private old-age provision we have further stabilized our strong market position in the field of the so-called 'Riester' pension. Since the launch of the product a total number of more than 630,000 policies has been sold by the life insurers of the AMB Generali Group.
The investment result of the first quarter was severely strained by additional price drops on capital markets. The EURO STOXX, for instance, decreased by 12.5 percent and the DAX by 16 percent. The AMB Generali Group went on with its strict interpretation of IAS impairment rules and in addition it reduced its share of equity investments to about 5 percent as at March 31, 2003. Mainly as a result of write-downs of euro 536 m on shares, participating interests and funds units there was a negative investment income of euro - 259 m (preceding year: 616 m). Despite further price drops it was possible, as a consequence of the write-downs, to reduce unrealized losses from shares, participating interests and investment funds to euro 918 m (Dec. 31, 2002: 1,125 m). On the other hand, interest-bearing securities experienced a positive development with hidden reserves amounting to euro 2.18 bn (Dec. 31, 2002: 2.05 bn) which enabled the AMB Generali Group to increase its hidden reserves in respect of investments available for sale to about euro 1.3 bn in the first quarter 2003 (year-end 2002: euro 925 m). As a whole the prudent write-down policy of the AMB Generali Group leads to hidden reserves being built up very quickly once stockmarkets take a positive development. This upward tendency is already recognizable in the second quarter 2003. In fact, as at April 30, 2003 unrealized capital losses from shares, participating interests and fund units improved from euro 918 m to euro 408 m.
The described decrease of premium income by 4.1 percent in property/casualty insurance had been foreseen as a consequence of the consistent pruning of motor business in all the property/casualty insurers of the Group and of the withdrawal from industrial business. A positive feature is the improvement of the combined ratio from 99.0 percent to 92.3 percent. After adjustment for extraordinary influences the improvement represents close to 5 percentage points. This is in line with the declared target of becoming more profitable in underwriting business.
The life and health insurers of the AMB Generali Group continue to steer a growth course. In the first quarter 2003 the total premiums of the life sub-segment went up by 1.7 percent to euro 1.68 bn. Looking at that figure it has to be taken into consideration that in the preceding year's quarter a major single-premium contract had been concluded. In the health sub-segment gross premiums written increased by 9.9 percent to euro 337 m mainly due to the very good new business and to premium adjustments.
Outlook for the result of the business year 2003 as a whole
For the full business year 2003 the AMB Generali Group expects a premium growth above the market average for its life and health segment. For the property/casualty insurers, however, the initiated measures of reorganization will lead to a decrease of premium income. As a consequence of the persistently pursued measures of reorganization and cost reduction it is to be assumed that there will be perceptible improvements in operative business for 2003 in comparison to the preceding year. The Group result will still very much depend on the development of capital markets. Provided there are no extraordinary claims events and no further capital-market turbulences, the AMB Generali Group expects to reach a positive pre-tax result.
The complete Group Report for the first quarter 2002 is available at our website www.amb.de, section: share, interim report.
