August 22 (SeeNews) - Vienna Insurance Group (VIG) said on Tuesday its operations in Romania generated a pre-tax profit of 5.8 million euro ($6.8 million) in the first six months of 2017, up 62.9% on the year, according to preliminary data.
This increase in profit was due to a significant improvement in the combined ratio, the company said in a conference call presentation of its first-half preliminary unaudited results posted on the corporate website.
VIG Romania's pre-tax result in the first half of 2016 was negatively affected by runoff results in previous years, the company noted.
Total gross written premiums of VIG's Romanian units fell by an annual 3.1% to 258.5 million euro in January-June, due to the regulatory cap the government placed on motor third party liability premiums (MTPL), which had a negative effect on overall premium development.
Romania adopted new MTPL law introducing reference tariffs and several other changes in May, introducing reference tariffs calculated by the Financial Supervision Authority (ASF) based on historic data.
"Possible impact on business [is] difficult to estimate over the long-term," VIG said.
VIG's premiums from MTPL insurance in Romania dropped 33.3% on the year to 88.4 million euro in the first half, while casco premiums rose 16% to 61.2 million euro and other property premiums grew 1.6% to 49.5 million euro.
Premiums from regular life insurance on the Romanian market dropped 3.4% year-on-year to 20.9 million euro, while single life insurance doubled on the year to 34.8 million euro. Health insurance premiums grew to 3.7 million euro in the six months through June, from 1.4 million euro in the same period of last year.
The group's net combined ratio in Romania improved to 99.3% in the first quarter of 2017 from 101% in the year ago period.
VIG's operations in Romania turned a pre-tax profit of 3.5 million euro in 2016, compared to a 46.4 million euro loss in 2015, due to strong premium growth.
In March, the group said that it plans to expand its health insurance portfolio in Romania, Bulgaria and three other European countries.
In Romania, VIG is represented by three insurance companies - Omniasig Non-life, Asirom, and BCR Life. In August 2016, the group agreed to acquire France-based AXA Group's life and savings insurance operations in Romania.
The transaction was concluded on April 28, 2017 after approval was received from the local authorities. AXA Life generated more than 3.8 million euro in gross premium income in 2016, mainly from traditional life insurance business. The company is expected to be included in the scope of consolidation in the 3rd quarter of 2017, following integration into the VIG organisational structure.
($=0.8517 euro)