* Q1 pretax profit down 4.7 pct to 151.8 mln euros
* Premiums steady at 2.73 bln euros
* Combined ratio 96.4 pct vs 96.9 yr ago, 100.6 end-2013
(Adds investor presentation, comment from CEO, analyst, share
By Angelika Gruber
VIENNA, May 27 Vienna Insurance Group's
first-quarter profit fell 4.7 percent, slightly less
than expected, as the group made money in all of its central and
eastern European markets for the first time since the financial
Emerging Europe's biggest insurer reported profit before tax
of 151.8 million euros ($207.2 million), partly reflecting a
return to profit at its struggling Romanian business.
Chief Executive Peter Hagen said on Tuesday the group faced
a "hit" of just a few million euros from widespread flooding in
the Balkans that hit Serbia and Bosnia especially hard.
"What I can say definitely is that our reinsurance programme
will ensure that we will be affected only very marginally. There
will be a hit, but we are probably talking about a few million
euros net - so nothing really dramatic - for the group," he told
Vienna's Romanian arm eked out a profit of 500,000 euros
before tax in the quarter after losing 2.9 million a year
earlier. Premiums fell nearly 19 percent to 82 million.
Hagen said last month he expected Romania to return to
profit this year after a 75 million euro writedown in 2013 to
reflect tough competition. He said on Tuesday it was too early
to say how sustainable the upturn in Romania would be.
The group, whose biggest market is Austria, said total
premiums edged up 1 percent to 2.73 billion euros and would have
risen nearly 3 percent excluding exchange-rate swings.
Analysts polled by Reuters had on average expected pretax
profit to fall 7.5 percent to 147 million euros on premiums of
Vienna's shares rose 0.4 percent to 38.825 euros by 0800
GMT, in line with European peers. Berenberg analysts
said the earnings were "robust" but unlikely to change consensus
earnings expectations much.
ROMANIA IMPROVES, ITALY MAKES LOSSES
Vienna said higher interest expenses for a new subordinated
bond and the strong euro had weighed on pretax profit.
The company's combined ratio - a measure of profitability in
the property and accident segments - improved to 96.4 percent
from 100.6 percent at the end of 2013. It had been 96.9 in the
"A substantial reduction of more than four percentage points
in the combined ratio confirms that the measures taken in the
second half of 2013 were correct," Hagen said in a statement.
One-off effects in Italy and Romania had contributed to a
2013 pretax profit drop of 37 percent to 355.1 million euros.
These two businesses still weigh on the group's combined ratio.
Vienna's Italian car insurance business posted heavy losses
last year after getting a flood of claims from customers across
the country. It has scaled back its Italian business, cut ties
with many brokers, changed local management and focused on
customers in northern Italy.
Premiums at its Italian motor business contracted 63 percent
in the quarter, with premiums from its Italian business overall
down 55 percent.
Hagen said Vienna was taking a conservative approach while
building reserves for its shrinking business in Italy.
"We expect that if this trend continues then the relative
impact of the portfolio will decrease. I still expect Italy to
produce a loss this year given this conservative provisioning."
($1 = 0.7325 Euros)
(Additional reporting by Michael Shields. Editing by Jane