VIENNA, Jan 28 (Reuters) - Vienna Insurance Group said its 2013 pretax profit dropped 40 percent to about 350 million euros ($478 million) due to one-off effects in Italy and Romania.
Emerging Europe’s biggest insurer had warned of volatile 2013 results due to competition in Romania and problems in Italy, but the drop was bigger than expected.
The group had said its Italian car insurance business would lose tens of millions of euros in 2013 after larger than expected claims.
The business had been intended to be relatively small, predictable and focused on the richer north, but instead attracted customers across the country.
Analysts polled by Reuters had on average expected 2013 pretax profit to fall 33 percent to 396 million euros on gross premiums of 9.19 billion, down 5.1 percent.
Premiums fell by 4.9 percent to about 9.4 billion euros, Vienna Insurance said in preliminary results released ahead of schedule late on Tuesday.
The company said without the one-offs its “normalised operating result” would be around 580 million euros, comparable with the previous year’s result.
It said it would raise its dividend by 0.10 euros per share to 1.30 euros, better than the 1.19 euros weighted average forecast by analysts polled by Thomson Reuters StarMine.
Vienna Insurance in November demoted a top executive responsible for its Italian automotive business after it suffered heavy losses there, helping drag group pretax profit down more than a fifth in the third quarter.
Vienna Insurance is scaling back its Italian business, cutting ties with many brokers, changing local management and focusing on customers in northern Italy who have other insurance as well.
Chief Executive Peter Hagen had declined to rule out more fourth-quarter provisions for both.
The plan to sell car insurance in northern Italy backfired when lots of southern Italians bought policies via brokers, triggering a flood of claims that forced the firm to set aside 50 million euros through the end of September. ($1 = 0.7319 euros) (Reporting by Georgina Prodhan and Michael Shields, editing by David Evans)