Ladies and gentlemen, welcome to the VIG Update for the First Three Quarters 2024 Conference Call and Live Webcast. I'm Sandra, the Chorus Call operator. I would like to remind you that all participants are being in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Nina of Investor Relations. Please go ahead.

Thank you, Sandra, and welcome to today's Vienna Insurance Group Conference Call. Liane Hirner, our CFO, will guide you through the presentation. After the presentation, Peter Hofinger, our Deputy CEO, and Liane Hirner will be happy to answer your questions regarding the nine months 2024 update. Liane, please go ahead.

A warm welcome also from my side to our update of the first nine months of this year. In today's presentation, we will share in addition to the gross written premiums insolvency ratio, also the IFRS 17/9 KPIs, insurance service revenue, profit before taxes, and net P&C combined ratio. Overall, the three quarters of this year were characterized by the strong operational performances of our group companies. With gross written premiums up by 8% in nine months 2024 and insurance service revenue increasing by 9.3%, we continue to deliver growth not only in the top-line, profit before taxes growing by 8.5% as well despite the impact of Boris, the CEE NatCat storm flood event in September underpins our strength and resilience. VIG's Group Reinsurance program limits the estimated gross losses of approximately EUR600 million from Boris to EUR70 million net. Most affected markets are Austria, the Czech Republic, and Poland. Speaking of Poland, I will come to the successful merger in Poland on the next slide, but let me first mention North Macedonia where we as a group are the number one insurer. We have merged two companies in North Macedonia, Winner Non-Life and Makedonija Insurance will operate together under the brand name Makedonija Osiguruvanje taking care of the Non-Life business while Winner Life will continue to operate independently and offer life insurance. Last week our main shareholder celebrated the Group's 200th anniversary. For VIG, a listed group holding the IPO on 17th November 1994 was a major milestone, which we highlighted with a special website and a separate LinkedIn campaign. Compared with the group's long history, our stock market history is relatively short, but we are determined to make it as successful and as long-lasting as the group itself. Turning to Slide 4, constantly working on growth and efficiency and supporting the development of our group companies and the markets they are active in is part of the success story of VIG. The completion of the announced mergers in Poland is one example how we are achieving this. In view of the specific market situation in Poland, PZU is the number one insurer with a market share of roughly 35% and is more than twice as big as the number two insurer on the Polish market. The three VIG companies currently number four in Poland with a combined market share of 9.4% are set to improve sales and to expand the market position after merger. Looking now at the macroeconomic outlook that we show on Slide 5, Poland's expected GDP growth rates of 3.7% in 2025 and 3.3% in 2026 shows a positive economic environment that we want to take advantage of. In general, the CEE markets are expected to perform well despite the downward drag from Germany based on strong private consumption and supported by foreign direct investments, especially in the Western Balkans, that can be seen in light of near-shoring trends following the supply chain issues experienced in many industries. On the right-hand side of the slide, we show the average annual real GDP growth for the period 2024 to 2028 from the Institute of Advanced Studies in Vienna, which also expects Romania, Poland, and Hungary to grow at average rates above or around plus 3%. All this combined with falling inflation and real wage increases, underpins the attractiveness of the region and confirms our commitment to CEE. Now let's move on the next slide to the details of our first to third-quarter results 2024, demonstrating again, this shows the strong development of VIG. Insurance service revenue of EUR9 billion up by 9.3%, profit before taxes of EUR666.5 million increased by 8.5%. The segment's extended CEE here especially the markets Romania, Bulgaria, and Slovakia, Poland and Austria mainly contributed to the profit growth. Despite the impact of CEE flood Boris, VIG's P&C net combined ratio remained at 94.3% at the previous year's level. The discounting effect was 3.4%. Due to an increased solvency capital requirement due to the increased business volume of EUR4.001 billion[ph], the solvency ratio including transitionals amounted to 259%. Solvency ratio excluding transitional measures was at excellent 237% as of September 2024. Now over the page, we show the gross written premium development by segment. Overall premiums increased by 8% to an amount of EUR11.5 billion, strongly supported by double-digit growth rates in the segments extended CEE and Special markets. Again it's Romania, Bulgaria, but also the Baltics, Slovakia, and Hungary pushing the premium volume in the extended CEE segment. In the special market segment, it's mainly Turkiye driving the premium growth to over EUR1 billion after nine months. As shown on Slide 8, also Austria, Poland, and the Czech Republic recorded sound premium growth which translates to positive insurance service revenues presented on the next page. Overall, insurance service revenue increased by 9.3% to EUR9 billion, double-digit growth rates were recorded in Poland with 13.6%, the extended CEE with 13.8%, and the special market segment with 20.7%. Other property business in either motor or health as stated on Slide 9 are driving the favorable development. Please note that the extended CEE segment contributes the same level of revenues as Austria, our most developed market, which means further diversifying our top line. Now, on the next slide with regards to the solvency ratio development, you can find the details on Slide 10. The solvency ratio of 259% as of third quarter includes transitional measures. The SCR increased to EUR4.1 billion due to a reduction of the loss-absorbing capacity of the technical provisions caused by the downward shift of the interest rate curve in the main VIG markets which is Euro, Polish Zloty, Czech Crowns, and Romanian RON. The own funds of VIG Group increased slightly. As a result, the regulatory solvency ratio of the VIG group with incorporation of transitional measures of technical provisions came in at 259%, staying on a very strong level well above 200%. For the calculation without transitional measures on technical provisions, a similar development has been observed. In this case, the solvency ratio of the VIG Group amounted to an excellent 237%. Now this brings me to our last slide of today's presentation. As the presented figures clearly show, VIG is well on track to reach its 2024 target. We, therefore, confirm our guidance to profit before taxes on the upper end of the target range of EUR825 million to EUR875 million for 2024. Our responsible and conservative corporate and reinsurance policies limited the impact of Boris as expected and modeled by our risk managers. We will stick to our reinsurance approach and make sure that VIG is protected against severe NatCat events also in the future, we are confident that we will achieve our goals based on the strong capitalization of VIG, the solid performance of our segments Austria, Czech Republic, and Poland, the continuously growing extended CEE segment, and last but not least, based on the positive macroeconomic environment for the CEE region. With this, I come to the end of my presentation and Peter and myself are happy to answer your questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from August Marcan from UBS. Please go ahead.

Hi, thanks for taking my questions. I have three if that's okay. First one on Boris, are there any estimates on how much more will it cost in 4Q or further down the line at the start of 2025? My second question is on the outlook. You mentioned in your presentation that you're positive going into 2025. Do you think you can sustainably maintain the high-single-digit to low-double-digit growth that you have been having in GWP? And then lastly on your 4Q experience, how has the weather and claims been so far? That's all. Thanks.

Good afternoon. Thank you for your questions. I will take care of all of them. I start with the last one. There is nothing specific to be reported on Q4 until now. There is no significant effect in Q4 until now. Coming to question one, Boris estimates, the EUR600 million is a conservative estimate. We are very well known in the reinsurance industry that our estimates keep throughout the time. So we also do not expect any creeping in here in the year 2025. We feel comfortable with the gross figure which we are reporting here. Coming to our growth dynamic, I think Liane was outlining the economic growth. So we should benefit out of the economic growth. On the other hand side, one driver of our growth this year but also last year was the inflation and therefore the needed increase of some insured of values, as inflation is slowing down everywhere, we will not have this growth driver. So, it is -- we will grow, but it is likely that maybe we will grow a bit less than maybe we have shown this year.

I'm happy to take your second question regarding the outlook. As I already confirmed in my presentation, we confirm our guidance for this year to be on the upper end of our target range. When it comes to 2025, I also had some words on my slides on the positive macroeconomic environment for the CEE region, but we will present the outlook for 2025 together with our preliminary results in March 2025.

The next question comes from Thomas Unger from Erste Group. Please go ahead.

Yes, hello, good afternoon. Thank you also for taking my questions. I'd like to ask you, you said that your reinsurance approach will not change. Do you expect any change in costs coming next year? Any effect, any specific effect from the CEE floods that you incurred now? And if I could also ask you on the figures on profitability on the business lines for P&C, Life and Health, how did that perform thus far in 2024? And then also if you could give us the specific figures for the first three quarters on the insurance service results as well as the net investment result, I'd appreciate that. Thank you.

I will start with reinsurance. When we are placing our NatCat program for the whole CEE region, we are having two independent modeling companies and we have an internal model. As in many of our markets there are known market models, so we have the highest quality data for the program for the whole region covering it. We have longstanding relationships with our reinsurance companies. This flood event is an event which is as modeled, so there is no surprises by our reinsurance partners of it, very much also due to the flood prevention measures which have been taken from the year 2002 until today in Czech Republic and in Austria specifically, but also in Poland. Therefore reinsurance market is currently hard, so there will be certain adaptations generally in our reinsurance programs, but I do not see a major impact on our NatCat program due to the flood as it is for what we have ordered and it is modeled as it is gearing to come into reality.

Coming back to your question regarding the insurance service result and the net investment result, the net investment result remained quite stable compared to the first three quarters last year and amounts approximately EUR350 million. The insurance service result is a little bit lower compared to the first nine months last year due to NatCat events, but in both third quarters is well above EUR800 million.

Okay, thank you very much.

[Operator Instructions] The next question comes from Bhavin Rathod from HSBC. Please go ahead.

Hey, good afternoon. Thank you for taking my question and thank you also for providing those additional details around combined ratios, PBT, and insurance revenue. I really appreciate that. So, I have a few questions on my side. The first one would be on your PBT guidance. Now given you've already grown the PBT by close to 9% this year so far, and if I look at your 2023 PBT it was at somewhere around EUR876 million if you adjust for the impairment charges. Now the question is now given you're already 8% above what it was last year, why should we not expect the PBT to be materially above what you are currently guiding, i.e., at around EUR875 million or is it just because of the fact that you're expecting some sort of impairment charges or any one-off that we should be mindful of in the fourth quarter of this year. So that's the first one. The second one would be again on this PBT growth of 9%, appreciate if you could provide more color around how it was driven in terms of growth by P&C and Life. At first half it was largely driven by P&C business, should we believe that even at nine months it was driven by the P&C book or there was some contribution from the Life segment as well? And lastly, on the dynamics around P&C pricing in some of your major market, appreciate if you can provide more color around what sort of pricing dynamics you are seeing in some of your major regions like Poland, Hungary, Austria, and Romania. Thank you.

Thank you for your questions. I will start with the last one, certain pricing elements. Maybe I start with Poland. Poland in the past was quite painful for us in the pricing area of motor TPL. We now did this year our homework with merging and realizing synergies. But at the same time, we also see first signs of a recovery of the market as in my personal opinion the whole market was is loss-making a motor TPL. So there is a certain dynamic giving the room for an increase in the motor TPL pricing. If I come to Czech Republic, motor is still a very, very strong competition here. We have an exceptional market position there. This I would see to be continued to see this competition. Hopefully, there will be some different developments in next year. Austria in motor business is pretty stable. When we come to property and corporate business the picture is a bit different. We see that Poland as well as in Czech Republic, there is certain rate increases in property and corporate. We see in Austria a more flattish development, but if there is an account which has certain losses over the year, there is also rate increases. So, this has become more individual in Austria by the pricing, account by account, and not anymore, so a general tendency. I hope this gives you enough flavor. Maybe one topic, what is too early to say if there will be certain impacts on the consequences of the floods where generally one can see certain impacts of such an event like Boris but this is too early to comment, this we should see in the first quarter what will be in the various markets be the impact of the flood event. Thank you.

Coming back to your question regarding the PBT growth of 9%, this is mainly coming out of the P&C business, Life is rather flat development. CSM release is slightly below the first three quarters of last year. So here rather stable development. And when it comes to P&C, I refer to what Peter has said and we could reflect the inflation also in our premium development. So, the profitability in P&C increased compared to the first three quarters last year. Your first question related to the PBT guidance, we still keep our guidance and confirm that we will end the target above the upper range of the target level. As you know, it's quite volatile in the macroeconomic environment and we cannot exclude impairments or negative one-off effects in the fourth quarter. So, we stick with our guidance at the upper end of the target range for the time being.

That's very helpful. Thank you so much.

[Operator Instructions] Madam, gentleman, there are no further questions. I hand back the call over to Nina for any closing remarks.

Thank you, Sandra. Ladies and gentlemen, thank you for participating in today's call. The next results call with VIG's preliminary results for the financial year 2024 is scheduled for 12th of March 2025. In the meantime, our best wishes for the upcoming festive season and goodbye from Vienna.

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