W&W Group: Successful first nine months of 2018

At EUR 172.3 million, consolidated net profit exceeds expectations, despite record investments
New business continues to be positive
Executive Board Chairman Jürgen A. Junker: “Our venture into new areas is bearing fruit”
Earnings forecast confirmed for the year as a whole

The Wüstenrot & Württembergische Group (W&W) has continued its solid, successful course in the year so far. Consolidated net income after taxes for January through September 2018 exceeded expectations. New business continued to develop positively overall. The W&W Group confirms the expectation of consolidated net profit of at least EUR 200 million for 2018 as a whole.

Jürgen A. Junker, Chairman of the Executive Board of W&W AG: “The year 2018 is the second year of our venture into the digital future, where we are seeking to position ourselves to be even more in line with our customers. We launched numerous new digital initiatives and products and are increasingly seeing their success. We are making good headway with the modernisation of our processes in traditional business and with new business models. This shows that W&W is capable of spotting changing customer needs and meeting them with attractive, market-ready solutions. The fact that our earnings performance has exceeded our expectations after nine months, in spite of very high investment, is proof of the inner strength that our Group has developed. W&W is on a good path into the digital future, one that is focused on our customers.”

Important indicators from the first nine months of 2018

Consolidated net profit after taxes came in at EUR 172.3 million, compared with EUR 214.7 million for the corresponding prior-year period. The decline, which was expected and announced, was attributable to the Group’s ongoing record investment programme, but the results still exceeded our expectations. The largest contributor to results by far was the Property/Casualty Insurance segment (EUR 106.8 million; prior comparable period: EUR 109.2 million). The slight decline was due to higher tax expenses.

Group-wide general administrative expenses from January to September rose by just 2.0% to EUR 777.6 million (prior comparable period: EUR 762.4 million). While personnel expenses fell despite collectively bargained salary increases, higher market expenses were incurred, inter alia, as a result of the launch of Württembergische Versicherung on the market. In this regard, the W&W Group continues to be very disciplined in terms of costs and remains committed to increasing annual productivity by 5%.

Division performance in the first nine months of 2018

In Property and Casualty Insurance, gross premiums written increased by 5.5% to EUR 1.56 billion. New and replacement business rose by 8.2% in this regard, headed up by the retail customers area, but also by motor business. Despite higher losses due to acts of nature, Württembergische Versicherung once again posted a very good gross combined ratio (loss/cost ratio) of 89.3% after nine months, which improved on the prior-year value of 90.7%.

In Life and Health Insurance, gross premiums written rose year over year by 3.0% to EUR 1.60 billion. The development of business for company pension schemes was particularly positive.

Construction financing business developed positively again, posting Group-wide growth in the first three quarters of some 10% to EUR 4.56 billion, which out-performed the market.
Gross new home loan savings business by contract volume for Wüstenrot Bausparkasse came in at EUR 9.68 billion through the first nine months, which was nearly equal to the prior-year value of EUR 10.11 billion. Net new business amounted to EUR 7.87 billion, compared with EUR 8.46 billion in the prior-year period.

Residential “Riester” contracts posted good growth in the first nine months of the current year, as did the home loan and savings product for children, "Kinder-Wohnsparen". We expect that the business will experience further growth by the end of the year, due in part to a new product for higher-volume business. Also expanded were the products in “Wüstenrot Wohnwelt”, which has been available online since the start of this year. Users can not only search for properties on the residential platform but now also place advertisements for properties. If an individual is looking to sell his or her house or flat, he or she can offer it in “Wohnwelt” at no charge.

Digital business models expanded further

Since May of this year, the W&W Group’s digital business models have been bundled in brandpool GmbH. The new products and services were continually expanded during the reporting period.

With the new business liability insurance policy for industry, building trade and gastronomy, the digital brand “Adam Riese” was the first to introduce insurance for commercial customers onto the market, supplementing the liability and legal expenses products for private customers. On whole, the market response to “Adam Riese” has exceeded expectations since its launch in October 2017.

The web-based financing assistant NIST, which was launched in April 2018, successfully concluded its first loans and has developed according to plan. NIST helps users in simple steps from the start of the search for a property to the financing of the purchase of it.

Stuttgart, 13. November 2018