Nürnberger Beteiligungs (NBG) released its FY18 numbers last Saturday, reporting a 2.2% increase in gross premiums booked to €3.5bn. This is broadly in line with management’s guidance of a slight increase across its segments. Net profit before adjusting for minorities stood at €60.8m, down from €99.5m in FY17 but higher than earlier guidance of €50m. The management will recommend a dividend per share of €3.00, in line with prior year’s payout.
Higher than expected earnings were assisted by solid new business, with new premiums up by 7.8% year-on-year to €555.9m, largely driven by higher new business in the life insurance segment (up by €28.1m). As well as the full consolidation of Neue Rechtsschutz-Versicherung (NRV), acquired in Q317.
Moreover, NBG’s life insurance business was supported by recent changes implemented by the German regulator (BaFin) in the calculation of Zinszusatzreserve (ZZR), an additional obligatory reserve introduced in Germany back in 2011 for the life insurance industry to ensure that future obligations are well covered despite the current low interest rate environment. Consequently, the ZZR increase in the case of NBG stood at €61.3m in FY18, in comparison to €241.3m in FY17.
NBG’s net investment income related to the standard insurance business reached €730.3m, down 6.5% year-on-year, with higher disposal gains at €212.8m (vs. €154.0m in FY17). The high disposal gains were offset by lower current income at €617.9m (FY17:€708.0m), the result of a high base from one-time effects in FY17 and lower income from other investments, primarily private equity.
Claim expenses went up only slightly by 1.2% year-on-year to €2.3bn, while operating expenses were higher by 10.8% year-on-year at €558.9m, on the back of higher acquisition costs largely associated with new business, as well as G&A expenses.
In FY19, NBG’s management expects the life insurance business to report segment profit at c. €38m, down from €44m in FY18, as a result of the continued low interest environment impacting investment income. The Property and Casualty business is expected to report a profit of €15m against €23.9m in FY18 despite solid new business.
This should be driven by the increase in equalization reserves and lower net investment income, amongst other factors. Health Insurance should post a profit at €5.0m, up from €4.5m in FY18, with new business only slightly below FY18 and premiums booked visibly higher on a year-on-year basis. Banking services’ profit should remain stable vs FY18. Consequently, NBG expects a profit at group level of €55m in FY19.