OREANDA-NEWS. March 30, 2010. ROSNO Group is publishing consolidated financial performance results for the 12 months of 2009, prepared under IFRS (preliminary non-audited data). According to financials for the year, ROSNO Group earned 213% more operating profit than in the previous year. The Group’s net profit reached 839 million roubles, indicating a considerable improvement of financial performance against the net loss of 2,306 million roubles in the 12 months of 2008. The results achieved in the 12 months of 2009 fully conform to the Group’s portfolio optimization and profitability improvement strategy.

Major financials of ROSNO Group

The performance results for the 12 months of 2009 reflect the profitable growth strategy of ROSNO Group. In the 12 months of 2009, ROSNO Group’s operating profit grew by 213% to 1,346 mln. roubles, which is 916 mln. roubles more than over the same period of the previous year.

Contribution of ROSNO companies to operating profit

 

Operating profit, mln. roubles

Growth, mln. roubles

 

2009

2008

IC ROSNO

1273

1263

10

IC Medexpress

27

104

-77

IC Allianz Ukraine

-136

-391

255

AMC Allianz ROSNO Asset Management

64

-153

217

Other subsidiaries

118

-393

511

Total

1346

430

916

In Q4 2009, the secured yield of motor insurance portfolio and ROSNO’s increasing business profitability caused the combined non-life insurance ratio to decrease to 96.8% (vs. 98.7% in Q4 2008). In Q4 2009, the aggregate non-life loss ratio (ratio of actual losses to insurance premium earned) equalled 57.68% (vs. 57.95% in Q4 2008).

Contribution of ROSNO companies to consolidated net profit

 

Net profit, mln. roubles

Growth, mln. roubles

 

2009

2008

IC ROSNO

779

-1211

1990

IC Medexpress

23

51

-28

IC Allianz Ukraine

-160

-493

333

AMC Allianz ROSNO Asset Management

51

-191

242

Other subsidiaries

146

-462

608

Total

839

-2306

3145

As compared to the first 12 months of 2008, the companies of ROSNO Group increased net profit by 3,145 million roubles. Such a significant growth resulted from better insurance and investment results across IC ROSNO and lower losses of its subsidiaries.

ROSNO Group insurance premium and insurance compensations

The aggregate insurance premium collected by ROSNO Group in the 12 months of 2009 amounted to 22.9 bn roubles (vs. 24.7 bn roubles in the 12 months of 2008). In the environment where the insurance market fell by 8%1, the Group’s gross insurance premium decrease was at the expected level, and the quantity of concluded contracts remained generally the same (3,871 thousand contracts in 2009 vs. 3,906 thousand contracts in 2008).

The decrease in premium collected in 2009 resulted from deliberate reduction of sales in the motor insurance sector due to a scheduled optimization of motor insurance portfolio in the most unprofitable segments, a general market trend for reduction of medical insurance costs prevailing in the client companies, and lower volume of insurance premium collected by Allianz Ukraine (by 53.7 %), (further details are provided in the Allianz Eurasia section).

Insurance premium segmentation by ROSNO Group company

 

Insurance premium, mln roubles

 

2009

2008

Growth, %

IC ROSNO

21 478

22 302

-3,7%

IC Medexpress

825

967

-14,8%

IC Allianz Ukraine

381

825

-53,7%

Other subsidiaries

181

596

-69,6%

Total

22 865

24 690

-7,4%

The share of IC ROSNO in the aggregate premium collected by the Group in the 4 quarters of 2009 equalled 93.9% (as compared to 90.3% for the 4th quarter of 2008).

Major business lines

ROSNO Group’s portfolio remains well-balanced. Its major business lines are as follows: voluntary medical insurance (26.7% of the insurance portfolio), property insurance (20.7% of the insurance portfolio), and motor insurance, including OMTPL (33.4% of the insurance portfolio). In the 12 months of 2009, their aggregate share in the insurance portfolio equalled 81%.

Investment policy

Following its strategy of conservative approach aiming to provide maximum reliability and liquidity of investments, ROSNO Group allocates insurance reserves and equity in the banking instruments of the largest and most financially sound banks, as well as in state securities and corporate bonds with high reliability rating.

Fixed-income banking instruments accounted for the major share of the portfolio, equalling 63% (vs. 64% as of the end of Q4 2008).

Along with monitoring credit quality of its investment portfolio, the company pays much attention to diversifying its investments, balancing the proportions of government and corporate securities in its portfolio, and restricting the maximum share of investments per issuer.

Allianz Eurasia

According to the operating results posted by Allianz Eurasia, the aggregate insurance premium collected in the 12 months of 2009 by ROSNO Group, together with IC Progress-Garant, IC Allianz Kazakhstan, IC Allianz ROSNO Life and SAK Allianz equalled 31.1 bn roubles. The major contribution to the premium collected by Allianz Eurasia is made the companies of ROSNO Group, accounting for 74% of the aggregate premium.

Allianz Eurasia Group renders long-term life insurance services via Allianz ROSNO Life. In 2009, the company demonstrated rapid growth of premium collected (by 129% vs. Q4 2008) and a considerable improvement of financial results. The company’s net loss decreased by 134 million roubles to 354 million roubles (against 488 million roubles in the 12 months of 2008).

Due to the unstable financial and economic situation in Ukraine and in the Ukrainian insurance market, the company’s management decided to modify the development strategy of IC Allianz Ukraine. As a result of this decision, the company’s insurance premium collected decreased by 53.7%, as expected. In the 12 months of 2009, the company’s insurance premium amounted to 381 mln. roubles, as compared to 825 mln. roubles in the 12 months of 2008.At the same time, the company has succeeded in cutting business costs, thus contributing to the lower loss (160 million roubles of net loss for the 12 months of 2009 vs. 391 million roubles for the 12 months of 2008).