W&W Group with record result in 2014

Increase in operating profit supplemented by special effects – cost targets reached

Wüstenrot & Württembergische (W&W), the Stuttgart-based specialist for financial provisions, achieved a record result in the 2014 financial year. With an IFRS net income of around 242 million euros, the Group managed to exceed the previous year's result (ca. 155 million euros) as well as the original forecast (180 million euros) significantly. Higher product returns, consistent cost management, favourable claims development and special returns from a disinvestment all had a positive effect. The Group also managed to reduce overall costs by nearly one billion euros, which was the target sum set in the optimisation programme "W&W 2015", nearly one year before the programme was actually due to finish. The net income according to the HGB (German Commercial Code) of W&W AG, as the parent company of the Group, reached a total of 56 million euros last year (2013: nearly 72 million euros). The dividends of W&W AG should – subject to approval by the Annual General Meeting – remain unchanged at 0.50 euro per share. For 2015 an IFRS net income of around 200 million euros is being aimed for. The W&W Group started the current year with healthy sales figures. For example, slight single figure growth was recorded for gross premiums written for insurance up to the end of February 2015. Home loan savings business dropped slightly in line with the market, whereas construction financing rose sharply. W&W will report on the results of the 1st Quarter in detail in the middle of May.

In the area of regulation and supervision, the W&W Group was able to pass further significant milestones in 2014. Wüstenrot Bausparkasse AG and Wüstenrot Bank AG Pfandbriefbank passed the quality and stress test of the European Central Bank without any stipulations. Both subsidiaries also received permission to use the IRBA approach from BaFin, which will help them to determine credit risks using their own, internal rating systems. This in turn will help them reduce their capital requirements significantly. In the insurance area, preparations for Solvency II are running at full speed. All requirements will have been implemented when the rules come into force on 1 January, 2016. Württembergische passed all of the external effectiveness tests for its sales-compliance management system successfully. This was confirmed in the report of the auditors Deloitte & Touche. The GDV Code of Conduct for sales represents the benchmark for the effectiveness test.

Gross premiums of Württembergische pass the four billion euros mark

The gross premiums written for damage and accident insurance by Württembergische Versicherung rose in comparison to 2014 by nearly four per cent to around 1.6 billion euros. With regard to life insurance, gross premiums written rose slightly from 2.22 billion euros in 2013 to 2.24 billion euros in 2014. Here, an increase in market share was achieved with a rise of 12.1 per cent for regular new premiums. Written gross premiums for health insurance rose in 2014 to around 183 million euros, after 171 million euros the year before. With 4.03 billion euros overall, gross insurance premiums in the W&W Group passed the four billion euro mark for the first time ever.

Wüstenrot Bausparkasse performing well

In 2014, Wüstenrot Bausparkasse achieved a gross new business volume of 13.7 billion euros measured in terms of total home loan savings. This was lower than the record amount of 15.4 billion euros achieved in the previous year. New business therefore followed developments in the sector, which still benefited significantly in 2013 from one-off effects caused by the change in rates. With regard to net new business, the oldest German building society recorded a home loan savings volume of 11.5 billion euros, following 12.8 billion euros in 2013. Adjusted new business therefore developed better than gross new business once again. What’s more, net new business development was once again better than the sector average, whereby Wüstenrot Bausparkasse was able to increase its market share again and further strengthen its second place under the German building societies.

The Group's construction building business was geared towards profitability and standardisation once again in 2014. Across all segments, new loans to the amount of ca. 4.7 billion euros were organised, following an amount of ca. 5 billion euros in 2013. 3.9 billion euros of which was generated with Group companies (previous year: 4.6 billion euros). 832 million euros was organised primarily via the construction financing portal.

W&W 2015 optimisation programme successful

The W&W Group not only progressed well with regard to sales in 2014. The optimisation programme "W&W 2015", the objective of which is to reduce costs, increase returns and expand the capital base across the Group, also had a positive effect. Overall, the earnings effect of "W&W 2015" was around 70 million euros after tax in 2014 alone. Furthermore, the W&W Group has promoted consistent cost management with "W&W 2015", as a result of which the objective of reducing overall costs by one billion euros was already nearly reached in 2014.

Into the future with "W&W@2020"

With the new programme "W&W@2020", the specialist for financial provisions is gearing up for the coming financial years. The guiding principle of this programme is the linking of stability with customer orientation.

Dr Alexander Erdland, Chairman of the Executive Board of W&W AG: "The needs of the customers and their behaviour are going through a significant change. Security and flexibility, transparency and cost-efficiency, as well as the quality of advice are increasing in importance. This is going hand in hand with the ongoing digitisation. As a result of this, W&W is currently working intensively on the creation of access, information, communication, activity and conclusion possibilities, which the customers want now – both online and offline. In short, programme "W&W@2020" also describes the ongoing digitisation of the entire company.

The pioneer in relation to the digitisation strategy within the Group is Wüstenrot Bank, Which has already implemented numerous new services over the past few months, which have already stimulated direct business considerably. These include an identification video when opening an account, which means the trip to the post office branch can be dispensed with, and also video-based advice for securities business. Smartphone users have also had access to an online banking app since spring 2014.