W&W consistently on course

Building society savings with significant growth - Strong equity base

The Wüstenrot & Württembergische Group (W&W) has boosted new business almost across the board during the first half of 2016. For the overall year, the Stuttgart-based financial services group has reaffirmed its results forecast of over 220 million euros. The prerequisite for this, most importantly, is that there are no extraordinary burdens resulting from extreme damages or particular changes to the capital market. In the first half of the year the consolidated net profit of 121 million euros (previous year: 144.1 million euros) was in line with expectations and below the previous year's value, which included a one-off tax income, although several storms also had to be weathered in 2016.

A look at the new business figures of the W&W Group reveals the following picture: As of the end of June 2016, the Wüstenrot building society gained further new business and achieved a building society savings total of 7.6 billion euros (previous year: 7.3 billion euros), which represents an increase of 4.8 per cent on the previous year. The net new business grew even more strongly by almost 14 per cent to 6 billion euros (previous year: 5.3 billion euros). In contrast to the way the markets have developed, Wüstenrot was thus able to achieve significant growth and to gain further market share.

As far as the insurance business of the W&W Group is concerned, the life and health insurance achieved almost 1.2 billion euros of gross premiums written (previous year: 1.12 billion euros). In property and casualty insurance the gross premiums written increased during the first half of the year by around 30 million euros to 1.07 billion euros (previous year: 1.04 billion euros).

Württembergische Versicherung experienced particularly damaging events during the first half of the year, including the storms "Elvira", "Friederike" and "Neele", which led to an increase in elemental damages (gross) of 15 million euros to almost 50 million euros. Despite this, insurance benefits fell in property and casualty insurance. This is due, not least, to a risk-aware underwriting policy over recent years. With the combined ratio (gross) an even more improved value of 90.0 per cent could thus be achieved (previous year: 90.9 per cent).

Alongside the successes in the new business, with W&W the focus has been on the continual improvement of the strong equity base. On 30 June 2016 the equity of the W&W Group reached a record level of 3.8 billion euros following a figure of almost 3.65 billion euros on 31 December 2015.

Dr Alexander Erdland, Chairman of the Executive Board at W&W AG: "The course of the first half-year confirms our solid growth trajectory. This in turn is based on customer orientation, sustainability, financial solidity and change capacity. Time and again W&W has been successful at creating new product solutions. One example of this is the success of the "Wüstenrot Wohnsparen" saving scheme, which has been extremely well received by customers."

A new strategy for life insurance products

W&W is sticking consistently to its course for adaptation to the prevailing market conditions. Against the background of interest rates that have fallen further, the life insurance businesses of the W&W group have been pushing ahead with the sale of their modern pension product lines since the beginning of August 2016. At the same time, the sale of the conventional classic products in the area of private pension insurance is to be restricted for the time being. By way of a contemporary offering, in addition to the unit-linked pension schemes Württembergische life insurance is offering the "Extra" and "IndexClever" product lines. The latter was only introduced as a product in June 2016, and Württembergische has developed the "multi-asset strategy" especially for it. With a broad spread, it invests worldwide in various investment classes.

The new product is ideally suited for private pension schemes because its design allows for annual opportunities for growth and a one-hundred per cent guarantee of the capital saved. Where the annual returns of the "multi-asset strategy" are positive, the insured persons benefit in part from the value development and receive a corresponding income. Where there is negative development the customer does not lose out and the pension capital remains 100 per cent preserved.

Shares remain robust in a turbulent environment

W&W's solid and future-oriented business model is also reflected in the performance of the security listed in the SDAX selection index since the spring of 2016. Taking into account the dividend payment of 0.60 euros per share, a performance of around minus nine per cent can be calculated for the second quarter. In light of the numerous negative developments - starting with "Brexit" and continuing with the indication of a possible Italian banking crisis - the share does, however, appear stable in the market in relation to other financial service providers. With a current price of around 18 euro, W&W share already markedly exceeds its price of 30 June. Analysts therefore continue to rate the W&W share under "buy" and see a price of up to 23 euros as appropriate.

As another positive factor, Standard & Poor's (S&P) has just in recent days reconfirmed all ratings for the W&W Group as having a stable outlook. Thus the core businesses of the W&W Group continue to show an "A" rating, whilst the DACH company Wüstenrot & Württembergische AG boasts a "BBB+" rating. After last year's rise on the ratings scale, the risk management of the W&W Group is to rise further to the category "strong".

Focus on productive growth

As regards the remainder of 2016, Jürgen A. Junker, new Member of the Executive Board notes: "We are placing the focus on productive growth, and there are a few things we are working on to this end. We are going to expand the number of tandem agencies and financial planning centres. It is there that the tied agents of both Wüstenrot and Württembergische take care of customers." This way, the performance portfolios of the Home Loan and Savings Bank (Division) and local insurance have even more resonance with the customer. Junker continues: "The outstanding strength of W&W is its all-round provision from one source. Thanks to the active interplay of the mobile sales force and digital access routes, we not only offer the customers clear added value vis a vis competitors, but more importantly we also develop our corporation to become the leading supply platform with personal advice."