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W&W Group pleased with financial year 2016

- Forecast surpassed: Consolidated net earnings total €235.3 million.

- Wüstenrot Bausparkasse increases net new business and gains market share in a declining market.

- Property/casualty insurance increases gross premiums and further improves combined ratio.

- W&W@2020 programme: New digital offers well received by customers.

Despite the persistently difficult market environment, the Wüstenrot & Württembergische Group (W&W) achieved good results in the 2016 financial year. Last year, the expert for financial provisions generated consolidated net profit of €235.3 million. Thus, the forecast of at least €220 million was comfortably reached. In its divisions including the home loan and savings business, part of the new business outperformed the sector trend. New products and services were taken up positively by the customers, especially due to the intensified development of the digital offers. For 2017, the W&W Group expects further growth in new business along with continued high investments in digitisation.

"In view of the persistently low interest rates, changed customer expectations and increasing regulation, the results of 2016 are more than respectable" says Jürgen A. Junker, Chairman of the Executive Board of W&W AG since 1 January 2017. All product categories and all sales channels contributed to the bottom line – our own sales forces, partnerships, brokers, and direct sales. Junker adds: "However, we must not stop at this point. In the coming years, our focus will greatly depend on duly handling the question of which products and which channels are most suitable for our existing customers and potential new customers. In this context, our successful traditional sales channels are just us important as the digital approaches in which we plan to invest about €100 million in the next three years. The objective is to establish our Group as a modern platform in the fields of financial provisions, housing and savings."

Key indicators of the Group for 2016

- Consolidated net profit amounted to €235.3 million. As planned, the figure remained below last year's record figure of €274.3 million, but was nevertheless higher than we had expected.

- As in the previous year, the property/casualty insurance segment provided the greatest net income contribution of €108.3 million (2015: €114.9 million). This figure reflects the improved underwriting income as a result of a sustainable, risk-conscious underwriting policy.

- Compared to 2015, the profit contributions of the Home Loan and Savings Bank and Life and Health Insurance segments were higher in 2016.

- Mainly due to the low interest rates, net financial income amounted to €1.82 billion (previous year: €2.03 billion).

- Benefits paid under insurance contracts dropped to €4.08 billion (2015: €4.28 billion). This was partly due to the favourable claims history in property insurance.

- Despite the higher contributions to the deposit guarantee and high IT investments, steadfast cost management resulted in a reduction of general administrative expenses by about 3% to approximately €1.08 billion.

Stable dividend planned

The Executive Board and the Supervisory board propose to the Annual General Meeting on 1 June 2017 to pay a dividend of €0.60 per W&W share, as in the previous year. This would mean a distribution of about €56 million. Calculated on the basis of the year-end price of the share, which has been listed in the SDAX since 21 March 2016, the dividend yield would amount to an attractive 3.2%.

Performance of the divisions in 2016

Home Loan and Savings Bank

In 2016, the net new business of Wüstenrot Bausparkasse increased almost 2% to €11.9 billion. This growth took place despite the drop of 9% in net new business throughout the sector in general. Wüstenrot managed to expand its market share significantly, reinforcing its position as the sector's Number Two. The future-oriented Wüstenrot "Wohnsparen", a concept that was introduced in February 2016 and that further develops conventional home loan and savings schemes, was a key success driver. Wüstenrot Bausparkasse's multiple award-winning Riester offer (Wüstenrot Wohn-Riester) also benefited from the good performance of Wüstenrot Wohnsparen. The gross new business amounted to €13.6 billion (previous year: €14.1 billion).

In the field of construction financing, the new business throughout the group amounted to almost €5.4 billion in new business, 1.6% less than in the previous year. Thus, Wüstenrot outperformed the sector in general (-4%).


Gross premiums written in property and casualty insurance increased by another 2.4% to €1.68 billion. The new business amounted to €207.9 million, a figure close to that of the previous year (-0.9%). In the private customer field, Württembergische Versicherung launched new modular rates for accident, household and building cover. The growth in the corporate customer segment was mainly borne by the core product "company policy", whose scope was further expanded, e.g. by including photovoltaic plants of commercially utilised buildings. In 2016, the cautious underwriting policy and the resulting good net income performance led to a further improvement of the gross combined ratio to 90.1% (previous year: 92.1%; 2014: 95.5%).

Gross premiums written in life insurance dropped 3.5% to about €2.10 billion. The decrease was caused by the declining new business in the generally shrinking market and portfolio losses. Last year, Württembergische Lebensversicherung supplemented its product offer with new, optimised risk life insurance rates with Premium, Compact and Combined protection. Since October 2016, it has also been possible to buy Compact and Premium online.

Gross premiums written in health insurance increased more than 9% to some €216 million in 2016. This good growth is mainly attributable to the success of the supplementary health and long-term care rates of Württembergische Krankenversicherung, which regularly win awards in product tests.

Digital product innovation on the march

Last year, the W&W Group expanded its range of digital offers under the W&W@2020 programme. These offers supplement the successful conventional sales channels of our own mobile sales force and of the sales forces of cooperation partners. Following the central bundling of the construction financing business at Wüstenrot Bausparkasse, Wüstenrot Bank AG now concentrates entirely on its role as a digital bank for private customers with an attractive product offer in the account, card and securities business, which can also be accessed online.

In 2016, W&W customers made use of video advice more than 2,000 times. This usually takes place when they visit their local advisor in order to reinvest maturing assets and simply ask for an investment advisor of Wüstenrot Bank to join in via Skype. The conversion rate from such video consulting is close to 60%.

In autumn 2016, Wüstenrot Bank introduced computer-aided advice technology (robo-advising). For example, an automated fund management routine continually optimises the investment strategy selected by the client for the "Wüstenrot ETF Managed Custody Account". As a result, our gross fund sales in the retail business went up by more than 7% to €381 million. The number of customer custody accounts increased more than 5% to almost 79,000.

Jürgen A. Junker, Chairman of the Executive Board of W&W, notes: "The Internet has massively changed people's purchasing behaviour, also in the field of financial products. Generally, we want to become even more agile and mobile in order to gain the online-oriented target group as new customers while continuing to fulfil the expectations of our existing customers, who appreciate the high quality of our advisory services. The W&W Group will make a determined effort to shape its future positively."

Outlook for the 2017 financial year

In view of the ongoing real estate boom in Germany, Wüstenrot expects 2017 to see growth in the fields of home loan and savings and construction financing. Württembergische is also positive as to the performance of the insurance business. The high investments under the W&W@2020 programme will continue for the purpose of reaching new customers and market segments through all sales channels, supporting the growth strategy of the W&W Group.

Against this backdrop, the Executive Board is confident that the consolidated profit for 2017 will reach a similar level as in 2016.