W&W starts 2017 with earnings growth
Once again indemnity and casualty insurance made the biggest contribution to earnings. For 2017 as a whole the financial services group still expects consolidated net profit to be about the same as the previous year when it earned around EUR 235 million.
Jürgen A. Junker, CEO of W&W AG says: "We got off to a good start in 2017 – although the market environment remains difficult with increasing regulatory burdens and even more intense competition and investment requirements. In the first quarter the W&W Group once again proved that it has great sustainability and is able to outperform the market even in difficult times. This is not something we can take for granted, and we shall do all we can to secure and expand this position. Due to our first-class customer base of six million people, a determined course of digitisation which we have already embarked on, the acceleration of our processes. All in all we are cautiously optimistic about the future."
Development of business segments in the first quarter of 2017
With a market share of around 15 percent, Wüstenrot has been able to consolidate its position as Germany's second-biggest building society and develop according to plan. The new business (net) based on contract volume amounted to some EUR 3 billion and almost reached the previous year's level of EUR 3.1 billion. On the other hand, a one-off effect caused the gross amount to fall to EUR 3.7 billion (previous year: EUR 4.8 billion). There was a change of rates in 2016, but business has now returned to normal. For 2017 as a whole we are expecting growth.
A boost was provided by the construction financing business, which in the first quarter of 2017 rose by 17 per cent throughout the Group, rising to EUR 1.4 billion, including brokering for third parties. This was particularly strengthened by our focus on the home-owning aspirations of our customers. In property/casualty insurance there was further growth in gross premiums written. They rose to EUR 831.4 million (previous year: EUR 792.4 million). As in 2016, the good claims development had a positive effect on the earnings of the W&W Group. The combined ratio amounted to about 87 per cent, for instance. In life and health insurance gross premiums written amounted to EUR 545.9 million, after EUR 612 million in the same quarter in the previous year. Here a conscious decision was made to forgo the single premium business and concentrate on stable value rather than growth.
The W&W Group already took some important strategic decisions in the first quarter. The construction financing and covered bond business of the Wüstenrot Bank Pfandbriefbank AG has been transferred to the Wüstenrot Bausparkasse AG. This makes Wüstenrot the first German building society to operate an active covered bond business. In this pioneering role it is therefore exploiting the opportunities presented by the amendment of the Building Society Act at the end of 2015 and already issued a covered bond in May 2017.
Furthermore, the previous months saw the transfer of the savings and investment products from the bank to the building society. Both projects have had a positive effect on refinancing and on the building society's earnings situation and are opening up prospects for growth in the area of homes and housing. The product range of Wüstenrot Bank will now comprise accounts, card services, fund brokerage and online activities. An important precondition for this was the introduction of the efficient core banking system of the third-party provider "FiduciaGAD".
Finally this development has also been expedited by the work on the new smartphone app from Treefin, which is specially intended for W&W clients. The creation of a new digital brand for insurance products is also making rapid progress.