Austrian insurer Vienna Insurance Group’s (VIG) business in Romania continued to decline in the first quarter of this year (Q1), but returned to profit after more than two years of losses, following restructuring, according to the group’s quarterly report.

“Profit before taxes rose to EUR 0.5 million in the first quarter of 2014, and although it is still too early to talk of a sustainable change, it is a welcome initial sign of improvement from the package of measures implemented in the previous year,” VIG states in the report. In Q1 2013, the company posted total losses of EUR 5.3 million in Romania.

In the first three months of the current year, the Romanian companies controlled by VIG underwrote premiums totaling EUR 82.4 million, a decrease of 18.6 percent compared to the same period last year. VIG’s companies in Romania are Omniasig, Asirom, for general insurance, and BCR Asigurari de Viata, which operates on the life insurance segment.

“Due to continued restructuring of the product portfolio, written premiums  fell by 12.2 percent in the property and casualty segment to EUR 68.7 million. Written premiums in life insurance decreased to EUR 13.7 million in the first quarter of 2014. The 40.3 percent decline in premiums was primarily due to elimination of a high sales volume group insurance product during the realignment of BCR Life in the second half of 2013," according to VIG.

However, the Austrian group managed to significantly reduce its costs. Expenses for claims and insurance benefits were down 55 percent, to EUR 28.2 million, while acquisition and administrative expenses went down by 40 percent, to EUR 18.4 million. The headcount for the Romanian operations decreased by 300 in March 2014 compared to December 2014, to 2,437 employees.

Vinna Insurance, which is still the largest insurance group on the Romanian market, saw its business decline during the last five years. In 2009, the group’s companies recorded over EUR 600 million in gross written premiums  and had a EUR 24 million gross profit. The group then had more than 5,000 employees in Romania. In 2013, its business in Romania fell to EUR 362 million and the group’s total losses amounted to EUR 100 million. The total number of employees had more than halved since 2009.

Vienna Insurance Group as a whole posted gross premiums written of EUR 2.73 billion in Q1 2014, with a small increase compared to Q1 2013. Gross profit slightly decreased to EUR 152 million. The group is listed on the Vienna Stock Exchange and has a market capitalization of EUR 4.97 billion.

Andrei Chirileasa, andrei@romania-insider.com