Klakki

Press release: VÍS operating performance 2012

13.03 2013

VÍS: strong operating performance in 2012

Highlights:

  • Profit ISK 3,025 m, as compared with a profit of ISK 408 m in 2011
  • Total premiums for the year ISK 16,460 m, up 5.8% from 2011
  • Financial income ISK 3,936 m, up 95.9% from 2011
  • Combined ratio 98.5%, down from 106.1% in 2011
  • Equity ISK 14,470 m at end-2012, as opposed to ISK 11,584 m at year-end 2011
  • Total assets at year-end ISK 43,452 m, as compared with ISK 38,190 m at end-2011
  • Year-end equity ratio 33.3%, as opposed to 30.3% at year-end 2011
  • Return on equity 23.2%, as opposed to 3.6% in 2011
  • Parent company solvency ratio 4.9 at year-end, as compared with 3.8 at year-end 2011
  • Adjusted group solvency ratio 3.8 at year-end
  • Cash from operating activities ISK 3,522 m, as opposed to ISK 2,702 m in 2011

Sigrún Ragna Ólafsdóttir, CEO
“The year was a strong one: operations went well during the year, and the company’s balance sheet is very sound. For example, equity totalled ISK 14.5 bn at year-end, and the equity ratio was 33.3%. The company’s solvency margin was ISK 14.8 m, and the solvency ratio was 4.9, well above our targeted threshold of 4.0. At the end of the year, the group’s technical provisions totalled ISK 26.2 bn, while assets to offset the technical provisions totalled ISK 38.5 bn, or ISK 12.3 bn higher, which reflects VÍS’ financial strength.”

Strong market position
VÍS’ operations are based on two foundations: insurance activities and investments. VÍS is Iceland’s largest insurance company, with a market share of 36% and a strong service network with 41 service locations around the country. The company has some 82,000 customers nationwide, with no one customer accounting for more than 1% of premiums in 2012. Premiums are well distributed among insurance types.

Company employees process an average of 2,500 covered losses per month, or nearly 30,000 per year. In recent years, the loss ratio has been too high, and in 2012 the company reached its long-term goal of bringing it down below 75%. The ratio was 73.6%, as opposed to 82.1% in 2011. It is satisfying to see the results of the hard work done within VÍS with respect to strengthening risk assessment and pricing for the various insurance products, in addition to the preventive campaigns the company has worked on.

Another long-term goal was reached during the year: the combined ratio was reduced to below 100%. It measured 98.5% in 2012, as opposed to 106.1% in 2011. It is not possible to rely on investments to cover losses from insurance activities, as was deemed acceptable in earlier years. The company’s staff will place emphasis on maintaining this strong performance.

Investment activities
Investment activities, the other pillar of VÍS’ operations, were also successful during the year. Emphasis has been placed on increasing the weight of listed assets in the asset portfolio so as to enhance security and safety in investment. Market conditions were favourable to the company during the year, but the occurrence of asset price increases based not on increased value but on differences between supply and demand is cause for concern.

In March 2012, an agreement was signed with Klakki ehf., concerning VÍS’ purchase of life insurer Líftryggingafélag Íslands hf. (Lífís), which was previously a sister company to VÍS. Lífís became a part of the VÍS group as of 1 April 2012. Lífís has a market share of about 25% in the Icelandic life insurance market. The company’s operations have been profitable in recent years. Furthermore, it was decided to sell the VÍS subsidiary Öryggismiðstöð Íslands in December. The company recorded a profit of ISK 242 m on the sale.

Strategy set in 2012
The company engaged in broad-based strategy formulation in 2012. All employees took part in this work, as did customers and business partners. The strategy, which extends to 2017, is ambitious, goal-directed, and realistic. With it, we are creating our future based on a strong, sound company with a clear mission. As a part of the new strategy, the company launched a new VÍS logo during the year.

Listing on OMXICE and share capital sales
The VÍS Board has applied to the OMX Nordic Exchange in Iceland to admit the company’s shares for trading on the OMXICE Main List. During the prelude, Klakki ehf., owner of VÍS, plans to offer institutional and general investors the opportunity to buy the majority of VÍS shares in an offering planned for April, overseen by Arion Bank Corporate Finance.

Listing the company’s shares on OMXICE promotes increased liquidity and more effective price formation for the company’s issued securities; it also contributes to diversified ownership and increased accessibility of information on the company to shareholders, customers, and the general public.

VÍS Board and alternates meet statutory requirements for gender ratios
Members of the VÍS Board are Benedikt Jóhannesson, chair; Magnús Scheving Thorsteinsson; Helga Jónsdóttir; Guðrún Þorgeirsdóttir; and Ingi Rafn Jónsson. The Board and its alternates meet the statutory requirements for gender ratios in company boards of directors, which are to enter into force on 1 September 2013.

Further information:
Those wishing to acquaint themselves with the company’s annual report can find it on the VÍS website:  www.vis.is

Further information can be obtained from Sigrún Ragna Ólafsdóttir, CEO, at tel: +354 560-5000.

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