First-quarter pre-tax profit at Vienna Insurance Group (VIG) fell 15.2 percent to 130.9 million euros ($145.5 million), missing market expectations, while premiums edged up to 2.76 billion euros, it said on Wednesday. "The historically low interest rates adversely affected current income in the financial result and also made a precaution for personnel provisions in Austria necessary," it said, adding that investment income eased 0.9 percent to 273 million euros.
A spokesman said VIG had to top up pension funds in Austria because of the low yields on investments. VIG, Austria's largest insurer, said that interest on a subordinated bond issued in March was recognised for the first time, while it paid out more in weather-related claims. The consensus forecast from analysts polled by Reuters had been pretax profit of 137 million euros on gross written premiums of 2.765 billion.
VIG's combined ratio, a measure of profitability in the property and accident business, improved by a tenth of a percentage point to 96.3 percent. The company said last month that ultra-low interest rates could push 2015 investment income down by around a tenth. It gave no guidance on its 2015 outlook on Wednesday. Its most profitable market in the quarter was the Czech Republic, with pretax profit of 45.8 million euros, while Romania made a profit of 1.8 million euros as restructuring measures bore fruit and market conditions improved, VIG said.
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