Travel Insurer Europäische Reiseversicherung Continues to Extend its Leadership Position

Best result in the company’s history despite the market’s weak performance

Vienna, 9 April 2013 – In 2012, insurance premium income increased by 5.8 per cent to €62.5 million, profit from ordinary activities grew by 45 per cent to €5.1 million and profit for the year was up 26.6 per cent to €3.3 million.  Europäische continued to strengthen its market position, insuring some 2.2 million travellers.

Nearly every business segment at Europäische benefited from the growth in its travel insurance operations. Annual insurance policies grew particularly strongly, showing double-digit growth, as did corporate travel insurance cover (CTI) for business travellers. The company’s branch in Slovakia continued to expand, recording 7.4 per cent growth in the hotly contested Slovakian tourism market and making a significant contribution to Europäische’s strong profit performance.

Based on this success, CEO Martin Sturzlbaum emphasized the renewed increase in market penetration: “Alongside the travelling public’s growing risk awareness, good products, services and advice tailored to the current risk situation played a decisive part in enabling us to attract new customers and sales associates at a time when the travel market was stagnating.”

2012 WAS NOT A SIMPLE YEAR FOR THE TRAVEL INDUSTRY

Although results in the incoming tourism segment were outstanding, there was very little growth in the outbound tourism market, which is Europäische Reiseversicherung’s principal business segment.

The Amadeus AATIX (Austrian Air Traffic Index), which captures scheduled flights booked through travel agents and also includes business trips, showed growth of 2 per cent compared with 2011, while the Amadeus TOURIX (Austrian Touristik Index), which captures the number of bookings with tour operators made through travel agents reported a -6.9% decrease.  Nonetheless, Europäische recorded growth in nearly every segment, resulting in its best ever profit.

The incoming tourism market experienced growth in arrivals of 4.4 per cent to 36.15 million and an increase in overnight stays of 4 per cent to 130.97 million in 2012. These were record figures that impacted positively on the insurance solutions that Europäische has created for holidays in Austria.

A GOOD CLAIMS RECORD—CANCELLATIONS ONCE AGAIN THE BIGGEST ITEM

The insurance year was not affected by any unusual events like natural disasters or epidemics.  Claims expense increased by 4.4 per cent to €28.6 million. Cancellation insurance claims accounted for 57 per cent of the total (€16.3 million), which was roughly as much as in 2011, while travel health and accident insurance claims accounted for over 36 per cent (€10.3 million). The company’s loss ratio—claims in relation to premiums—improved again from the excellent level of 46.9 per cent recorded in 2011 to 46.3 per cent in 2012.

SUBSTANTIAL ACROSS-THE-BOARD IMPROVEMENTS

Underwriting expenses increased by 8.6 per cent to €25.9 million.    Acquisition costs, made up largely of commission, accounted for more than 90 per cent of underwriting expenses.

Thanks to the small improvement in the state of the financial markets compared with 2011, investment income increased to €1.3 million while still applying the rigorous Austrian law.

Profit from ordinary activities increased by 45 per cent to €5.1 million, and profit for the year grew by 26.6 per cent to €3.3 million (the biggest annual profit in the company’s history). Taking into account €1.6 million of profit carried forward from 2011, net profit grew by 40 per cent to €2.8 million. This permitted an increase in the company’s own funds to €13.83 million.

EUROPÄISCHE’S TWO SUBSIDIARIES DEVELOP WELL

Insurance broker Care Consult stayed successfully on its path and continued to focus on the tourism and events segments. TTC (Travel Training Center) established itself as a leading tourism service provider due to its extensive programme of seminars.

THRIVING ABROAD

Europäische Reiseversicherung successfully sustained its activities in the Central European region. Helped by good partnerships, the branch in Slovakia set up in 2006 increased its premium income by 7.4 per cent to €4.9 million. This means that after a successful developmental phase, the company is achieving solid and sustainable expansion, turning it into one of the country’s leading travel insurers.

The branch in Slovenia expanded direct sales alongside its collaboration with the Generali parent company’s local subsidiary. Economic conditions were difficult in Slovenia, leading to a sharp slump in travel business that hit travel insurance operations. To offset this, the branch continued enlarging its product line and working to anchor the Europäische Reiseversicherung brand.

Europäische carried on selling the same successful insurance products in South Tyrol as in Austria. It worked with numerous travel agencies and operators as sales partners. Although economic conditions were difficult, growth in 2012 was good.

Preparations for entry into the Croatian market continued. It is to take place when Croatia joins the EU this year and will be along the same lines as in Slovenia. Europäische holds equity investments in the two leading travel insurance specialists in Hungary and the Czech Republic.  Although the challenging conditions of the travel industry, they made clear profits.

THERE IS STILL POTENTIAL FOR GROWTH

The real economy is expected to stabilize and the company’s premium income should grow a little as a result in 2013. Above all, Europäische is targeting another increase in market penetration.  Introducing product innovations, developing new sales channels and enlarging the extensive service network should enable it to achieve further growth in the number of travellers taking out travel insurance. In the words of Europäische’s CEO Martin Sturzlbaum, “The proportion is much higher in other countries—for instance, in Scandinavia—than here. So there is potential.”

Disclaimer:
This publication is intended to provide basic information to the media. Information about business performance, products and services is presented in a shortened and simplified form.